Museveni says no to MPs’ loan bailout deal

President Museveni had no comforting words on Monday for NRM MPs trapped by the huge debt burden.

The president told the NRM caucus that he had blocked a Parliament-brokered deal for a Chinese firm to buy off the MPs loans.

The Parliamentary Commission, hoping to extricate many MPs from the shackles of debt, convinced a yet-to-be-named Chinese firm to buy off the loans and revalue them at lower rates. It’s not yet clear how the Chinese stood to gain from the deal because details of the deal are still scanty.

A source familiar with the deal told The Observer that the Chinese firm was to work locally with Post Bank to buy out the loans with funding from a Chinese bank. The bank is, however, reluctant to enter into the arrangement until a government guarantee is secured.

But Museveni told the NRM caucus at State House Entebbe that he blocked the deal. “You can do what you can, or say whatever you want but I am here, and I am telling you that I personally blocked it because I cannot guarantee individual loans on behalf of the government of Uganda because I would be looked at as a non serious leader internationally,” Museveni reportedly told the MPs.

Museveni, who seems to be fed up with his cash strapped MPs begging for help during State House meetings, instead resorted to lecturing them about the benefits of frugal spending.

“How do you go to money lenders? Why do you borrow money to build a very good house where you are going to just sleep when it is not going to bring any profits?” wondered Museveni, as the MPs reportedly glanced about the walls of the palatial State House.

In March, the Local government and Public Service committee, which had been invited to State House to discuss the proposed creation of more districts, turned the meeting into a begging spree with individual MPs asking Museveni to help settle their individual financial problems.(see: Broke MPs plead with Museveni)

Making reference to his grass thatched hut at his Kisozi ranch in which he sleeps while in the village, Museveni said he did not see why MPs wanted to own lavish houses. He advised the MPs to at least put up rental apartments to supplement their incomes.

“For me I don’t come to your Parliament but I get this information from my other sources, and I am told that out of the total number of MPs, about 300 have loans to the extent that they take home nothing at the end of the month,” he said on Monday.

Museveni, sources say, then asked Attorney General Peter Nyombi whether there was a provision in the law that would protect MPs from money lenders.

“These people are suffering because of private money lenders. Is there a provision in the law that we can use to protect them from private money lenders that charge high interest rates?” Museveni asked. Nyombi said there was an old law that needed to be reviewed.

The Observer has established that many MPs turn to loan sharks after failing to service their loans in established financial institutions. The loan sharks lend at an interest rate as high as 30 per cent. The MPs got a lifeline yesterday when Parliament’s deputy Clerk in charge of Administration, Chris Kaija, sent out messages alerting them that their gratuity cash had been sent to their accounts.

“Please be informed that the money has been sent to your bank accounts, and you should be able to access it tomorrow (Wednesday),” read Kaija’s message, sent out at 11am.

Each of the MPs received an accumulated amount of at least 18.7m in gratuity over a period of two years. The payment comes after a court case filed in March by Kabula MP James Kakooza, challenging the government and the Parliamentary commission for stopping payment of their monthly gratuity without the consent of the MPs. The case was settled out of court.

Muwanga's sack

During Monday’s caucus meeting, Museveni also told MPs that he wanted the permanent secretary in the ministry of Public Service, Adah K Muwanga, sacked for mismanagement.

“I am looking for a new permanent secretary to manage Public Service because these people are mismanaging (the ministry). I didn’t like the way the former Prime Minister [Apollo] Nsibambi was praising (the ministry of) Public service that it was doing very well. I was not comfortable and used to negatively talk about it but they advised me to stop, that I was demoralising the Public service,” the source quotes Museveni as saying.

Muwanga’s problem stems from her ministry’s failure to pay salaries of lower cadre civil servants notably police and teachers in time. Museveni, who reportedly appeared to have had prior information, about the mess in the ministries of Finance and Public service, invited the respective ministers to explain to the MPs.

Sezi Mbaguta, the junior Public Service minister, told the meeting that the delay was a result of the more than 7000 ghost workers on the payroll, discovered by Auditor General John Muwanga. Cabinet recently set up a subcommittee headed by second deputy prime minister, Gen Moses Ali, to verify the findings of the auditor general’s report. Moses Ali is expected to report back to cabinet this week.

Maria Kiwanuka, the Finance minister, told the meeting that she had scheduled a meeting for Monday, at which all the outstanding arrears would be paid. She was however sad that her meeting had been overtaken by the caucus meeting. Shocked by the submissions of the two ministers, Prime Minister Amama Mbabazi shot up and told the meeting that he was learning of “the crisis situation” in the country for the first time.

“I am surprised that the whole of the police force has not been paid since April. Mr President, it seems there is mis-coordination among the sectors,” Mbabazi is quoted as having said.

When questions kept coming, Kiwanuka told the meeting that there was an excess of Shs 40bn that remained from last financial year’s budget that could be used to pay the salary arrears. This seemed to have given Museveni some relief. He asked Nyombi whether he (Museveni) could use his constitutional powers to order the Finance ministry to pay the salary arrears to avoid a standoff.

Nyombi told Museveni that he could only do that with parliamentary approval. Museveni also maintained his hard-line stance against giving teachers a 20 per cent pay rise, saying that even with a better pay as compared to private schools, the performance of UPE schools has remained poor.

sadabkk@observer.ug