Finance officials fight over Shs12b project


Kampala: Bad blood is flowing among ministry of Finance senior technocrats over a $5 million (about Shs12 billion) project that a cross-section of senior technical leadership wants extended without a handover report and proper accountability.

According to documents that the Daily Monitor has seen, the Rural Financial Services Project (RFSP) was supposed to end in December last year. But the second phase of the project has since been secretly and irregularly extended until mid-year (June 2014).

It is understood that the Secretary to the Treasury, Mr Keith Muhakanizi, endorsed the extension to the second phase called the Project for Financial Inclusion for Rural Areas (PROFIRA) without a handover report that is supposed to justify the extension to the next phase. But in an interview with Mr Muhakanizi last week, he said a smooth transition to the next phase was part of the deal.

Our investigations established that the $36 million (about Shs89 billion) project funded by IFAD has been running for more than five years now. But in October last year, a decision between the government and the donor was reached to close the RFS project by the end of the year—2013.

Sources privy to the matter told the Daily Monitor that the new project—PROFIRA is being forced through against all odds because some officials are already looking at stealing some of the $5 million that the government is injecting into the project as a counterpart part-funding.

A correspondence dated January 15, 2014 from the department of Microfinance to the top technical leadership of the ministry, described the establishment of PROFIRA as irregular on grounds that it was against an earlier decision reached between the government and the donor.

Another memo received by Mr Muhakanizi on January 14, which the Daily Monitor has seen, re-echoes the same irregularity with a call that a handover report of the first project be done before embarking on any other related extension.

It is, however, believed that the PROFIRA project is already underway irrespective of the fact that its establishment and operation is not only irregular, but bordering on fraud, according to sources within the ministry and State House.

When writing to Mr Muhakanizi about the matter in a letter dated December 16, 2013, the State minister for Microfinance, Ms Caroline Amali Okao, advised that there should not be a transition to the new project—PROFIRA, before Parliament approves it.

She also noted that issues such as reporting arrangements, staffing, procurement and actions on the audit queries arising out of the qualified Auditor General’s report of March 2013 should first be addressed before the commencement of the PROFIRA project, something that has been ignored.

In her correspondence, Ms Okao also wondered why the Commissioner in charge of Microfinance Department and the two projects, Mr Maxwell Adea, was being bypassed on matters to do with the extension.

And as a result, it said technical officers who are opposed to the manner in which the second project has been renewed are being witch-hunted by the top technical leadership.

A case in point was in a recent meeting where it is understood that Mr Muhakanizi warned Mr Adea, who is in charge of the project, for his attempts to demand for accountability of the first project, RSFP, which is supposed to usher in the second phase which is already underway without his consent.

Mr Muhakanizi denies witch-hunting anybody, but said he only brought Mr Adea to order on the grounds that it is not his responsibility to receive a handover report but the ministry’s accounting officer.

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