By Online Team

17^th Dec 2012:

The recent wave of donor aid cuts (amounting to $260million) in protest at the theft of approximately $13million dollars from the Office of the Prime Minister (OPM) is threatening post-war rehabilitation in the northern Uganda and other key public investments, the UN news agency IRIN has reported.

Deputy Secretary to the Treasury Mr. Keith Muhakanizi told IRIN that donors, under a Joint Budget Support Framework (JBSF) – including the World Bank, European Union, Austria, Belgium, Denmark, Germany, Ireland, Sweden and the United Kingdom – have suspended “about US$260 million”, of the annual budget for at least six months.

Uganda is trying to win back donor esteem by meeting their conditions – Denmark, for instance, has demanded a full refund of stolen money, the introduction of better control systems, and written confirmation of the government’s commitment to crack down on corrupt officials. Uganda has vowed to recover the stolen funds, boost the accountability to its public financial system, and prosecute guilty officials.

At least 12 OPM employees have been suspended, and two senior officials are on remand facing prosecution. Hearings through a public accounts committee are ongoing, and Uganda’s Daily Monitor newspaper reported on 13 December that the cabinet had approved a measure to refund $15.5 million to donors from the government’s consolidated fund.

Muhakanizi said public services would not be impacted by the cuts until the next financial quarter, starting January 2013, when another instalment of donor funds is due to be released.  “…We will take adjustment measures where necessary across the board,” he said.

Economic fallout

Uganda has already shifted its budget priorities once this financial year. In September, members of parliament refused to pass the budget without additional funding being allocated for the recruitment of health workers. Josephine Watera, lead researcher on the Parliamentary Social Services Committee behind that resolution, says more than $100 million in extra funds were eventually granted and pulled from a number of sectors.

Though she insisted that budget battle was necessary for the survival of the country’s deteriorating health sector, she said government’s short-term fixes will have unforeseen long-term impacts on the sectors the money is moved from.

“The Ministry of Finance says it is not impacted by the donor funds [being suspended],” Watera said. “And maybe we will mostly feel the impact two years later, but shifting money in the budget will not see it replaced to where it came from.”

With relatively low domestic revenue collection (13 percent of Uganda’s GDP, the lowest in the region) and much-awaited crude oil production still years away, analysts say the aid cuts will likely be devastating for the Ugandan economy.

“Government is the biggest spender in its economy – with cuts, everything suffers,” said Angelo Izama, a Political Affairs Analyst at the US-based Open Society Foundation.

Uganda’s central bank has said the suspension of aid will cut the country’s economic growth by 0.7 percent, reducing its projected 4.3 percent growth in the 2012-2013 financial year to 3.6 percent.

Northern recovery at risk

With donations withheld pending the results of ongoing investigations, the fate of programmes under the troubled Peace, Recovery and Development Plan for Northern Uganda (PRDP) are in limbo. Though the government plan ended in June, an extension was due to run from July 2012 to 2015.

On 28 November, Sweden issued a statement demanding that Uganda repay some $6.7 million – the full amount Sweden contributed to roads, schools, health clinics, legal system and water supply through the PRDP – though it has not yet been able to verify that the full amount of this money was misused.

“We are aware that our recovery might slow down some development in northern Uganda, and it is extremely regrettable,” said Charlotte Petri Gornitzka, the director general of the Swedish International Development Agency (SIDA).

David Odongo, the Chairperson of Aleptong District in the Lango however fears that the aid cuts will affect the most vulnerable members of society.  “By cutting aid they are not punishing us [leaders] but killing children and women out in the villages who are in dire need of service delivery out there,” Odongo said.

Martin Ojara Mapinduzi, the district chairman of Gulu District, in northern Uganda’s Acholi sub-region, urged donors to revamp the way they distributed aid rather than cut it. “They should focus on using the district local government structures and development agencies that directly interface with the people whom the funds are meant for,” he said.

“We are very, very worried,” said Luke Nyeko, chairman of Kitgum District, one of the 55 northern districts that had been benefiting from PRPD programming.

According to Nyeko, Kitgum stopped receiving government-managed PRPD funds in September with no explanation, and a number of programmes, including a scholarship scheme for vulnerable youth, were stopped in their tracks.

He called on donors to follow the example of the US government, which supports projects directly through USAID, as opposed to through Uganda’s budget.  END: Login to www.ugandacorrespondent.com every Monday to read our top stories mid-week for our updates

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