Monday, May 5, 2014


Last year the finance ministry instituted a series of changes in its payment systems aimed at plugging the holes that were causing major leakages of public funds.

Among the changes instituted were the consolidation of accounts and devolution of the payroll to the districts.

The measures are still being test run and teething problems are being worked out.

Previously a ministries, government departments and agencies (MDA) would open numerous accounts for payment to the payroll, suppliers of goods and services. Because these numerous accounts were difficult to track they were employed for siphoning money out of the ministry. The ultimate plan is to have one central account for all government transactions which will make it easy for the finance ministry monitor transactions in real time. In addition no expense can now be authorised without a previously approved work planned.

In an extension of this push for more transparency in government accounts the finance ministry now pays salaries direct to the accounting officers of districts according to a verified payroll by the Chief Administrative Officers (CAO) and his respective headmasters for instance. This way the cut out the public service and education ministries through which payments would be made, effectively reducing the surface area for theft.

A by-product of these changes is that some civil servants have gone without salary since the beginning of the year.

Last month Finance ministry permanent secretary and secretary to the Treasury Keith Muhakanizi placed an advert twice in the papers reminding 37 districts that had not handed in the verified payrolls of their teaching staff by the 15th and again by the 23rd April. It’s as if suddenly after all these years the respective accounting officers don’t know how to draw up a payroll!

The reason is not very hard to fathom. In many cases officials have padded the payrolls with ghost teachers, to now submit a much lower payroll numbers would raise eyebrows and even lead to prosecution.

Hence the reluctance in many cases to submit a cleaned up payroll. Or this maybe an attempt to create pressure on the politicians so they may direct a reversion to business-as-usual.

In one central Uganda district the payroll has now shrunk from 2,900 teachers to 900.

A cursory look over the budget performance for the last three quarters display a dramatic drop in the capacity of government to absorb the money when it is available. At the same time last year all ministries but one, had absorbed most of the money released to them, fast forward to today and these same ministries are struggling to utilise half the money  released to them.

If you are wondering how come there is no money floating around like it used to be, these initiatives maybe at the heart of the matter.

This raises some interesting issues not only about government operations but on the general economy. It is evident that billions – no hundreds of billions of shillings have been lost to government finding their way into the pockets of greedy officials. So failure of government delivery was not for lack of government funds but because of people working from the instance to subvert programs by stealing money. But maybe that is putting too high a premium on their motives, the simple truth seems to be that these people stole money for their own aggrandisement but not out of any allegiance to a higher power.

It also explains the real estate boom in Kampala in recent years. On a wider plane official figures show that the main drivers of growth have been construction and services.

One can expect that the beneficiaries of this scam are not going to take this lying down but will fight tooth and nail to maintain the status quo, we can only hope the finance ministry can stay the course regardless of the short term pain we are feeling now.

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