Legislators order thorough empowerment funds scrutiny
AN assessment carried out by the Parliamentary Committee on Public Accounts (PAC) has identified several gaps in 52 economic empowerment funds including nonperforming loans amounting to 50.04bn/-.
Mismanagement of the funds has been singled out as one of the factors in the misuse of public funds thereby affecting the attainment of its objectives.
PAC’s Chairperson, Ms Naghenjwa Kaboyoka disclosed this, while presenting the committee’s one year past implementation report in the National Assembly, on Tuesday.
“The assessment discovered bad debts worth 50.04bn/- out of 98.3bn/- in three economic empower ment funds including the Agricultural Inputs fund (20.1bn/- out of 27.87bn/-) equivalent to 72 per cent, Kilimo Kwanza Fund (27.6bn/- out of 34.2bn/-) equivalent to 80 per cent and SELF Microfinance Fund 2.7bn/- out of 36.9bn/- equivalent to 7 percent,” said Ms Kaboyoka.
According to her, the bad debts contributed to the issuance of loans to individuals who lack the required criteria. Equally, the assessment discovered that SELF Microfinance Fund had invested a large amount as collateral and issued loans to commercial banks contrary to its core activities.
She revealed that between the financial years June 2017/2018 to 2020/2021, a total of 72.2bn/- equivalent to 56 per cent was disbursed by the microfinance to commercial banks instead of small entrepreneurs in hard to reach areas as stipulated in its objective.
In strengthening management of the funds in the economic empowerment funds in the country, the Parliament suggested that the government should carry out a thorough scrutiny of all the 52 funds to examine their existence.
The Chairman inquired that the assessment should be completed within the present financial year, indicating that during the transition period, the government should strengthen management of the funds in ensuring disbursement of the loans is carried out after proper confirmation on all crucial requirements and documentation.
Besides, the funds should be used for intended purposes and its payment be done timely, hinting that the Controller and Auditor General should conduct a comprehensive audit of the 52 empowerment funds in determining weaknesses.
She, however, noted that upon the finalisation of the audit the government should take necessary measures in line to the result.
Another area which the committee identified faults involved interest payable for delaying to settle the payments of consulting engineers and tax waivers.
Equally, Ms Kaboyoka outlined weaknesses in the management of projects executed using loans, indicating that the government has an interest debt to the tune of 5.39m/- due to the delay of making the payments.
“In the eight technical, comprehensive and performance audits the interest challenge has been affecting the timely execution of projects,” she said.
She added that “The interest was a result of unnecessary delay of payment to contractors as per the contract as well as issuance of Government Notes for authentic tax waivers of equipment while needed. Expounding further, the Chairman pointed out that the interests inflate the cost of executing the project, thereby causing loss to the government while the money would have been spent in other areas.
The Committee urged the government to devise an open system of immediately verifying and identifying payments of contractors in accordance with the contract requirement, to overcome mismanagement of funds.
On the other hand, the Committee suggested that the government should do away with the prolonged system of waiving tax for equipment coming from outside the country to support implementation of projects.
Also, proper measures should be taken against public officials who delay in the above matter due to negligence causing the government to incur more costs in implementing the project.
