PARLIAMENT OF

REPORT OF THE BUDGET COMMITTEE ON THE SUPPLEMENTARY EXPENDITURE SCHEDULE NO. 2: ADDENDUM 2A AND ADDENDUM 3 FOR FY 2O19I2O

Office of the Clerk

May 2O2O

\p6) 1.O INTRODUCTION Rt. Hon. Speaker, Government has so far laid before Pariiament supplementary expenditure requests for FY20L9/2O under the following Schedules:

o On 3.d December 20 19, Schedule No.1 amounting to Shs 437.631 billion which is 1.O87o of the approved budget for the Fy 2OL9 /20. . On 3.d March 2O2O, supplementaryexpenditure estimates under Schedule No.2 amounting to Shs 662.337 billion constituting --o/" of the budget. . On 19th March 2O2O, addendum No. 1 to Scheduie 2 amounting to Shs 749.a2O billion of which we offset 90bn allocated to vote OO2 (State House),shs 6.98bn allocated to vote OO3 (OPM) and shs 4.O75bn ailocated to vote 001 Office of the President (Land Inquiry Commission) all coming under the 3% legal provision, giving a balance of shs638,878r692r30s requiring prior parliamentary approval . On 31"t March 2O2O addendum 2 to schedule 2 amounting to shs 284bn to cater for interventions in combating the COVID 19 Pandemic . On the 3 1st March 2O2O addendum 2A to Schedule 2 for the FY 2019 l2O of Shs. 2,4081360100. . On the 2"d April 2O2O addendum 3 to Schedule 2 for the FY 2019 /2O of Shs. 16.576 billion.

The supplementary estimates were referred to the Budget Committee for scrutiny and reporting to the House thereto.

Before introducing the three addenda above, Ministry of Finance Planning and Economic Development had exhausted the 3% statutory iimit provided under section 25 of the Public Finance Management Act, 2015. The supplementary requests presented in this report require prior approval of Parliament before the funds can be released to the respective agencies by the Ministry of Finance, Planning and Economic Development.

Rt. Hon Speaker, the report of the Committee is presented in two parts as follows:

1. Part A: Presents the Methodologr, Legal Framework, Status of Compliance and Preiiminary Observations

2. Pafi B: Presents the proposed Supplementary Estimates under Schedule No 2: KCCA; Addenda 2A and 3 for the FY 2OL9/2O; Observations and Recommendations

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2 LD-rL> PART A

2.O METHODOLOGY

The Committee scrutinized the Supplementary Schedules and held meetings with the foliowing MDAs in the effort to obtain additional information and justification for the expenditure: 1. Ministry of Finance, Planning and Economic Development; 2. Ministry of and Metropolitan Affairs KCCA 3. Management of Uganda Industrial Research Institute; including a visit to the industrial facility at Namanve. 4. Ministry of Gender, Labour and Social Development

3.O LEGAL FRAMEWORK

Article 156 (2) of the Constitution of the Republic of Uganda states that 3'If in respect of ang financial gear it ls found. that the annount appropriated. for ang purpose und.er the Appropriation Act is insufficient or that a need has o'risenfor expend.iture for a purpose for whtch no amourtt has been appropriqted. bg that Act; or that ang monies haue been expend.ed. for ang purpose in excess of the amount appropriated. for that purpose or for a purpose for uthich tto amount has been appropriated. bg that Act, a supplementary estimate shouting the sums required. or spent shall be laid. d.oun before Parliament, utithin four months after the moneg ls spent."l

The above article is operationalised under Section 25 of the Public Finance Management Act, 2015 which provides as follows;

(1) That the tota.l supplementary expenditure tho,t requires ad.ditional resources ouer and aboue uthat is approued by Parliament shall not exceed. 3% of the total approued. bud.get for that tinancial gear, without approaal of Parliament.

