With Uganda preparing for 2026 elections, the country's economy is facing a crucial moment. Election cycles in Uganda have historically been marked by volatility, with political uncertainty often deterring investment and impeding growth.
As the campaign period looms closer, a key challenge facing the economy is the absence of a governor at the Bank of Uganda. The lack of leadership at this crucial institution undermines financial decision-making, raising concerns about the economy’s stability. The last substantive BoU governor, Tumusiime Mutebile, died three years ago.
In an interview, the Executive Director of the Civil Society Budget Advocacy Group, Mr Julius Mukunda, explains how the void in governance, coupled with recent mismanagement of funds, creates an environment of uncertainty that discourages investment and damages the country’s financial reputation.
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With the election coming up, what should our readers be aware of regarding the economy and the upcoming election?
As someone interested in economic management, I believe that Uganda’s elections have historically been problematic. There is often violence, which causes investors to either postpone or cancel decisions.
In a competitive election context, voter buying increases, which is concerning. The key question is: where does the money for these projects come from? Often, it is from the Treasury, and this results in political projects that are wasted once the election cycle ends, which ultimately wastes taxpayers' money.
But isn’t money being spent in the economy? People might say that it is stimulating the economy in some way. Has spending been halted in preparation for the election cycle?
It is important to differentiate what the money is being spent on. Political projects, such as short-term skills training for youth, are often poorly executed and inflated in cost. For example, a project that should cost Shs10 million might end up costing Shs100 million, and that doesn’t contribute to sustainable economic growth. It may briefly benefit some businesses, but overall, it’s not productive investment.
So, you're saying it’s not helping the economy?
Exactly. It is like giving someone money for a vacation versus investing in a factory. The vacation money is spent quickly and doesn’t bring long-term benefits. But the factory will keep producing for years, creating jobs and generating returns.
How do we prevent election-related spending from digging a hole in the National Budget?
Unfortunately, without proper governance and oversight, it’s difficult to prevent this. Right now, we lack a governor at the Bank of Uganda, which is a critical position for ensuring financial integrity. Without a governor, crucial financial decisions can’t be made effectively, and that puts the economy at risk.
Could the absence of a governor be a deliberate political decision?
I don’t know what is behind the decision, but the lack of a governor weakens our financial systems. There are clear signs of mismanagement, such as incidents where large sums of money are misappropriated, only to later mysteriously reappear.
Does this lack of oversight have consequences for investment?
Absolutely. Investors are concerned about the lack of governance. When they compare Uganda to countries like Kenya, Tanzania, and Rwanda, they see stable financial systems with proper leadership. If Uganda is seen as lacking that, it sends a negative signal to potential investors.
With an academic team at the Ministry of Finance, why isn't anyone advising the President on the consequences of not appointing a governor?
I believe they have advised him, and I don’t think the President is unaware of the consequences. He may have a different perspective on how to run the central bank, but the absence of a governor is definitely harming the economy.
So, you think the decision is causing harm, but it's a risk the President is willing to take?
Yes, it seems like a calculated risk, but the consequences are already becoming apparent. We need a governor, and we needed one yesterday.
Let’s talk about illicit financial flows. Are there any examples where such flows have undermined our election process?
One example is the gold export situation. Over 50% of Uganda's exports are gold, but we don’t have a gold refinery capable of processing that gold. We also can’t trace where the gold is coming from or where the proceeds are going, which raises suspicions of illicit financial flows.
Can Uganda benefit from money that comes from illicit trade or activities?
While it is true that money from illicit activities, such as ivory trade, might eventually flow into Uganda and contribute to the economy (for example, through factories that create jobs), the moral cost of benefiting from such money should not be overlooked. Engaging in illicit trade creates a slippery slope and raises ethical concerns.
That sounds like a significant concern. Are there other similar issues?
Another example is Uganda’s coffee export data. A large percentage of our coffee ends up in Italy, yet Italy doesn’t have significant coffee production. This suggests that much of the coffee being exported is being rerouted through other countries.
That doesn’t sound good. So, what do we do to address this?
