Lawmakers on the joint Parliament Committees of National Economy and Finance were left furious after discovering that the Government is set to borrow Euro500M equivalent to Shs2.008Trn to finance the 2023/2024 national budget.
This followed the tabling of three loan requests by the Minister of State for Finance (General Duties) Henry Musasizi in which the Government is seeking to borrow US$250m about Shs932.320Bn from the International Monetary Fund, another US$90M from the same Fund.
Although, it was the proposal to borrow Euro500M equivalent to Shs2.008Trn from Amarog Capital Ltd Sovereign Infrastructure Group and other financial institutions that irked MPs after discovering that Amarog Capital Ltd is a private money lender in Kenya.
John Teira (Bugabula North) questioned the capacity of Amarog Capital Ltd to provide funding to Government yet the same company has been operating in Uganda to provide private equity to firms mainly in agriculture to a tune of Shs5M, Shs10M, prompting him to task the Ministry of Finance to furnish Parliament with the due diligence report that was carried out on Amarog.
He said, “This Committee should be privy to that report so that we appreciate the drastic change on the Amalog Portfolio that has occurred in the last two years. We are suffering from the integrity issues of slipping from a tier one bank to a money lender to support our budget, I think it sounds a little offensive for the integrity of this nation and we need serious confirmation on this matter. Amarog has operated with mainly private equity especially in agriculture and small infrastructure support.”
Robert Migadde, Vice Chairperson National Economy Committee who said that the decision to seek funding from street lenders to finance the national budget is demeaning to Uganda’s rating on the international market.
He said, “The Ministry of Finance is degrading this country by going to money lenders, to people who don’t have money but they volunteer to become arrangers, so these aren’t different from brockers. Last time we had Standard Chartered Bank that failed to realize this money because one of the banks that they were supposed to access money from failed, we would have learnt from that mistake, but from Kenya, still a broker, they don’t have the money but they volunteered to broker from other lenders and we think they can raise Euro500M which we think they may not.”
He says that such a decision raises the cost of money and interest rates and isn’t good for Uganda’s ratings because Uganda shouldn’t belong to money lenders.
Muwanga Kivumbi (Butambala County) asked Government to produce the intelligence report conducted on Amarog before the agreement to seek funding from the company was agreed upon remarking, “We are requesting for the intelligence report from the Financial Intelligence Authority that looked into this company and did due delligence. He is also talking of terms because he is saying this company was compared to others, this company was compared we want to see the bid document and these were the preferred winners.”
Jimmy Akena (Lira City) tasked the Ministry of Finance to assure Parliament on Amarog’s capacity to raise these funds, noting, “None of these two give me confidence that as Uganda we are going somewhere where these funds are available. They said the FIA looked into it, I think we need to see what they checked because from their onsight, they have never handled money that we are looking for, so how are they going to help us as a country.”
Minister Musasizi informed the Committee that the decision to resort to Amarog followed an earlier failure by Standard Chartered Bank to provide the Euro273.03m about Shs1.098Trn as earlier agreed and the funding from Amarog will save Uganda Shs1.977Bn on cost of financing as compared to hitting the domestic market.
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