Donors freeze aid over corruption

By John Njoroge

The governments failure to act on high level corruption will have implications, and donors under the Joint Budget Support Framework are currently considering a range of actions. This may include withholding disbursements, reductions in aid or re-programming away from direct budget support.

These were the final remarks of the World Banks Country Manager Kundhavi Kadiresan during a meeting with the government of Uganda in March this year. Kadiresan had led a delegation of diplomats and development partners to meet the government team to discuss among other things, high level corruption in regard to funds spent on the Commonwealth Heads of Government Meeting o (CHOGM) of 2007. President Museveni did not attend the meeting. Development partners are particularly concerned about government failure to take effective action against high level corruption in the country, Kadiresan told the government delegation.

These remarks may not have come as a shock to government. On several occasions, donors have threatened to cut or completely withdraw support to some sectors of government due to corruption and lack of transparency.

Even as Kadiresan was giving those remarks, donor funding cuts had already begun. In late 2008, the Netherlands Embassy withdrew from funding the Ministry of Education over a textbook scandal. The embassy had given the ministry money to procure textbooks for schools in northern Uganda.

The procurement was flawed and the ministry did not account for the funds. This prompted the embassy to contact its home government in the Netherlands. After several consultations at home, the embassy withdrew its entire support to the ministry of education until government accounted for the money or apprehended the culprits.

Its not only the Ministry of Education that has irritated donors for failing to account for money given to it. The Uganda National Farmers Federation (UNFFE) is one of several other culprits facing aid cut for corruption. According to a letter Refund on project; Increasing farm household incomes in West Nile, Lango and Teso production systems, dated March 15th, 2010, the Head of Development Cooperation Marille Geraedts, wrote to the UNFFE president Frank Tumwebaze expressing displeasure at the federation’s failure to refund 17,312. Geraedts wrote on behalf of the Netherlands Ambassador. The money was part of € 460,000 disbursed over three year for a Northern Uganda farming project run by UNFFE.

In our letter of 6 November 2009 we urged UNFFE to refund this amount before 31 December 2009. We note that this has not transpired and we consider UNFFE to be in breach of the contract between EKN and UNFFE, the letter reads in part.

“If the outstanding sum of € 17,312.39 is not repaid to this embassy before 1 May 2010, we will proceed to dissolve our contract. This will imply that we will require repayment of the entire sum of € 460,000.00 transferred by this embassy so far. We have forwarded this case to the appropriate authorities in the Netherlands and are awaiting instructions on how to proceed,” the letter concludes.

It’s not only donors who are disturbed by UNFFE’s lack of accountability. The federation has been rocked by administrative wrangles. Some of its top executive members accuse their president Tumwebaze of arrogance and flouting the federations mode of operation. They also accuse him of abusing UNFFE’s funds. Tumwebaze is also MP for Kibaale. The UNFFE executive requested the Netherlands embassy to provide them with competent auditors to look into the federations books of accounts. However the embassy refused. In your letter you suggest that this embassy helps UNFFE with our own auditors to look into the misuse or diversionof the funds under this project. We decline this suggestion. Further auditing will be inconsequential for our conclusion, acknowledged by Mr Katumusiime and yourself that project funds have been diverted in breach of the terms of our contract,” the embassys letter reads.

The federation requested for up to July 1st this year to refund the missing € 17,312, but the Netherlands embassy flatly rejected the plea. In his letter, Mr Katumusiime asks us to extend the grace period up to July 2010, in order to allow UNFFE to mobilise the required resources. We cannot accept this proposal….. Any other settlement beyond swift repayment of the money due will therefore not be credible or acceptable, Marille Geraedts wrote.

The UNFFE has not refunded the ‚17,312. This means, according to the contract, UNFFE will have to refund the total of ‚¬ 460,000 it received for the whole project. Some executive members of the federation had supplied copies of letters to the donors complaining of raging mismanagement and misappropriation of the federations funds. The allegations pointed at Tumwebaze.

Riled by UNFFEs misuse of aid funds, the Netherlands embassy also circulated an email to the federation’s other development partners informing them about the matter.

As part of EKNs private sector development programme which is currently in the exit-phase, we used to fund the Uganda National Farmers Federation. Unfortunately this funding arrangement ended with a dispute over € 17,000 which had been allocated to an activity other than what it was intended for. Repeated requests for refunds proved to be of no avail. We therefore were forced to dissolve our contract with them and are investigating subsequent steps. In the spirit of donor coordination we would like to share this communication with you, to inform your consideration of any funding proposals by this organisation,” the email reads.

With this communication, it has since become impossible for UNFFE to get funding from its other development partners except the Uganda government.

Thats not all for UNFFE. For five months now, UNFFE employees have not been paid salaries, a donor funded component. Melle Leenstra, the Political Affairs and Trade Officer at the Netherlands Embassy confirmed that the embassy had terminated its support to UNFFE but declined to comment on the Head of Development Cooperation Geraedt letter to Tumwebaze. We are conducting additional inquiries into the misapplication of the funding extended to the UNFFE. We are also in contact with its executives over the matter and will communicate at a later date after we have been appropriately advised by our ministry headquarters in the Netherlands, he said.

He declined to comment on the freezing of aid to the Ministry of Education.