Treasury Released Ugx90bn to BOU without Guidelines

The Secretary to the Treasury Keith Muhakanizi acknowledges that he released up to Ugx30bn to Bank of Uganda under the Agriculture Credit Facility (ACF) without guidelines for three consecutive years.

Keith Muhakanizi
Keith Muhakanizi

He told the public accounts committee of parliament that the move was driven by political pressure.

The facility is an initiative set up by the government to provide medium and long term loans to projects engaged in agriculture and agro-processing on more favorable terms than are usually available from the Participating Financial institutions.

His acknowledgement was based on a task by Budadiri West MP Nandala Mafabi to explain how a project with no targets would be evaluated.

“How would you monitor something where you have not planned? There are sorts of product in commercial banks, how would you know that money sent to these banks is channeled to Agriculture?” Nandala probed.

In response, Muhakanizi explained that this was an adhoc measure meant to address an immediate problem within the agricultural sector bin the country.

He however hastens to add that although the fund helped the sector, there were glaring mistakes that need to be addressed.

“We accept the report and weaknesses that are there and we are going to take action. We know there was need for this, interest rates on agriculture were on a higher side, we were also trying to cure the problem by responding ‘adhoc ly’,” Muhakanizi said.

Muhakanizi’s justification that the monitoring is done by bank of Uganda was thrown out by the committee after Nandala Mafabi  produced a letter signed by BoU governor Emmanuel Tumusiime Mutebile indicating that the central bank wouldn’t monitor the funds with the final borrowers because it’s not under its mandate.

Committee chairperson Alice Alaso reprimanded Muhakanizi for attempting to mislead parliament that BoU is tasked with the supervision of the funds to the final borrower.

“We refuse to be misled, we take the fact that you have admitted that this mega project which getsUgx30bn every year, and was meant to relieve Ugandans is done without guidelines. This is proof of abuse in the whole monitoring,” she said.

The committee also faulted Muhanizi for not involving key stakeholders like the Ministry of Agriculture which indicated overwhelming weakness in the system.

The committee also found out that although the scheme lending arrangement needed borrowers to make monthly repayments, it was not being adhered to. It emerged that the central bank let commercial banks stay with the money for ten months without asking them for an interest.

The treasurer said he was surprised that that there was change in the period of collection and asked the committee to accord him more time to get acquainted with the change.

He said he couldn’t offer a conclusive response because the officer tasked with the scheme in the central bank was out of the country. “We were supposed to have supervised this project and we didn’t do it, I need time to answer specific questions,” he said.

However, the committee reprimanded him for abandoning tax payers’ money for over ten months with commercial banks without demanding any interest.

5 thoughts on “Treasury Released Ugx90bn to BOU without Guidelines

  1. Let him resign. I don’t know when parliament will ever make these corrupt, incompetent people accountable. If this was in United States, he would resign and at the same time be charged in court. He acknowledged that he released money due to political influence and he still has his job. Come on parliament. Are you guys playing games or wasting time.

    1. We are in Uganda let what happens in Vegas be left there. If you want to make a Point stop comparing our Country with those countries there is so much history behind their success so should we follow them? No so please reserve that at least

  2. We must learn from mistakes and make sure don’t Repeat them. We don’t seem to find solutions to stop abuse of money. Those service men are well paid how comes they make such costly mistakes to the treasury yet they keep their jobs. Loss of money means incompetence.

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