(2) Where fund.s are expend.ed. und.er subsection (7), supplementary estimates showlng the sums spent shall be laid. before Po,rliament within four months after the moneg is spent,2

Furthermore, Regulation 18(5), (6) and (7) of the Public Finance Management Regulations 2016 provide as follows:

(51 "Parlio,ment mag approue a supplementary appropriation or the Minister mag approue a supplementary bud.get, as the case mag be, uthere the supplementary expe nditure is unauoid.able or unforeseeable."

(6) For the purposes o.,f this Regulation;

156 (2) of the Constitution of the Republic of Uganda 25 of the Public Finance Management Act, 20 15

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nl 2.O METHODOLOGY

The Committee scrutinized the Supplementary Schedules and held meetings with the following MDAs in the effort to obtain additional information and justification for the expenditure: 1. Ministry of Finance, Planning and Economic Development; 2. Ministry of Kampala and Metropolitan Affairs KCCA 3. Management of Uganda Industrial Research Institute; including a visit to the industrial facility at Namanve.

3.O LEGAL FRAMEWORK

Article 156 (2) of the Constitution of the Republic of Uganda states tbat ulf in respect of ang Jinancio,l gear it is found. that the amount appropriated. for ang purpose und.er the Appropriation Act is insufficient or that a need. has a,risen for expend.iture for a pufpose for uthlch no amouttt has been appropriated by that Act; or that any monies haue been expend.ed. for any purpose dn excess of the amount appropriated.for that purpose or for a purpose for uthlch rto o.mount has been appropriated. bg that Act, a supplementary estimate shouting the sums required. or spent shall be laid. down before Po,rliament, within four months after the moneA is spent."l

The above article is operationalised under Section 25 of the Public Finance Management Act, 2Ol5 which provides as follows;

(1) That the total supplementary expenditure that requires ad.d.itional resources ouer and aboue uhat is approued. bg Parliament shall not exceed 3o/o of the total approued. bud.getfor thattinancial Uear, utlthout approual of Parliament.

(2) Where fund.s are expended. und.er subsection (7), supplementary estimates showing the sums spent shall be laid. before Parliament utithin four months after the moneg is spent.z

Furthermore, Regulation 18(5), (6) and (71 of the Public Finance Management Regulations 2016 provide as follows:

(5) "Parllo,ment mag approue o supplementary appropriatton or the Minister mag approue a supplementary bud.get, as the ca.se mag be, where the supplementary expend.iture is unauoid.able or unforeseeable."

(6) For the purposes o.f this Regulation;

lArticle 156 (2) of the Constitution of the Republic of Uganda 25 of the Public Finance Management Act, 2015

3 A.)l)'J >\ (a) "unauoid.q.ble" meants an expenditure that co,nnot be postponed to the nextJinancial gear through airementl

(b) "unforeseeable" d.oes not includ.e an expend.iture that u)as foreseeable bg the uote at the time of preparation of the budget of the uote or o,tt expenditure thq.t should. haue been includ.ed. in the bud.get of the uote

(7) Ang expenditure, which is fn excess of the appropriated. bud.get of aote and. which is not in accordance with this section shall be treated. cs loss of public fund.s as proaid.ed. for under section 79 (1) of the Act.3

4.O PRELIMINARYCOMMITTEE OBSERVATIONS 1. The Committee observed that the Supplementary Expenditure Schedules were laid in accordance with Section 25 of the PFMA 2015.

2. T}:e Committee noted that the totai Budget for Financial Year 2Ol9 /20 is Shs 4O,487,9O3,335,OOO trillion of which Shs. 27,957,163,419,000 Trillion was appropriated by Parliament while Shs. 12r53O.7 billion Trillion was approved as statutory expenditure. The Ministry of Finance, Planning and Economic Development is taking advantage of the astronomical increase in the annual budget ceiling that has provided more Iiscal space for suppiementary expenditure under the 3% window provided by the legal regime.

