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Local Government minister Raphael Magyezi (centre) commissions garbage equipment in Gulu City in October 2022. PHOTO/TOBBIAS JOLLY OWINY
|National
Prime
How trillions are lost at local govt level
What you need to know:
- Accounting officers are faulted for not verifying staff lists to ascertain the right amounts of money to be deducted.
The latest House report by the Public Accounts Committee (PAC) has unearthed a series of illegal, suspicious and fraudulent operations in local governments across the country.
The report, based on the Financial Year 2020-2021, collated information from 49 districts, six cities and five municipalities.
The cities spotlighted included Mbale, Gulu, Soroti, Masaka, Arua and Hoima while municipalities were Masindi, Kitgum, Moroto, Nebbi, and Koboko.
“There were vivid cases of over and under-remittances and non-remittance in some cases. Additionally, there were delays in remitting these funds for over 55 days as reported in Obongi District Local Government,” the report said in part.
Whereas 84 local governments deducted Shs259.65 billion to be remitted to the different beneficiaries, there were over-remittances of Shs2.16 billion and under-remittances of Shs7.33 billion.
Accounting officers were faulted for not verifying staff lists to ascertain the right amounts of money to be deducted.
It was also discovered that 48 local governments made unauthorised loan deductions totalling Shs11.1 billion. The deductions in question sprouted from 6,835 employees that lacked letters of consent.
It also came to light that 23 of the 48 local governments registered 1,916 employees with deductions totalling Shs3.77 billion that did not exist in the Payroll Deduction Management System (PDMS), operated by PCA-Payroll Consults Africa.
PAC was informed that some of the credit lending institutions extended loans to teachers’ SACCOs where, upon subsequent repayments, were effected to all teachers whether or not they applied for loan facilities.
In Kalangala District, for one, the committee noted that unauthorised loan deductions totalling Shs100.753 million from 57 employees did not have letters of undertaking.
Ghost payments
Delays to delete either deceased or retired staff from the payroll caused losses of more than Shs4 billion. In Gulu City, a delay to delete 20 staff created a Shs64.323 million blackhole.
Up to Shs39.616 million was paid to 11 staff who had either retired, transferred services, absconded or died in Gulu District.
In Lira District, the delays resulted in payments amounting to Shs14.683 million to eight staff who had ceased rendering services to the entity.
If it wasn’t ghost workers, it was a failure to deduct Pay As You Earn tax (PAYE) that was creating a blackhole.
Some accounting officers also advanced payments to the personal accounts of staff to implement activities. In Gulu, one such accounting officer authorised payment of Shs34.45 million to some staff’s individual bank accounts to facilitate the execution of several council activities.
There were also episodes of overpayment and underpayment of staff. In Lira District, over and underpaid staff salaries amounting to Shs115.3 million and Shs131.175 million respectively.
By closure of FY 2020-2021, salary arrears in the northern district amounted to Shs45.1 million.
The accounting officer is believed to have used Shs5.5 million to correct the anomalies.
Having a financial statement with a balance sheet adjustment of Shs192.5 million, Kole District failed to account for Shs349.5 million it spent on staff advances and fuel deposits.
This followed what PAC described as “laxity on the side of the accounting officer.”
The laxity continued to show itself true when the district charged Shs639.9 million on items which did not reflect the nature of the expenditure.
Govt response
Local Government minister Raphael Magyezi says a proposal for the appointment of a new Local Government Finance Commission has been submitted to the Cabinet. This, Mr Magyezi adds, is to address the litany of ills illuminated by PAC.
He, for instance, described the disbursement of funds to individual staff bank accounts as “tempting to local government staff.”
“Except for field staff allowances, funds for council activities are to be paid directly to service providers,” he declared.
PAC also discovered that 74 percent of the expenditure of Local Governments is on non-core activities such as employee costs and transfers to other units.
Development expenditures and services, the committee added, get the short end of the stick. Mr Magyezi consequently urged “all stakeholders in the budget process to refocus attention on grassroots development financing.”
He added that “government socio-economic transformation programmes such as the Parish Development Model, Emyooga, among others, are [a step] in the right direction.”
Mr Magyezi also asked accounting officers to “protect staff from manipulation, connivance, stringent repayment conditions and loan commitments beyond their capacity to repay [after they take out] multiple loans on high-interest rates.”
