By Flavia Nassaka
MPs earn big, but are deep in debt
Cash flow equals income minus expenses. Some members of Uganda’s parliament clearly skipped that personal finance management class. Among them are Felix Okot Ogong, Nakato Kyabanji Katusiime, Florence Kintu, and Simon Peter Aleper. All of them earn quite a bit of money and all of them are so deep in debt it has made headlines.
Florence Kintu, the MP for Kalungu had her land in Mukono confiscated for failure to clear a Shs300 million debt and Dokolo MP, Felix Okot Ogong was in July rescued by the High Court when a bank moved to sell off a property he had mortgaged for a Shs1.6 billion loan.
Ironically, Okot Ogong who is also a money-lender, had in July 2013 dragged fellow MP Simon Peter Aleper (Moroto) to court over a Shs70 million loan. Ogong was charging a loan-shark fee of 5% interest per month.
Other MPs, like Christopher Aciro of Gulu have been accused of misappropriating funds generated by their constituents. In Aciro’ case, he reportedly mismanaged about Shs28 million belonging to 170 savings groups in the Acholi sub-region.
Money troubles are nothing new in parliament but they are worsening. During the induction of the current parliament, the Speaker, Rebecca Kadaga who has been in parliament for over two-decades warned the new MPs to avoid loan sharks. Very few were listening. When reality sunk in a few months later, the MPs demanded a 50% raise in their allowances. But it appears not to have helped. Recently, some MPs from the ruling party appealed to President Yoweri Museveni for a bail-out. It failed and the desperate MPs turned to a Chinese firm which offered to buy their debt and offer them better repayment terms. That too was blocked.
Even as the MPs cash flow problems appear not to abate, Kadaga recently threw the MPs to the sharks when she called a press conference to warn that her office would no longer second MPs loan requests to banks.
Rosemary Seninde, the Wakiso Woman MP who sits on the Commission that took the decision defended it. She said the role of Parliament now is to introduce the individual as a legislator. “Beyond that, the relationship remains between an individual and the bank so that upon failure to pay parliament is not to blame.”
Insider information from parliament indicates that Kadaga acted because some MPs, fearing that all their money would be taken by banks, had started asking parliament to post their cheques on different accounts. Some would hide within the precinct of parliament as bailiffs waited outside.
No money literacy
Gomba Woman MP, Nakato Kyabanji Katusiime is among the unlucky ones. She was on Aug. 26 arrested for failure to repay a Shs100 million debt. Upon her release after paying an instalment of Shs20 million, she blames her constituency for her woes.
“The constituency demands are too high for a mere MP to afford,” she told The Independent in an interview.
But when Daily Monitor newspaper run the story; “Gomba Woman MP sent to jail over debt” on the day she was sent to jail, there was no sympathy in reader comments.
David Luttu said: “This is such a shame. Just a quick research on Google, our honourable MPs earn about Shs15 million a month, give and take. If at all they spend Shs5 million on work-related stuff… that leaves them with Shs10 million disposable income. This honourable MP should be able to pay this loan with interest in 10 months without causing the rest of us shame…Am sorry but she and others like her do not deserve to enter the gates of parliament.”
Another reader, Masiga, said: “Talk of broke and reckless parliamentarians. Why borrow such huge money that is beyond your means?”
Sabiitus wrote: “Let her not only be taken to prison but also made to work like others”.
Even fellow MPs, like Serere woman MP Alice Alaso, rubbish the excuse that MPs borrow to fulfil their constituency obligations. She says some MPs, especially new ones, spend extravagantly and live lavishly.
“How can you explain the scenario where one commits his entire salary to attending burials, wedding and paying voters’ school fees? To me, that’s biting more than we can chew and it’s definitely because some of us are financially illiterate”, she argues.
Without financial literacy, some MPs appear unable to understand how money works; including how to earn it, manages it, invest it and spend it. They appear not to know how to make informed and effective decisions with all of their financial resources.
The Parliamentary Commission is aware of this problem and occasionally outsources experts to talk to the MPs about money.
“Unfortunately these expert chats are one offs yet financial illiteracy has played a bigger part in the members’ indebtedness,” says Alaso.
This has also been noted and, Seninde says, members of the next parliament should be trained quickly to avoid the money troubles that have become common in the 9th parliament.
Equally disturbing is the lack of sympathy for MPs among voters.
A Daily Monitor reader called Rambo possibly summed it up: “This culture of entitlement by MPs should be eradicated. They are acting with impunity… Let her stay in jail!”
That appears to be the general feeling.
Many people in a country where the average income per month is about Shs80, 000 cannot understand why MPs who appear to earn quite a pile cannot pay their debts.
In reality, the MPs basic salary is just Shs2.6 million per month before tax – just about as much as that of a small time bank officer. But the MPs have other perks; around Shs3.5 million mileage facilitation, Shs3.2 million constituency facilitation, Shs4.5 million subsistence allowance, Shs1 million gratuity, Shs1 million town running, medical allowances, Shs50,000 per committee sitting, and travel facilitation when they go for trips domestic and foreign.
The various allowances make computing an MP’s salary quite confusing even for some of them, but it is generally said that MPs earn between Shs15 million and Shs20 million per month.