3. The committee is concerned about the growing number and frequency of supplementary requests as evidenced above. This worsening trend undermines the credibility of annual planning and budgeting as entities appear to be avoiding detailed scrutiny during the normal budget process in favor of supplementary budgeting whose expenditure can be allowed to take effect prior to the approval of parliament. It is a known fact that through supplementary spending, government has suppressed the approved annual budget in favor of funding supplementary expenditure. This practice needs to be discouraged by providing written guidelines to the government. These guidelines are being developed by the committee for presentation to the house for approval.

PART B

5.O PROPOSED ADDITIONAL SUPPLEMENTARY REQUESTS THAT REQUIRE PRIOR PARLIAMENTARY APPROVAL UNDER SCHEDULE NO. 2 FOR THE FY 2Ot9l2O

The additional Supplementary expenditure requests presented to the House for prior approval under Schedule No. 2 consist of the

18 of the Public Finance Management Regulations 2016

4 U"l'lto (a) Vote OO8 MFPED: Ushs. 3.9 billion (b) Vote OO8 MFPED: Ushs. 1.9 billion (c) Vote 122 - KCCA: Ushs 10 billion (d) Vote 110 UIRI: Ushs. 10 billion (e) Local Governments: Ushs.O776 billion (f) Vote 5O1 - Local Governments: Additional co-funding of Shs 9.O62bn for UGIFT. (g) Vote O18- MoGLSD: 2.408 billion

5.1 JUSTIFICATION FOR THE PROPOSED FUNDING af Vote OO8 Ministry of Finance, Planning and Economic Development- Ushs. 3.9 billion: The Committee was informed that in FY 2O7912O, Ushs.2.8bn was appropriated for the Privatization Unit. The amount included Ushsl.Sbn for Wages and Ushs1.3bn for non-wage to supplement the funding from the divestiture account. However, following the transfer of all divesture funds to the Uganda Consolidated Fund Account, the appropriated amount of Ushsl.Sbn was not sufficient to cover the salaries for the whole Financial Year. The Committee observed that the Privatization Unit had outlived its usefulness as most of its activities can be adequately absorbed in other government institutions. Its continued existence is an unnecessary liabiiity to the government. The committee therefore recommends that a total of Ushs 1,090,845,255 to cater for salaries for five months from February to June 2O2O be approved. The plan for winding up the Unit and the repealing of the PERD Statute should be expedited and presented to Parliament for necessary action. No further request for funding will be approved for the Unit by Parliament. b) The Committee was informed by the Ministry of Finance that the request for a subsidy of Ushs. 1.9 billion to settle the outstanding energ:f bills for Fine Spinners and Nyanza Textile Mills was withdrawn from the supplementary schedule. c) Vote L22 - Kampala Capital City Authority: Ushs 1O billion: The Committee was informed that KCCA was in the FY 2019/2A given an indicative figure of Shs. 30.5 billion for road maintenance but only received Shs. 22.3 billion to carry on routine road maintenance in the City. The shortfall together with the heavy rain have resulted into severe damage to the City road network which needs urgent intervention to keep it motorable.

The Committee further learnt that KCCA engaged Ministry of Finance and were assured of funding through a supplementary expenditure. Basing on this assurance, the Authority committed and undertook road maintenance works on the following roads; Upper Kololo Terrence, Queensway, pothole patching on affected roads like Wilson Road, Sikh Road, Channel Street, J , Lubiri Ring Road, Sir Apolo Kagwa, N , Kissasi

5 +e4) rR Road, Bukoto Ntinda, Ntinda Kiwatule, street lighting, draining maintenance and road marking. The Authority will also undertake the much needed maintenance works on Mutungo Tank Road, Cecilia Road, Naguru Close, Ggaba Bypass Road and also continue with road maintenance activities in all Divisions. The Committee recommends approval of Shs. 1O billion to address payments for the road maintenance works under KCCA. d) Vote 110 Uganda Industrial Research Institute (UIRII, the committee was informed that Ushs. 1O billion is required to operationalize the machining, manufacturing and industrial skills training centre at Namanve.

