Wednesday, April 23, 2014

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Uganda: Who Pays the Cost when the Aid Stops?

After years of being an aid darling despite widespread corruption, a number of donors recently suspended aid to Uganda following high-level scandals.
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President Yoweri Museveni of Uganda (centre) with President Jakaya Kikwete of Tanzania (left) and form UN Secretary-General Kofi Annan (right). Photograph by ICC Review Conference.

Although his swift response to the AIDS crisis and efforts to economically liberalise and politically stabilise his country have often seen Yoweri Museveni regarded as an aid darling by donor countries, the reputation of Uganda’s president might now be beginning to wane amidst reports of official corruption.

News of high-level corruption is nothing new. Uganda is believed to be the most corrupt country across East Africa and there's evidence to suggest elections have been fixed. But until recently, official development assistance has largely continued to flow unabated. In the last few months, however, a number of recent scandals have led some donors to demand Museveni’s government return misappropriated aid.

How much longer will the funds realistically roll in? And if aid is cut off, how will it affect the Ugandan people?

Donors denounce dodgy dealings

In August, Ugandan auditors informed the Irish government that the $16 million of joint funding it provided alongside Norway, Denmark, and Sweden had not paid for the anticipated peace, recovery, and development programme in northern Uganda. Rather this funding benefited several individuals employed within Prime Minister Patrick Amama Mbabazi’s office. Upon learning this, Irish Aid immediately suspended €16 million ($21 million) of aid.

In early January, following a confirmation that the diverted Irish Aid funds had been returned as promised, Irish Minister for Foreign Affairs Eamon Gilmore discussed his department’s findings in their enquiries into what had happened. They determined that “the fraud was conceived and carried out by personnel in collusion who had an intimate knowledge of systems within the ministry of finance, planning and economic development, [the] office of the prime minister and Bank of Uganda”.

The funds, they said, “were fraudulently transferred from the legitimate bank accounts into which the donors had properly deposited the money to fraudulent dormant accounts outside of the government system”. This made it nearly impossible to ascertain the ultimate beneficiaries. Although the money would be returned to Uganda to benefit the health, education, and AIDS project it was originally earmarked for, Gilmore stressed that it would not be funnelled through the government until greater confidence could be restored.

Then in October, the dispute with Irish Aid still raging, the UN Group of Experts report scandalised Uganda’s donors further. The report implicated not only Rwanda for interference with the Congolese M23 rebel group, but also Uganda for allegedly arming them. Museveni has since vowed to “defeat these thieves”. But are his words too little, too late?

In November, UK International Development Secretary Justine Greening followed the Irish example, suspending all direct and bilateral aid with immediate effect. "This is a result of initial evidence emerging from our ongoing forensic audit of the office of the prime minister, which indicates aid money may have been misused", stated the Department for International Development (DfID). "Unless the government of Uganda can show that UK taxpayers' money is going towards helping the poorest people lift themselves out of poverty, this aid will remain frozen and we will expect repayment and administrative and criminal sanctions."

Fragile friendships

The rhetoric coming from Kampala has been mixed. Ofwono Opondo, deputy spokesman for Museveni’s National Resistance Movement (NRM) party, bombastically informed reporters that the country could readily withstand a reduction in aid. His confidence perhaps stems from an anticipation of increased oil revenues in 2017.

For his part, Museveni waxed lyrical on his country’s successes, inviting foreign donors to "Kindly inform your home constituencies that you are dealing with capable people who fought the dictatorship of Idi Amin; fought the dictatorship of the UPC [Uganda People’s Congress]; defended Uganda from Sudanese-sponsored terrorism; destroyed the colonial army that was killing Ugandans; stopped the multiple crimes of that army against the people of Uganda; enabled the Ugandan economy to recover; contributed to regional peace…We have the capacity to defeat these thieves as we defeated all the other enemies of Uganda”.

However, in December the president seemed more cautious with regards to Uganda’s donors. Speaking about the controversial anti-homosexuality bill before the country’s parliament, Museveni requested that homosexuality – though not something to be promoted in his view – was not persecuted. Given apparent popular support for the bill in Uganda, this compromise was undoubtedly intended to dampen the outrage sparked by the bill in the West.

But the ubiquity of corruption in Uganda could itself be reason enough for donors to reconsider their funding. Museveni’s regime is one that allows power holders to divert political resources to maintain loyalty within its coalition, and along regional and tribal affiliations. General budget support was redirected to the NRM’s presidential and parliamentary campaigns in February 2011, and Museveni purchased a private jet with UK funds shortly after.

This misappropriation is an example of behaviour that maintains power without regard for the developmental consequences. The aid stolen by the prime minister’s office was intended to benefit the north of the country – a region ravaged by the war with the Lord’s Resistance Army (LRA) between 1986 and 2006. Aid from donors to the region has largely allowed Museveni to ignore his political opposition’s plight and consolidate the NRM’s monopoly on power. In this way, corruption has become institutionalised – it is a means to a governance strategy that the regime is predictably keen to retain.

Punishing the people for their pilfering president?

Despite well-documented occasions of corruption, aid has continued to flow from donors to Uganda – until recently. For Ireland at least, significant improvements to financial control systems must follow before the funnelling of aid through governmental coffers will be reinstated. And it asked for misused aid to be returned in the meantime.

What effect will this have on Uganda’s neediest?

A statement in December by the Anti-Corruption Coalition Uganda (ACCU) eloquently described the predicament for Uganda’s people. "When those in custody of our resources decide to divert monies meant for dying children and pregnant mothers, in order to build a political patronage system of survival, one is left wondering how far our government will continue to blatantly and arrogantly rob its citizens."

But it continued that returning misappropriated aid money is not a common practice, and Cissy Kagaba, head of the Anti-Corruption Coalition Uganda (ACCU), considers the move ill-advised. "It is rather unfortunate that donors are accepting money taken from the consolidated fund because this does not solve the problem [of corruption] … If they say they are friends of Uganda, they should realise that this is double jeopardy for Ugandans since refunded money from the consolidated fund means that ordinary Ugandans will be deprived of essential services."

Herein lies the conundrum for donor countries. On the one hand, they can risk inadvertently fuelling a corrupt system that benefits and bolsters a small elite, and angers their own citizenry at home. On the other hand, they can demand reform and transparency, but risk developmental programmes falling back. Either way, it is Uganda’s neediest that will suffer in the meantime.

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