Government officials in Uganda have raised concerns about the misuse of loan funds by local government officials, which is undermining the country's development efforts. State Minister for Finance, Planning and Economic Development Amos Lugoloobi stated that billions of shillings are being spent servicing loans whose proceeds are allegedly being misused or stolen. This has resulted in the government being left with the burden of repaying loans while the money does not achieve its intended purpose.
The misuse of borrowed funds was a key topic of discussion at the Eastern Region Local Government Regional Budget Consultative Workshop for the 2027/28 financial year, held in Mbale. The workshop brought together local government officials from the Eastern Region, including Chief Administrative Officers, LCV chairpersons, and Resident District Commissioners. Lugoloobi alleged that some local government officials divert or steal funds meant for development programmes such as roads and agriculture.
Local Government Minister Balaam Barugahara also expressed concerns about the management of government funds in the Eastern Region. Following a recent tour of several districts, particularly in Bugisu, Barugahara discovered widespread misuse of government resources by some district leaders. This was reflected in poor infrastructure and service delivery, despite government allocations to the districts.
Barugahara cited several issues, including the illegal collection of fees in public schools, poor conditions in schools, roads, and health facilities. Specifically, he mentioned Bududa Hospital, where the maternity ward was too small to adequately serve the community. He urged district leaders to present their challenges to the Ministry of Finance for consideration in the 2027/28 budget.
In response to the challenges faced by local governments, Barugahara announced that all Chief Administrative Officers across the country would receive new double-cabin vehicles within two weeks. This move aims to facilitate monitoring of government programmes and execution of their duties. The announcement followed concerns from local government leaders about inadequate resources for monitoring and implementing government programmes.
Local government leaders also requested that the share of locally generated revenue retained by local governments be increased. They argued that allowing districts to retain more of the revenue they collect would provide them with additional resources to finance development activities, including road maintenance and administrative work.
The issue of recovering funds under the Emyooga and Parish Development Model programmes was also raised. Emmaculate Ematu, the Ngora Resident District Commissioner, expressed concerns about the recovery of funds, as some beneficiaries claim the money was provided for political reasons and therefore should not be repaid. The ministers were asked to provide guidance on how local governments should handle the recovery of these funds.
Key points
- The Ugandan government is spending billions of shillings servicing loans whose proceeds are allegedly being misused or stolen by some local government officials.
- Local government leaders are seeking additional resources and greater flexibility to address service delivery challenges in their respective districts.
- The misuse of loan funds is undermining Uganda's development efforts, leaving taxpayers with the responsibility of repaying money that has not been put to productive use.
