18 Dec 2009

A review by the Global Fund's Inspector General of the Fund's grants to Uganda, four years after the Fund temporarily suspended five grants worth $213 million due to financial mismanagement, has concluded that the Fund should continue to use Uganda's Ministry of Financial Planning and Economic Development (MoFPED) as Principal Recipient (PR).

The Office of the Inspector General (OIG) took this position in its "Follow up review of the Global Fund grants to Uganda," despite acknowledging severe limitations in the ability of MoFPED and its designated implementer, the Ministry of Health (MOH), to allocate, disburse and account for funds to hospitals and health centres, particularly outside the capital and particularly when dealing with HIV/Aids.

In general, this review, released in September 2009, emphasized the positive side of the situation and expressed tentative confidence that a proposed Long Term Institutional Arrangement (LTIA) with the government will be able to deal with these weaknesses.

But on closer reading, the conclusions also appear to indicate a degree of unease over the ability of the PR to effectively use and protect Global Fund investments in Uganda.

Furthermore, an earlier OIG report ("Review of the suspension/termination processes for Global Fund grants"), released in 2008, concluded that there had been no detailed analysis as to how the LTIA would structure the day-to-day management of the grants. Therefore, that report said, the Inspector General "could not provide assurance" that the arrangements and controls in place were adequate to safeguard Global Fund investments in the country.

The first conclusion of the 2009 report points to the conviction of four people in connection with the embezzlement, misappropriation or failure to account for $1.6 million in disbursed funds, and says that these convictions have "rendered credibility to the ongoing process of investigation and prosecution of the culprits".

The four people who were convicted - Teddy Seezi Cheeye, Fred Kavuma, Analiza Mondon and Elizabeth Ngororano - all represented or worked for sub-recipients of Global Fund grants; they were among an estimated 300 people charged by a specially created anti-corruption court three years after the fact. No one from the MoFPED's subsequently disbanded Program Management Unit (PMU), the body responsible for the management and oversight of the grants, has been convicted. The then Minister of Health, Jim Muhwezi, and his two deputies, Alex Kamugisha and Mike Mukula, all of whom have been alleged in press reports to be linked to the scandal, were dropped in a May 2006 cabinet shuffle, a few months after a public commission of inquiry started work. They have been charged in connection with the misuse of Global Alliance for Vaccines & immunization (GAVI) funds but not in the mismanagement of Global Fund money.

The OIG's first conclusion also says the Government of Uganda has demonstrated "in the last one year" - after increasing pressure from donors - "a commitment to recover the outstanding funds that were misused." As of June 2009, "a significant $780,000 (61%) is still to be recovered," and unspecified "accountabilities" in the amount of $2.3 million were still outstanding.

According to the second conclusion and the analysis upon which it is based, tracking and accounting for Global Fund grant monies though Uganda's public financial management system, as proposed under the LTIA and welcomed by the OIG, presents a daunting problem in a country whose annual operating budget is 40 to 50 per cent dependent on foreign aid. The disbursement of Global Fund grants would have to be coordinated with the government's annual budgeting process, so it is deemed "impractical" to use the LTIA until the 2010/2011 budget year. Although the report states that it would be possible to include Global Fund activities in the national budget, this would require advance planning and commitment from the PR and program managers.

The report acknowledges that using the LTIA has the key advantages of a) being supportive of government policy; b) ensuring better management of scarce resources through the reduction of the likelihood of duplication of funding and the roles of various institutions; and c) strengthening country systems. But it warns that "all this comes at the cost of having less visibility of funds, and with that, the increased risk that funds may not be used for their intended purposes and the inability to attribute results to funding provided."

The third conclusion points out that there are many issues that need to be addressed before the LTIA can work effectively, and concludes that in the meantime the Global Fund "is left with no option but to implement its programs through a project mode process".

The fourth conclusion states that the performance of the LTIA should be "subject to regular monitoring and review" - even though earlier parts of the report offer numerous examples of the difficulties involved in Uganda in auditing, as well as monitoring and evaluating, the grant disbursement and accounting process.

The fifth conclusion states that the Global Fund Secretariat, in response to the OIG report, has indicated it will work with the government "to put the key success factors identified into practice" - in other words, to get done the various things that the OIG points out need to be done if the grants are to succeed.

"Follow up review of the Global Fund grants to Uganda", 9 September 2009, can be found at www.theglobalfund.org/documents/oig/OIG_Report_Uganda_Follow_Up_Review_of_the_Global_Fund_grants_9_Sept_09.pdf

"Review of the suspension/termination processes for Global Fund grants", 9 September 2008, can be found at www.theglobalfund.org/documents/oig/ReviewOfTheSuspensionTerminationProcessesForGrants.pdf

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