Civil society to Kampala: We want transparency, not graft-laced debts

The civil society in Uganda is demanding transparency in the spending of Covid-19 loans to avoid loading taxpayers with corruption-fuelled debts.

African countries have in the past three months borrowed billions of dollars as lenders have loosened their purse strings to help in the fight against the coronavirus pandemic.

Uganda had by end of last week received about $600 million (about Ush2.3 trillion) from various lenders to deal with the Covid-19 disruption, including a $491.5 million loan from the International Monetary Fund.

Cissy Kagaba, Executive Director at Anti-Corruption Coalition Uganda (ACCU) warns that the pandemic, and traditionally weak accountability systems, offer fertile ground for fraud.

“These countries already have a poor accountability track record and even with these monies I don’t think we are going to do any better,” Ms Kagaba warns, “Procurement processes are likely to be flouted because there is a pandemic.”

Official figures put Uganda’s current debt at Ush11.8 trillion, or 38 percent of GDP.

According to Julius Kapwepwe, director of programs at the debt tracking NGO, Uganda Debt Network (UDN), East African governments should be guided by necessity and not the convenience of the situation brought about by the pandemic.

The NGO disputes Uganda’s official debt figures and estimates the real figure could be Ush14.3 trillion before accounting for the recent borrowing. “From UDN analysis we are clearly about 49.8 percent of GDP if you add the current stock recoverable, international borrowing and domestic debt.

“We would wish to see a situation where Covid-19 is not used as an excuse for accelerated borrowing but rather limit loans to necessity,” he said.

DEVELOPMENT LOANS

Uganda’s lower debt-to-GDP ratio relative to its EAC neighbours has made it easier to get development loans.

Mr Kapwepwe warns that availability of money without a clear plan for its utilisation raises the risk for abuse.

A big chunk of the money has been given to Uganda to address health emergencies brought about by the coronavirus while some of it is directed to shore up the economy, which has been affected by lockdown measures taken by the government to curb the spread of the virus.

While a section of the Treasury remain busy writing proposals for more external borrowing, the Central Bank has been active in the local market selling Treasury Bills to raise more money.

The government has also instituted a fundraising drive targeting private companies and wealthy individuals to donate food, money and other essentials for the COVID-19 pandemic response.

According to Minister for General Duties Mary Karoro Okurut, who heads the country’s COVID-19 response task force, the government has collected about Ush27 billion ($7m) in cash and in kind locally to help in the fight against the virus.

Uganda’s debt stock grew from Ush46.36 trillion at the end of June 2019 to Ush48.91 trillion at the end of December 2019. Of this, the external debt was Ush31.53 trillion representing 64 per cent while domestic debt was Ush17.38 trillion representing 36 per cent.