The committee was informed that in 2014, UiRi secured a grant of USD 30 million from the Government of The People's Republic of China for the establishment of a Machining, Manufacturing and Industrial Skills Training Center (MMISTC), at Kampala Industrial Business Park, Namanve. As part of the grant 17 building structures at the campus have been constructed, machines and equipment installed. The Chinese contractors handed over the center to Government of Uganda in December 2019 well before the contract period of two years eiapsed. The plant was commissioned by H.E The President in January 2O2O without funding to operationalize the project.

The Project is expected to perform the following: i. Enhance industrial skills by providing platforms for hands-on training and apprenticeship; ii. Engage in modern methods of machining and manufacturing of metallic parts, accessories, and implements, as it progresses towards manufacturing of machines; iii. Create capacity for development of indigenous technologies and reduce technologz import bill; and iv. Manufacture products and provide allied services for the market so that revenues generated can be used to sustain the project and contribute to government coffers.

The Committee visited the Centre on Friday 15m May 2O2O and found that all the L7 buildings were completed and machines and equipment installed. The Centre however, required the support in order to become operational. The breakdown of the expenditure request is as follows:

Table 1 RECURRENT BUDGET Item Description Budget(UGX) t000) 1 Spares, tools and consumables 1,338,660 2 Installation of an appropriate transformer and payment of 1,140,000 accumulated utility bills for water, electricity, gas and fuels

6 3 Procurement of professional services to work on specialized 581,040 machines, training at site, and capacity building for production operations 4 Maintenance of machinery and civil works 769,800 5 Landscaping, earth works and protection of sensitive 1,850,000 equipment Sub-Total for recurrent budget 5,679,50O

DEVELOPMENT BUDGET 6 Additional equipment not covered in the scope of grant from 1,35L,500 China 7 Procurement of foundry production equipment 969,000 B Procurement of ICT equipment for the facility 1,000,000 9 Procurement of transport services and Iogistics 1,000,000 Sub-Total for Development budeet 4,320,500 Total Budeet 10,000,000

The Committee was further informed that UIRI had started procurement processes for acquisition of required goods and services this FY. Therefore, the institution will be able to absorb all the funds within the month to end of the FY2O 79 /20, since all priority activities are ready for implementation. The Committee recommends that Shs. 10 billion be provided to UIRI to operationalize the machining, manufacturing and industrial skills training Centre at Namanve. e) Local Governments Suppiementary to cater for additional Ushs 0.776 billion Local revenue collected by Luwero District (Ushs O.S5billion) (Ushs O.OB billion) and (Ushs O.15 billion|. The committee recommends that the funds be approved as proposed.

Vote 5O1 - Local Governments Additional co-funding of Shs 9.O62bn for Uganda Inter-governmental Fiscal Transfer (UGIFT) to Local Governments for respective Seed Secondary Schools and upgrade of Health Centre IIs to Health Centre IIIs as a Government policy.

Table 2: Allocation of Ushs. 9,062,697,577 Supplementary Estimates by Vote Seed School and Health Centre

Apac District Project: Upgrade of health Centre II Olelpek Health Centre 502 385,000,000 ff ,i,,xgit*i#:*;oa&a$,; tmi.,r; .;i;i i;;ii: .385:0OH0U0lt

Busia District Majanji Health Centre 507 Project: Upgrade of health Centre II il 76,552,7

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,t-dA-u 1 Locatlon ' Amouut

Kanungu District Project: Construction of Seed Secondary Katete Seed School Secondary School 713,000,40i 519 health II Matanda HC II Project: Upgrade of Centre 3t9.597,562

Katakwl District s22 Project: Upgrade of Aliakamer HCII Aliakamer HCII 28,906,728

Kyenjojo District Myeri and Project: Funds Monitoring UGIFT for Kayankaramata HC 530 Projects Under Health 23,699,882 IIs

