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FEATURE

SATURDAY VISION
July 30, 2016

local governments fail to utilise the limited funds released

By Roselynn Karatsi
There is evidence of districts
returning money to the Consolidated
Fund. Over 10 local governments,
including Jinja municipality, Yumbe
district local government Nyahuka
Town Council, Apac district local
government and Mukono district
local government, are culprits in the
2014/2015 Auditor Generals (AG)
report.
Despite having limited capacity,
poor road networks, dilapidated
hospitals and schools, local
governments continuously fail to
utilise the funds released.
The audit inspection carried out
in June last year on various projects
rolled over from the previous year,
revealed that some projects had
stalled in Kitgum. The AG said the
accounting officer attributed the
delay to the interdiction of the then
substantive chief administrative
officer. This led to the contractors
failure to access funds that were
eventually returned to the treasury.
Aside from that incident, Omrid
General Enterprise, a contractor
who had entered into agreement
with the district, was being
prosecuted for having received an
advance of sh22,860,000 out of the
sh114,963,600 and no works were
done.
Lagoro Seed Secondary School
in Kitgum is another stalled project
dated 2011, where sh37m intended
for the construction of one block of
two classrooms was never paid to
the contractor. The AG observed that
there were no contract documents
maintained to ascertain the level of
management follow-ups.
The AG says Section 17(2) of the
Public Finance and Management Act,
2015 requires a local government
that does not expend money that was
given to the funds for the financial
year at the end of the financial
year to repay the money to the
Consolidated Fund. Arua had an
unspent balance of sh325m, though
it was already committed as this
was part of the development funds,
according to Esau Ekaphlan, the chief
administrative officer of Arua district
local government.
When we wrote to the finance
ministry requesting to retain it, we
were allowed, although this may not
be the case always. In other cases,
even if retention is granted, funds
come late or less, which can cause
problems with contractors, Ekaphlan
said.
He said these funds were intended
for roads works, schools and health
centres in Arua. From the Kitgum
and Arua incidents, we realise service
delivery suffers because districts
do not manage the procurements
well. The Government support to
the local governments is key in
these processes, especially through
monitoring the procurements.
The AG said the dragged
completion of works delays prompt
service delivery to the communities
since the accounting officer admitted
that the works stalled because the
contractors had abandoned it.
There are technicalities around
these funds, which led the local
governments to remit them. John
Genda Walala, the director of Local
Government Inspection, says the
issue of returning the money is
counter-productive. This is normally
caused by the delayed release of

Why do local governments

return money to the treasury?

President Yoweri Museveni commissioning road construction equipment for all the districts in Uganda
in 2012 in Namanve, Mukono. Even with such resources, some districts have failed to utilise them
funds and lack of capacity among
some contractors and some local
governments, he said.
Walala clarified that the bigger
challenge is the mindset of public
servants as some of them think they
do not have to give their best in
government employment.
He noted that when money is
returned to the central government, it
is not re-voted into the budget, which
creates a backlog of unattended to
services.
The consumers of the social
services suffer because of
bureaucracy, incompetency and
corrupt leaders. We are pushing for
flexibility without abusing the laws.
We would want a revolting policy to
enrich the working of the process of
service delivery. I would rather the
officials are sanctioned but public
work continues, he argues.
It has been a learning process
for the finance ministry and local
governments as Patrick Ocailap, the
deputy secretary to the treasury said
the issue of delayed release of funds
has already been resolved through
quarterly releases. This has been
done to ensure that funds are utilised
in time.
We have reformed the fund release
system to allow accounting officers
plan well. It is our intention to always
have 100% of the development funds
released as per the appropriation
of Parliament because districts are
frontline delivery points and failing
to do so would be undermining
government programmes. Currently,
all development funds were released
in the third quarter, he said.
Ocailap said in the past, money
was released by the 10th of every
month, which was problematic as

