20 March 2014

Uganda: Museveni May Give Each MP Sh150 Million Loan Bailout

Saddled with huge debts, Uganda's MPs are keeping their fingers crossed, after finding a good Samaritan in President Museveni.

The Observer has learnt that the president is considering giving each MP as much as Shs 150 million, to pay off their accumulated debts.

According to sources familiar with proceedings of last month's NRM MPs' caucus retreat at Kyankwanzi and the latest caucus meetings at State House, the MPs may get the money wired to their accounts by the end of the month. Museveni last year rejected a bailout deal suggested by the Parliamentary Commission.

However, it is now understood that he has seriously considered the idea after recent reports suggested that Prime Minister Amama Mbabazi was willing to give MPs at least Shs 120m each to service their loans.

"I have learnt from my sources that there are some people who want to clear people's debts; clear them as who? Where do you get the money from?" Museveni reportedly told the Kyankwanzi retreat.

In July, last year, during an NRM caucus meeting at State House Entebbe, Museveni told the MPs that he had blocked a Parliament-brokered deal for a Chinese firm to buy off their loans. The commission, hoping to extricate many MPs from the shackles of debt, convinced China's Exim (Export-import) bank to buy off the loans and revalue them at lower rates.

Most MPs borrowed at interest rates between 27 and 30 per cent. And for Exim bank to buy off the loans, the commission suggested that government guarantees a loan buyout. With a government guarantee, the firm would then offer the legislators loans through Post bank at six per cent.

Change of heart

Museveni's reluctance then, according to our source, could have been influenced by his desire to further exercise control over the MPs.

"He would tell us in caucus that he knew that the majority of us are 'anaemic' because of the debts, that his sources had told him that only about 50 of us were financially sound and the rest were getting almost zero (salary)," an MP said.

But with a rumour that Mbabazi was offering a payoff to the legislators, a source said, Museveni fears to lose control of the MPs. To seal the deal, we have learnt, Museveni first met some parliamentary commissioners plus some NRM chairpersons of House committees, who reportedly asked him to agree to a salary rise for MPs.

The legislators wanted their salaries increased from Shs 2.6m to Shs 10m, and their emoluments raised to Shs 30m. This, according to a source privy to the deal, was intended to boost their gratuity, which would offer some relief for the indebted MPs.

Museveni reportedly rejected this proposal, fearing that teachers, health workers, and other poorly-paid civil servants would complain. He also said the increment would have a heavy impact on the budget. So, our sources said, a one-off figure of Shs 150m for each MP was agreed.

On March 10, when the caucus discussed the plan to derail Mbabazi's alleged aspiration to become the NRM flag bearer, Museveni reportedly told the MPs that their budget for that campaign was not part of his 'rescue plan.' This, sources say, is the codename for the bailout, which could cost the taxpayers at least Shs 56.25bn.

Museveni is then said to have summoned the caucus leaders for a separate meeting to conclude the matter.

"The caucus leadership [is yet to get] back [to MPs] because it is them and the president that were to conclude this matter. For now I don't know the actual figure that they agreed upon," another MP said.


But the leader of Opposition in Parliament (LOP), Wafula Oguttu, described the scheme as criminal.

"Unless it is handled in their usual manner but once it is brought up for discussion, we shall reject it," Oguttu told The Observer.

"It is for NRM MPs; it will not apply to us and I personally will not take that money," Oguttu added.

While Oguttu echoed other opposition voices, precedent suggests his MPs may not have the courage to reject the money. Many opposition lawmakers refused to refund the Shs 20m (given in the 2010 - 2011 campaign period allegedly for Naads monitoring) and Shs 5m given in 2013 for consultations on the Marriage and Divorce Bill.

Copyright © 2014 The Observer. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.