We need greater transparency and accountability in how we track exports, investments, and financial flows. If we don’t have clear data on where our resources are coming from and where they’re going, it becomes nearly impossible to address illicit financial flows or prevent them from affecting our economy.
How does money in the hands of very few people hurt the economy?
When money is concentrated in the hands of a few, the gap between the rich and poor widens. This lack of wealth distribution fuels corruption, as the wealthy can use their money to influence decisions, buy judgments, and shape policies that suit their interests.
Additionally, it disrupts the market, as we see inflated land prices in Kampala, where money laundering causes the cost of land to skyrocket.
Why are land prices so high in Kampala?
Land prices are inflated because wealthy individuals, who may have illicitly acquired money, use these funds to invest in land, often overvaluing it. This serves as a way to "launder" money, especially since it can’t easily be banked or moved offshore due to tight regulations.
How do supermarkets play into the economy?
Wealthy individuals may build supermarkets as a way to store their money. Often, the lower floors are filled, but the upper floors remain vacant. The illusion is that the wealth originates from legitimate business ventures, like the supermarket, when in reality, it might stem from illicit sources.
Why is the government reluctant to conduct lifestyle audits?
Lifestyle audits would expose the sources of wealth for many individuals in power. If investigations into property ownership and money sources were conducted, it could lead to difficult questions regarding how people in government accumulate their wealth, especially when it may be tied to corruption.
How can we break the cycle of corruption and immoral governance?
Breaking the cycle requires respecting systems. Even when systems are in place, individuals feel entitled and break the rules because there is no accountability. For example, if national service delivery standards mandate that government vehicles should not exceed certain specifications, but those standards are disregarded, it signals a lack of respect for systems, leading to more corruption.
Why are citizens not more involved in the budgeting process?
There is increasing apathy among citizens because many feel disconnected from the government. People see the government benefiting itself through corruption, and this alienates them. For instance, even though government funds are used to build infrastructure like markets, citizens may not participate in using these services because they believe the government has failed to serve their interests.
How can citizens better engage in the budgeting process?
Civil society organisations need to educate citizens that government services belong to them, not just to elected officials. Citizens must be made aware that if services are not functioning, they are the ones who suffer the most. Engaging people in the budgeting process ensures they understand how government spending impacts their lives and holds the government accountable.
How can government improve public service delivery?
The government must improve the quality of its services and show respect for citizens. If citizens see that their concerns are acknowledged and that the government is taking steps to rectify issues, it could rebuild trust. Furthermore, enforcing quality standards in government services can help improve service delivery.
How can we ensure standards are followed in government service delivery?
The Ministry of Public Service sets benchmarks that define how services should be delivered, such as the number of chairs in a classroom or the type of supplies government entities should use. Citizens should be aware of these standards so they can hold the government accountable when things go wrong.
Without clear standards, there's room for misuse, like unnecessary luxury purchases, such as a jet instead of standard government vehicles.
Are the national service delivery standards well-known?
National standards do exist and they set clear guidelines for government services. However, many citizens are not aware of these standards, making it difficult for them to hold the government accountable. It’s crucial for citizens to understand these benchmarks to ensure the government operates transparently and effectively.
How are government standards set for service delivery?
The Ministry of Public Service sets standards that outline how services should be delivered, such as the types of supplies (pens, laptops) and infrastructure (roads, classrooms) the government should use. These standards are costed, meaning there is a clear guideline on how much should be spent on these resources.
What happens when these standards are not followed?
When government standards are ignored, it can lead to inefficiencies and corruption. For example, an officer might use a Land Cruiser, which is beyond the standard allocation for their position. The lack of adherence to standards results in discrepancies across departments and agencies.
Why are public salaries sometimes inconsistent with the established standards?
The government has distorted the service structure, leading to discrepancies in salaries. For example, a driver in a government agency can earn more than a commissioner, which deviates from the expected pay scale.
How do mushrooming government agencies affect standards?
The creation of additional agencies, such as parliamentary commissions or new anti-corruption bodies, leads to divergent standards. These agencies often set their own rules, causing a lack of consistency across the government, and ultimately, weakening the enforcement of national standards.