RELEASE OF FUNDS

The AG report shows the

following balances as unspent;
lJinja municipal council
sh2,750,777,445
lApac district local
government,
sh1,765395,052
lZombo sh89,456,000
Mukono, sh49,028,802
lMbale municipal council
sh149,210,972
lNyahuka town council,
sh288,894,036
lArua municipality,
sh4,780,442,890
lYumbe, sh2,021,502
you would find money being released
in June, yet the financial year would
end at the end of this month.
The AG reveals that part of the
unutilised funds was intended for
capacity building under the Uganda
support to Municipal Infrastructure
Development (USMID) Project.
A total of 14 municipal councils
under the USMID project had not
fully utilised funds released to them
amounting to sh63,141,565,615.
They comprised capacity building
funds (sh6,079,544,830) and
infrastructure development funds
sh57,062,020,785.
This reflects lack of effective
implementation of projects
disadvantaging the communities
which are supposed to benefit from
the programme.
Ocailap said further reforms are
in place to ensure money is fully
utilised for the purpose Parliament
approved it.

Money is not put to use when

it is in the Consolidated Fund. We
continue to support the personnel to
procure goods and services efficiently
depending on the workplan. There
are special cases such as school fees
and seeds, which require the release
in a particular time and we ensure
that such seasonal activities move in
time, he said.
Besides the ministrys delays in
releasing the money, Ocailap said
they realised that officials were
misusing unspent balances at the end
of the financial year, which is why a
local government is now allowed to
have only one bank account.
Initially, we would allow them to
keep the money with the hope that it
would be utilised appropriately. But
we learnt that they would deliberately
delay to use the money, he said.
Ocailap added that whenever
money was released for the new
financial year, they would transfer the
unspent balance to another account
to disguise it as utilised, since they
used to have a number of accounts
in different banks and would never
adjust the workplans at all.
Eugene Ssemakula, a research
officer at Advocates Coalition for
Development and Environment
(ACODE) said: The issue of unspent
funds is so big, there are many
processes, including the how the
funds are released, when it happens,
how funds should be utilised and
how they are utilised.
This process begins from the
approval of the districts budget
to the approval of a procurement
process. Ssemakula said governance
aspects play along as the council has
to pass the budget and the district
executive controls the daily running

of the office.
When conflicts arise between the
political and technical wing, chances
are high that the procurement
process will delay and the money will
be returned, he said.
He said sometimes the money may
even be released, but if the districts
have not sent their workplan, they
will not be given the rights to access
the money.
The workplan must have been
uploaded as well as accountabilities.
We, however, must note that
some delays are caused by selfish
individual decisions. Some officials
draw the money and put it on a
fixed deposit account for a month,
so that they can make extra bucks
without stealing, which delays work,
Ssemakula said.
Sylvia Kirabo, a senior public
relations officer at Public
Procurement and Disposal of Public
Assets Authority (PPDA), said
procurement begins with planning
and good timing as money is many
times released late. Therefore, it is
only those who plan well that avoid
returning funds, she said.
Kirabo said local governments need
to comply with the procurement
requirements to avoid complaints or
any form of fraud.
Some people think we delay the
services, but without the law, it
could be even worse due to internal
issues. PPDA allows bidders to
lodge complaints, which call for
administrative reviews that can
consume time just like reluctant
technocrats who take long to make a
decision, she said.
However, Kirabo advised that local
government can avoid delays of
particular procurements as the nature
of some contracts allows them to
begin the procurement process early
without committing the Government.
Walala said it is illegal to commit
the Government before funds are
released. Sometimes less money
than planned for is released and
committing government might cause
avoidable costs such as breach of
contract.
It is difficult for some local
governments to utilise the released
funds, especially when there is
need to procure goods and services
because of capacity challenges. If the
procurement process is not started
early enough and you wait for the
money to come through first, chances
are that you may not utilise it are
high, he said.
Ocailap said he recognises that
capacity in local governments is
limited and their structures are still
weak. But that does not mean they
are not properly guided because
we have been carrying out budget
workshops to help them learn to plan
better. You must plan well for the
money to work, he said.
Ocailap clarified that the law
requires local governments to consult
in cases where they have no capacity
and the line ministry is expected to
give them the desired assistance.