Masindi District Project: Construction of Budongo Seed Budongo Seed 87,O79,797 534 Secondary Secondary

Moyo District Project: Construction of Dufile Seed Dufile Seed Secondary 539 27,717,336 Secondary School School

Yumbe District Project: Construction of Lodonga Seed Lodonga Seed 507,866,094 Secondary School Secondary School 556 Project: Upgrade of Kerwa HC II Kerwa HC II 3,636,922

Mityana District 568 Project: Upgrade of Namungo HC II Namungo HC II 4,735,O75

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\)r2-$/ s72 Project: Upgrade of Atura HC II Atura HC II 724,371,745

Amudat District Project: of Karita Seed Girls Girls Construction Karita Seed 426,700,OOO 581 Secondary School Secondary School

Kyegegwa District 584 Upgrade of Karwenyi HC Karwenyi HC 370,786,630

Lamwo District 585 Project: Upgrade of Katum HC II Katum HC II 346,662,400 Paloga Seed Project: Paloga Seed Secondary School 456,652,O0O Secondary School

Otuke District 586 Project: Upgrade of Ogwette HC II Ogwette HC II 262,000,000

Alebtong District Project: Updrade of Awei HC II Awei HC II 541,211,375 588 Project: Construction Abia Seed Abia Seed Secondary of 618,585,001 Secondary School School

Serere District Project: Upgrade of Kagwara & Aarapoo Kagwara Aarapoo & 132,252,147 596 HC II HC II rTeirffiW;ffi-W;r

Kalungu District 598 Project: Upgrade of Kabaale HC II Kabaale HC II 124,471,t86

9 ,\),/-,,'/ District Project: of Lorengecora Seed Seed Construction Lorengecora 215,381,065 60,4 Secondary School Secondary Schoo1

Kibuku District Project: Upgrade of Nalubembe HC II Nalubembe HC II 229,700,OOO 605 ffi

Buhweju District 610 Project: Upgrade of Mushasha HC II Mushasha HC II 723,337,228 --.TW[illffil TI -.' .].i:.l ialllrllt1,ll,r, 7/l A.llft,fi 7 O O Q'..

Kagadi District 613 Project: Upgrade of Muhorro HC II Muhorro HC II 729,700,OOO

Rubanda District Project: Upgrade of Mpungu HC II Mpungu HC II 353,000,000 Project: Construction of Nyamweru Seed Nyamweru Seed 6t6 365,871,031 Secondary School Secondary School T

Kasanda District 625 Project: Upgrade of Kikandwa HC II Kikandwa HC II 65,400,000 ffi IF ,IXffi;.If,

Mubende Municipality 746 Project: Upgrade of Lwemikomago HC II Lwemikomago HC II 198,824,514

Vote O18: Ushs 2,408,360,000 Ministry of Gender, Labour and Social Development: Parliament in FY 20181 19 authorized expenditure of Shs 3.4 bnons et vities in a supplementary budget provision. 10 \urtu However, of this amount, only Shs lbn was released. Cabinet directed the MFPED to release the balance of shs2.4bn in FY 2O19/2O2O for implementation of the remaining street children activities (CABINET MINUTE a39(ct2o19). The amount is expected to finance priority interventions targeting 1,500 street children as foiiows:

Table 3: Im mentation of Street Children Activities in the Coun No Activitv Budqet (Ushs'OOOI 1 Rescue and temporaql settlement 900,000 Centres 2 Improvement of Facilities in Transit t58,t97 Centres 3 Vehicles for Surveillance and tracing 776,640 4 Food and Non-food items in 278,O52 permanent Centres 5 Resettlement Package 195,200 6 Street Surveillance 67,500 7 Coordination, monitoring and support 27,370 supervision Totd 2,402,959

The Committee has considered the plight of street kids picked recently by the Ministry and now housed at different permanent and temporary centres and the challenges associated with rehabilitating, feeding and resettling them as well as ensuring surveillance to limit new ones from getting into cities and other urban areas. The Committee therefore recommends that Shs 2,4021960,000 be provided as requested to ameliorate the problem of street kids.