Is the current oversight system adequate for enforcing these standards?
While there are agencies tasked with enforcing standards, like the Inspector General of Government (IGG) and the Auditor General, there has been a proliferation of agencies involved in corruption control. This has diluted the focus and effectiveness of the enforcement of international delivery standards. More agencies and their complexity make it harder to uphold the standards.
What needs to change for the system to improve?
The key change lies in strengthening Parliament, which currently lacks the power to enforce the standards effectively. Citizens also play a critical role in holding elected officials accountable for their actions. Without active citizen participation, it is difficult to bring about change.
Is the challenge mainly political?
Yes, the challenge is political. There is a need for citizens to elect accountable leaders and actively participate in the change process. If citizens do not hold their leaders accountable, it becomes difficult to implement effective change, allowing corruption to thrive.
Why do Ugandans sometimes elect politicians who are not held accountable?
Often, Ugandans elect popular candidates who may not necessarily deliver on their promises. This election is more about sticking it to the government, rather than ensuring the candidate is capable of fulfilling their duties. The lack of concern for whether these leaders deliver or not makes it difficult to hold them accountable.
Government standards are established across various sectors, specifying the kind of services that should be delivered to the public. These standards even outline the costs for items like pens or road construction. For instance, there are guidelines on how much the government should pay for laptops for staff.
While these standards exist and are costed, the real challenge lies in the lack of respect for these systems, which exposes them to the risk of non-compliance.
Yes, there is a clear standard. For instance, an officer at a certain level should follow a guideline that specifies they should purchase a certain brand or type of vehicle, like a Land Cruiser.
Yet, we often see this not happening. There’s a standard in place, such as the guidelines for storage structures, which states how much money should be allocated depending on the position. But now we’re seeing the government distorting these standards, such as giving science teachers more money than others. This means we need to revisit and revise these standards.
Who is responsible for enforcing these standards? Is the president aware of them, or does it just become an executive order?
The President is the head of government, so this falls under his leadership. But it’s also clear that the government itself has distorted the service structure by introducing policies that alter these standards.
So, in the case of the Uganda Registration Services Bureau, are they subject to these standards?
Yes, they should be. Any entity that gets money from the public, whether from the treasury or through other means, is supposed to follow these standards. However, the abuse of these standards often goes unnoticed.
How have the creation of agencies affected adherence to these standards?
The emergence of new agencies has distorted these standards. For example, the Parliamentary Commission decided to create its own standards, separate from the government’s. This fragmentation weakens the overall consistency of the government’s standards. Now, each commission or agency has its own set of rules, leading to a lack of uniformity.
Isn’t the number of anti-corruption agencies in the country is growing each year?
Yes, there has been an increase in the number of corruption-fighting agencies in the country. We started with constitutional bodies like the IGG, the Office of the Auditor General, and others. Now, the State House has several anti-corruption agencies focusing on specific sectors, like land and health. This expansion only further complicates adherence to international delivery standards.
Can we ever break out of this cycle?
To break out of this, I believe we need a stronger Parliament. Right now, Parliament is weak and often contributes to the problems it should be overseeing. But more importantly, citizens must become active participants in demanding change.
If citizens don’t understand their role and don’t hold their elected officials accountable, then it will be difficult to change anything. The system needs active involvement from the people to ensure the standards are respected.
That sounds like a political statement. Are you suggesting that citizens need to become more politically engaged?
Yes, it’s all about the people electing responsible individuals and holding them accountable for what they’ve delivered. If citizens don’t participate in ensuring that their leaders stick to the standards, then the problem will persist, no matter who’s in power.
But isn't the problem that many Ugandans don't care about the effectiveness of their MPs as long as the person they elect is popular or perceived to be "spiting the government"?
Exactly. People are more focused on the symbolic act of electing someone popular or someone who they believe will challenge the government. But they should care about whether that person can actually deliver on their promises and make a real difference. We need to encourage citizens to actively participate and demand more from their leaders.