Uganda: NGOs Panic As DGF Orders Audit Amid Suspension

Sections of civil society that have been recipients of grants from the Democracy Governing Facility (DGF) have hit the panic button after it emerged late last week that bankers of the Fund have commissioned a comprehensive financial audit.

International audit firm, KPMG Uganda, will carry out intensive examination of the book of accounts of the organisation, which among others activities, facilitates equitable growth, poverty eradication, rule of law and long-term stability in Uganda.

The audit comes more than six months since the activities of the facility, which is financed by the governments of Denmark, Ireland, Austria, UK, Sweden, Norway, and the European Union (EU), were suspended on the orders of President Museveni.

In ordering the suspension by way of a January 2 letter to the minister of Finance, Mr Matia Kasaija, Mr Museveni argued that DGF funds were being "used to finance activities and organisations designed to subvert (the) government under the guise of improving governance."

He also accused Mr Keith Muhakanizi, who was Permanent Secretary and Secretary to the Treasury at the time, of having "irregularly and unilaterally" licensed the facility to be operated with very limited involvement by Ugandans.

"How is it possible that the Ugandans whose affairs are being dealt with here can only be spectators in the management of their own affairs? This is not the financing of a private business but the funding of State and non-State actors to achieve the political objective of the funders," Mr Museveni wrote.

Mr Muhakanizi was on July 15 replaced at Finance by Makerere University Business School (Mubs) lecturer Ramathan Ggoobi in a shakeup of permanent secretaries which also saw seven of them retired, some in public interest.

Mr Museveni was reportedly angry that DGF had been allowed to operate without the involvement of Cabinet or the approval of the Attorney General. He also questioned why he was never consulted.

The audit

Our civil society source told Sunday Monitor that the timing of the audit suggest that it is being conducted as part of preparations to close the Fund, which was established in July 2011 by eight of Uganda's development partners, namely Austria, Denmark, Ireland, the Netherlands, Norway, Sweden, the United Kingdom, and the European Union (EU).

"There are all indications that this is a close out audit. I have been made to understand that the donors are reluctant to admit the three representatives of the government, yet the government is equally resolute on having representation on the board. It is a standoff. They are quietly working to close out," the source said.

Lack of government representation on the DGF board has been a long-time demand. On April 24, 2019, Mr Kasaija nominated the former State for Finance, Mr Gabriel Ajedra, and the director of Debt and Cash Policy Directorate of the Ministry of Finance, Ms Maris Wanyera, to represent government on the board, but the donors wrote back saying the duo would be added to a list of "resource persons for DGF who we will contact for ad hoc engagements with DGF," which angered Mr Museveni.

Whereas the Danish ambassador to Uganda, Mr Nicolaj Hejberg Petersen, admits that KPMG has been commissioned to carry out an audit, it is not being done in preparation to close the fund.

"The audit... is a normal undertaking that we do every year. That is completely normal. We do the same thing every year. There are audits every year the difference was last year and the other year we had unqualified audits, but it is a completely normal audit," Mr Petersen told Sunday Monitor on phone.

Stalled talks

The audit comes more than five months since the February 18 meeting that Mr Museveni held with EU diplomats at State House Entebbe.

The meeting named former Prime Minister Ruhakana Rugunda to head an ad hoc committee to spearhead negotiations aimed at putting in place a new governance structure with adequate local representation. The responsibility was later transferred from Dr Rugunda to technocrats in the Ministry of Foreign Affairs.

The outgoing permanent secretary in the Ministry of Foreign Affairs, Mr Patrick Mugoya, told Sunday Monitor in an interview late last month that government and the donors had arrived at a compromise.

"We are in the final stages of concluding another agreement. In principle we have agreed with the donors. What remains is signing onto certain documents, which I think will not take a very long time," Mr Mugoya said.

He said it was only due to development on the political landscape that were pegging back the formalisation of agreements.

"We are almost done. Actually if it had not been for some of these activities (meetings of the Central Executive Committee of the NRM, elapsing of Cabinet, and elections for a Speaker and Deputy Speaker) that have been taking place lately, we would have been done," he said.

Whereas it was not possible to speak to Mr Vincent Bagiire, who replaced Mr Mugoya as permanent secretary at the Ministry of Foreign Affairs, ambassador Petersen suggests the comments that Mr Mugoya made last month are a true reflection of what is pertaining.

"The information on winding up is completely untrue. On the contrary, the dialogue with the Government of Uganda has been constructive," Mr Petersen said.

Suspension bites

Meanwhile, the executive director of the umbrella National NGO Forum, Mr Moses Isooba, has revealed no activities have been going on at all the NGOs that were receiving grants from DGF, a situation that has directly and indirectly affected the livelihoods of thousands of Ugandans. Financial statements posted on the DGF website shows that the facility extended to the said organisations financial support to the tune of Shs113.8 billion between July 2016 and December 2017; Shs64.8 billion in 2018 and Shs88.5 billion in 2019.

That gives an average of Shs76.3 billion, which is indicative of the amount of money that has not been released to the agencies.

"The facility was supporting about 78 NGOs. If each of these NGOs employs a minimum of 10 people, we are talking about 780 people, but you know that every person has dependents. If each employee has 10 dependents we are talking about 7,000 people that have been thrown under the bus," Mr Isooba said.

Mr Isooba, however, added that the suspension also hit communities where the NGOs were operating quite hard.

"Communities that were benefitting from the activities of the NGOs are now not serviced and you cannot put a monetary value to that. And DGF was also supporting government agencies like Parliament and the Ministry of Internal Affairs. The fact that they are not getting money means there are services that Ugandan are not accessing," Mr Isooba added.

Background...Representation

Lack of government representation on the DGF board has been a long-time demand. On April 24, 2019, Mr Kasaija nominated the former State for Finance, Mr Gabriel Ajedra, and the director of Debt and Cash Policy Directorate of the Ministry of Finance, Ms Maris Wanyera, to represent government on the board, but the donors wrote back saying the duo would be added to a list of "resource persons for DGF who we will contact for ad hoc engagements with DGF," which angered Mr Museveni.

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