6.0 CONCLUSION The committee recommends that Parliament approves a total supplementary request of Shs 33,332,550,832 of which Shs 9,172 ,7131255 is for recurrent expenditure and Shs 24,1591837,577 ts for development expenditure. The details recommended for suppiy by vote are presented in table 4 below.

Table 4: Figures Recommended for Approval and Supply by Vote Vote Ministry/Insititution Recurrent Development Total (Ushs) (Ushs) 08 Ministry of Finance, 1,090,845,255 1,090,845,255 Planning anf Econ. Development (Privatisation Unit- wases) 110 Uganda Industrial 5,679,500,000 4,320,500,000 10,000,000,000 Research Insititute t20 Kampala Capital City 10,o00,00o,00o 10,000,000,000 rAuthqrity ,/

11 \-Iz^- 018 Ministry of Gender, 1,626,320,OOO 776,640,OOO 2,402,960,OOO Labour and Social Development 532 Luwero District 552,581,000 552,581 601 Mitooma District 77,590,000 77,580,000 530 Kyenjojo District 145,887,000 145,887,000 502 385,000,000 385,000,000 507 76,552,158 76,552,t58 519 1,o32,597,963 1,o32,597,963 522 28,906,128 28,906,128 530 Kyenjojo District 23,699,882 23,699,882 534 87,O79,797 87,O79,797 539 27,717,336 27,717,336 556 511,502,916 511,502,916 568 4,735,O75 4,735,O75 572 Oyam District 724,371,745 724,371,745 581 426,700,OOO 426,700,OOO 584 37O,786,630 370,786,630 585 803,314,400 803,314,400 586 262,OOO,OOO 262,OOO,OOO 588 1,159,796,376 1,159,796,376 596 132,252,147 t32,252,L47 598 124,471,186 L24,47L,186 604 215,381,065 2 15,381,065 605 229,7OO,OOO 229,700,OOO 610 723,337,228 723,337,228 613 729,7OO,OOO 729,700,OOO

616 718,871,03 1 718,871,O31 625 Kasanda District 65,400,000 65,400,000 786 Mubende Municipality 198,824,514 199,824,514

Total Supplementary 9,L72,7L3,255 24,L59,837,577 33,332,550,832

72 MEMBERS WHO SIGNED THE REPORT OF THE COMMITTEE ON BUDGET ON THE SUPPLEMENTARY EXPENDITURE SCHEDULE NO.l AND SHEDULE NO. 2 FOR FY 2OI9 20 NO NAME SIGNATURE 1 Hon. Lugoloobi Amos (Chairpersonl 2 Hon. Opolot IsiaEi Patrick (Vice Chairperson) r{ 3 Hon. Mwesigye Fred 4 Hon. Ilukor Charles 5 Hon. Hashim Sulaiman 6 Hon. Luboso Kenneth 7 Hon. Mutebi David Ronnie t 8 Hon. Nankabirwa Ann Maria alA ---) 9 Hon. Othieno Okoth Richard 10 Hon. Komuhangi Margaret 11 Hon. Khainza Justine t2 Hon. Achia Remisio 13 Hon. Asiku Elly Elias t4 Hon. Tumuramye Genesio 15 Hon. Aleper Aachiila Marsaret 16 Hon. Ngabirano Charles A Ki. T7 Hon. Nabayisa Idah 18 Hon. Musasizi Henry 19 Hon. Silwany Solomon E,z 20 Hon. Kiiza Winfred 2t Hon. Atim Oewal Cecilia 22 Hon. Muzume Roland 23 Hon. Ongom Joy 24 Hon. Muwanqa Kivumbi 25 Hon. Ntende Robert 26 Hon. Karuhanga Gerald 27 Hon. Baqoole John 28 Hon. Kakoza James 29 Hon. Soyekwa Cheborion Kenneth

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