More than half of Uganda’s public enterprises are costing taxpayers heavily in losses and would be better managed under public-private partnerships, says a new report by the Auditor-General.
According to the report, only 14 out of the 29 state enterprises analysed made profits in 2018, with Bank of Uganda, National Social Security Fund and National Water and Sewerage Corporation posting profits of $114.5 million $64.8 million and $13.7 million, respectively.
The worst performing were Uganda Railways Corporation, Uganda Electricity Transmission Company Ltd and Civil Aviation Authority with losses of $25.1 million, $20.2 million and $5.6 million, respectively.
"There is a need for government to improve on supervision and monitoring of these entities by introducing performance-based contracts with clear targets. In addition, the government could also explore public-private partnerships," read the report.
In addition to making losses, a number of companies are unable to meet their long-term debt.
"Four state enterprises had debt ratios of more than 50 per cent, implying that their total assets were insufficient to cover their total debt. These were Uganda Electricity Distribution Company Ltd, Uganda Electricity Generation Company Ltd, Uganda Electricity Transmission Company Ltd and National Water and Sewerage Corporation," said AG John Muwanga.
All the state enterprises are independently managed, but are expected to operate efficiently, make profits and pay dividends to the government.
"Out of the 17 profit making enterprises, only New Vision Printing and Publishing Company proposed a dividend payout amounting to $540,243," said Mr Muwanga.
Previous red flags
In 2017, the Auditor General pointed out that out of the of the 22 state enterprises, only 10 were "profitable.
Clarifying on the non-profitability of majority of state-owned enterprises, Auditor General John Muwanga observed in the report that at least seven State enterprises have debt ratios of more than 50 per cent implying that most of their assets are financed by debt."These enterprises are required to operate in a profitable manner and pay dividends to government but only one enterprise paid dividends to its shareholders in the year under review," Mr Muwanga said.He said Vision Group, incorporated as the New Vision Printing & Publishing Company Ltd, declared dividends of Shs3.8b. The loss making entities Mr Muwanga indicated in the 2017 report had "made losses from their operating activities, and advised their shareholders, especially government through the Ministry of Finance, to review their operations "with a view to turning them into profit making organisations."Some enterprises such as National Housing and Construction Company (co-owned with […]