The Auditor General, Mr John Muwanga’s audit for the FY2018/2019 indicates that at least Shs736b from 43 donor-funded projects implemented by the different ministries, departments, and agencies (MDAs) was returned to the Consolidated Fund. This is in accordance with the Public Finance Management Act, 2015, on account of being “unabsorbed.”
The audit, submitted to Parliament in January, shows that Shs666b was carried forward from the preceding FY2017/2018 for the same projects.
During the audit year 2018/2019, Shs1.6 trillion was allocated, bringing total available funds for the 43 projects to Shs2.3 trillion of which only Shs1.58 trillion was used.

This represented an absorption capacity of 68 per cent, while the Shs736b was unutilised for, among other reasons, delays in approval of project work plans, protracted procurements, delays in signing of project contracts and the sluggish execution of works.
Project costs increase
As a result of the partial or non-implemented activities, interest charges on unwithdrawn funds of Shs90b increased project administration costs due to project extensions and delayed service delivery.
In that audited financial year, the World Bank-funded Uganda Support to Municipal Infrastructure Development Program Project (USMID)—phase II had the largest unabsorbed portfolio of Shs203.48b.

In effect, this money was carried forward to the last financial year 2019/2020, which ended last month.
But nearly half of it has been returned to the national coffers after the Covid-19 pandemic halted any activities in the country.
Phase I of USMID started in 2013 running for five years at a cost of $138m (Shs510b, and as it neared completion in December 2018, a second phase was hastily conceived, which according to the project coordinator, Mr Isaac Mutenyo, was based “on a number of successes registered.”

“We did our midterm reviews in June 2018, and we were supposed to start phase II in January 2019, but there are a lot of protocols of project approval—locally from Parliament to Cabinet, and then the World Bank,” Mr Mutenyo said last week.
The USMID was created to enhance the institutional performance of select local governments countrywide to improve urban service delivery through, among others, infrastructure development.
The project was given a nod by government in December 2018, and after satisfying all additional conditions, it was approved by the World Bank board in Washington in April 2019.

“So, we received the first funding on June 28th when the financial year was ending, which brought about these distortions,” Mr Mutenyo told Daily Monitor.
He said no work can start until a host of preparatory activities such as environment impact assessment, detailed engineering, and resettlement action studies for each of the project have been done and approved, which consumed the last half of 2019. “So in effect, we started on phase II in February 2020. During phase II (prior to 2015 when the Public Finance Management Act came into force), we used to give local governments money and when they did not use it, they would keep but that changed; it has to be returned and then redistributed.”
While USMID II might be explicable, there are a host of local government projects whose slow progress and chronic failure to spend funds is as a result of incompetence.

A review of the Finance ministry documents indicates that absorptions have improved across the central and local government.
Mr Muwanga in his recent report noted that “it has been observed over the years that activities that are planned and budgeted for by local governments are either poorly implemented or not implemented at all, which affects service delivery, the improvement of the people’s well-being and the country’s ability to attain the National Development Goals.”