4 December 2012

Uganda: Aid Cuts Begin to Bite

Ministers warn of tough times ahead:

Over the past few weeks, Government has been rocked by a string of significant foreign aid cuts. For the sixth time, last weekend, Germany, Europe's largest economy, announced it had cut aid to Uganda, capping a campaign against the growing corruption in the country and the office of the Prime Minister in particular where an estimated Shs 50bn meant for the recovery effort in northern Uganda is believed to have been swindled.

The Germany cut brings the total amount of foreign aid cancelled to at least $300m (Shs 780bn). And the full weight of the cuts is beginning to get felt amid reassurances from some government officials that the country can stay the course. The Office of the Prime Minister is taking the hardest hit. It's undergoing an overhaul, an official familiar with the office told The Observer.

He said new cost-cutting measures are in place. He said the accounts department, formerly headed by the interdicted former principal accountant, Geoffrey Kazinda, has been overhauled.

"Apart from one cashier and two messengers, all the faces are new, sent in from the ministry of finance," he said.

In other departments, deputies have since assumed control, in an acting capacity. There are changes too in the mode of operation, he said.

"In the past you could privately negotiate a salary advance with the accountant but now it is impossible to get anything since those kinds of deals also brought problems to the accountants," he said.

Official trips out of office are now tightly monitored. One needs clearance from a supervisor, usually a head of department, to travel, contrary to what used to happen.

"Now you have to draw up a requisition and send it to the audit team to go through it before it is approved," the source added. The Observer understands that OPM staff recently complained about this procedure. And the government announced on Monday that other ministries too were headed for tougher times.

"Government intends to make the necessary adjustments within its budget, including a cut on its expenditures. All sectors will be reasonably affected by expenditure cuts," said a government statement released by Uganda Media Centre Executive Director Fred Opolot.

He said most sectors of the economy would also be affected by the cuts, but insisted the government was doing everything to arrest the rot.Matia Kasaija, the junior minister for Planning, told The Observer today that it was time for everyone to start cutting their coat according to their cloth.

"The country will survive but there will be hardships here and there. Certain programmes will be sacrificed," Kasaija said.

He said the president would have to cancel any more pledges as "part of the new arrangement to make sure money is saved to plug the holes.... and used for other things."

Prioritisation was also the word on the lips of Asuman Kiyingi, the state minister for Regional Cooperation.

"There will have to be some reallocations in the budgets of many ministries to make up for the cut aid. This means that ministries will be expected to priotise their activities and allocate funds accordingly," Kiyingi said.

For the financial year 2012/2013, donors had pledged to contribute Shs 2.77 trillion in budget support, about 25 per cent of the Shs 11.1 trillion national budget. Speaking at the National Anti-Corruption Convention on Monday, Roberto Ridolfi, the head of the European Union Delegation in Uganda, said Kampala had failed to institute tight financial controls to stem theft of donor funds.

"How can I go back to Europe and ask for aid for Uganda? The recent corruption scandals are a breach of trust between the country and its development partners," Ridolfi said.

Within a month, donors have slashed aid worth $300m (Shs 780bn). While some of this money was contribution towards budget support, a big chunk of it was to fund development projects. Kiyingi, however, believes Uganda could be a victim of the harsh economic conditions in Europe.

"We all know that the economies of some of these counties are not doing well. So all this talk of corruption has given them a perfect excuse to cut aid as their economies recover," he said.

Hard times:

Experts anticipate that since many of these donor - supported projects cut across several sectors, ranging from health to education, from infrastructure to agriculture, withholding aid could have dire consequences for people whose lives and livelihood have been dependent on them.

The cuts mean that there could be less drugs in hospitals, the outreach of agricultural programmes like the National Agricultural Advisory Service (Naads) will be affected, while the quality of Universal Secondary Education and Universal Primary Education could take a hit because the two programmes are heavily funded by the donors.

"It is not the so - called big people in town like the MPs who are going to feel the pinch of the donor cuts; it is the small people in the villages. It is the teachers and health workers who have gone months without salaries," said Gideon Badagawa, the executive director of the Private Sector Foundation Uganda (PSFU).

In the OPM's case, the Peace, Recovery and Development Plan (PRDP) in northern Uganda is the first casualty of the donor cuts. It was initiated to help redevelop northern Uganda which was ravaged by the 20-year LRA war. With donors expected to review their position (on aid cuts) in May, a month before the commencement of the 2013/2014 financial year, we could have a tough six months ahead.

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