In a sorry state
The Local Government minister conceded that the state of District Urban and Community Access Roads (DUCAR) is in a sorry state.
“They are poorly maintained in virtually all districts and urban councils, mainly due to inadequate financing of road maintenance,” he said, adding: “The big towns especially the cities and municipalities require additional resources because of the high cost of maintenance.”
While releasing Shs1.558 trillion to local governments for the third-quarter of the current FY, Mr Ramathan Ggoobi—the Finance ministry’s permanent secretary, who is also secretary to the Treasury (PSST)—decried the poor planning of local government accounting officers.
This followed revelations last year that a number of government workers were going months on the job without pay.
In the Financial Year 2020-21, Parliament appropriated a total sum of Shs2.096 trillion to 60 local governments which is equivalent to 50.5 percent of Shs4.148 trillion of the total funds appropriated for all local governments in the year.
Overall, the local governments underperformed as far as local revenue registration is concerned. They collected Shs30.4 billion of a targeted Shs68.2488 billion, putting local revenue performance at 56 percent.
Glaring mistakes
PAC’s report also revealed that Moroto District contracted Union Innovation Company Ltd at Shs138.71 million to rehabilitate its commercial office block. Despite Shs121.82 million (88 percent of the total) being paid, the facility remained incomplete with several civil defects.
It is also noted that the district applied selective bidding contrary to Section 34 of the Local Government PPDA Regulations, 2006, in procuring contracts above Shs243.62 million.
Contracts worth Shs157.38 million were also awarded without powers of attorney with Uganda Registration Services Bureau.
Elsewhere, another contract valued at Shs334.73 million was not implemented despite being planned for. Procurements worth Shs171.39 million were also discovered to lack terms of delivery of contracts.
In Napak District, the committee discovered variances between amounts on the payroll and payments to individual pensioners, leading to underpayments of Shs274.44 million.
The district also spent over Shs190.3 million on fuel for its vehicle fleet, but failed to produce a fuel register to trace fuel consumption at the various fuel stations and link the same to the logbooks.
The Napak LG also awarded contracts for procurements worth Shs51.58 million without registered powers of attorney with Uganda Registration Services Bureau.
In December 2020, the district contracted Jopal Investments and Logistics Ltd to construct a staff house and two stance-lined pit latrines with bathrooms at Naiku HCIII worth Shs192.16 million.
But by October 2021, electrical installations had not been done, plumbing works and bathroom fittings had not been installed and a water tank (2500 litre capacity) had not been supplied and installed.
Leakages galore
In May 2019, Bau Technical Services Ltd, a contractor for Bubentsye Seed Secondary School embarked on the Shs845.94 million one-year project.
But by November 2020, the science laboratories were still incomplete, rainwater gutters had not been fixed and the drainage channels were still incomplete. The toilets were meanwhile still under construction and the windows and doors for the ICT laboratory had not been fixed.
During the routine mechanise maintenance of Tooma-Buwalasi Road (4 km) valued at Shs11.42 million, PAC’s onsite visit uncovered collapsed culvert lines that left the affected sections of the road flooded.
In Nakasongola, the report reveals that Shs4.3 million was illegally paid to non-health facility workers as consolidated health allowance while Shs3.6 million was paid to un-entitled staff as lunch allowance.
In the neighbouring Nakaseke District, in the Shs121.1 million upgrade of a General Ward at Butalangu HC III, PAC remarked that Hest Engineers Company Ltd—the contractor—had only delivered two delivery beds, one patient bed and mattress and a few plastic chairs, at the time of the audit. The contractor also did not install electricity and water.
In Gulu City, the authorities could not account for Shs262.36 million it paid to individual staff personal bank accounts to implement several council activities instead of paying them to eligible suppliers and service providers.
Way forward
To curb such shenanigans, Mr Ramathan Ggoobi, the Finance ministry’s permanent secretary, who is also secretary to the Treasury, ordered this week that accounting officers “must ensure timely submission of performance reports.”
He also said that “the national identification numbers will be used in the confirmation of payment of wages.” “Failure to adhere to this, the service providers should turn off services to the non-compliant votes,” Mr Ggoobi decreed.