Unfortunately, the perks bounty is no assured unless the MPs is street-wise, belongs to the right networks, and knows how to juggle multiple tasks. Foreign travel is one of the most coveted perks, but it is tightly controlled and used as carrot and stick. You do not get unless you press the right buttons. MP Alice Alaso says “it is embarrassing how MPs pop from meeting to meeting not because they are discussing issues but they are looking for allowances”.
Semujju Nganda (MP Kyadondo East) is more direct: He says the biggest business at parliament is looking for money and that “members reach an extent of going to an event, sign, and rush to another one.” He says the MPs sign for events that happen within the same time.
“They come to meetings without any clue; they just come to pick allowances,” he says. That perhaps explains why the MPs had in their budget proposals for the 2014/15 Financial Year, asked that their salaries and allowance be `consolidated into one package’. The Ministry of Finance knocked down the proposal because it would raise the wage bill by 30%. Unofficially, however, many recognise that giving MPs financial stability amounts to throwing away the executive’s carrot and stick. Not a good idea.
But the misperception of the MPs true worth persists because some MPs have managed to navigate their complex financial lives without much trouble. The prosperous façade of a few fools many as it glosses over the indebted many. Unfortunately, those taken in by the façade of prosperity include the MPs themselves, their voters, and the banks.
It starts in the beginning when, at the start of each five year term, the MPs; new and old, are given a motor vehicle allowance. For the current MPs, that was Shs103 million each tax free. An average Four-wheel SUV favoured by most MPs goes for about Shs50 million. The balance goes into acquiring a new wardrobe befitting their new status. Next comes a change in lifestyle; including acquiring a new, large and modern mansion in the city.
The banks proper may shun them, but private money lenders are on hand to help. They easily give loans of Shs100 million and over. With the new SUV, city mansion, and cash in the bag, the fake new make-over is in place.
It is not surprising, therefore, that in spite of the well document troubles, to be a member of parliament is one of the most attractive jobs in Uganda.
Contenders usually start laying strategies for winning the next election immediately after an election. This is what exactly took place in Fort Portal Municipality when Alex Ruhunda won the parliamentary seat in 2011. As early as 2012, aspirants started moving around the villages, meeting voters in markets, mosques, and churches and making campaign promises. With such pressure on the MP; that someone is eyeing their seat, the incumbent MPs never go out of campaign mode and the spending that goes with it.
Richard Mugisa, a village opinion leader at Bukwali village in East Division, Fort Portal Municipality says Ruhunda is quite a common figure in the constituency. Mugisa says apart from building for each homestead an energy saving stove, the legislator has made financial contributions to the Bukwali Youth Creative Club, a youth Savings and Credit Cooperative (SACCO).
Awidah Kabagenyi from Kagote, another village in West Division, is also among those who have enjoyed Ruhunda’s generosity. Kabagenyi says, as their patron in Nikisoboka SACCO, Ruhunda “fills in the gaps whenever some money is needed”.
In addition to that, the legislator is defined by many in the constituency as one of their own because he stands with them in both moments of joy and sorrow, in parties and at funerals. The voters expect it of every MP and they do not care how much it costs the MP. After, they say, MPs are wealthy.
Nobody asks the important questions: If they are as wealthy as is claimed, why are so many MPs so deep in debt? What needs to be done about it? Why do so many people who should know better choose to lead a high expenses lifestyle well-knowing they have very little income?
Dr. Apollo Karugaba, who represented Fort Portal Municipality in parliament 15 years ago, says MPs’ indebtedness started with the popularisation of the “politics of money”. “During our time, the electorate didn’t look at us as money churning machines and yet MPs were not as greedy as some portray themselves today. Both parties focused on constituency development”.
The Leader of Opposition, Wafula Oguttu, agrees. He says MPs trouble starts when, instead of presenting issues to the electorate, they hoodwink them by buying them sugar, paying fees, attending burials, and weddings. “In 2011, I won an election without buying a single kilogram of sugar for any voter. Those who asked for tea, I advised them to try my opponents,” he told The Independent.
Emmanuel Dombo, the Bunyole East MP who has been in the House since 1996 also says indebtedness is a problem faced by “amateurs who are excited and at the same time scared that when they don’t wash their electorate with money, they’ll be kicked out”. Dombo insists that in addition to money management lessons for MPs reviving meaningful Constituency Development Fund (CDF) is necessary. The CDF meant to facilitate legislators’ constituency work was erased upon misuse by some parliamentarians. “After spending millions in campaigns, some members went to parliament while already in a deficit. All that was on their minds was to make money to clear their debts. It’s no wonder that such members keep bothering the speaker requesting for travel opportunities so they can get bigger allowances”.
Prof. Sabiti Makara, a political scientist at Makerere University says the MPs money troubles are because voters have understood that the idea of politicians representing people is something just theoretical.
“Now that people have learnt that MPs represent themselves, they keep demanding for money and favours from them,” he says. He says the electorate only benefits when MPs are invited to fundraising events in the villages.
Makara says being indebted should not be a problem but the MPs could be borrowing in the wrong way.
“Politicians and other professionals worldwide are also indebted but they do it through good means from banks not from loan sharks who ask for exorbitant interests as it is here,” he says.
Considering their kind of obligations, the professor says MPs have to look for other monies to complement salary.
Makara, however, predicts that the next parliament is likely to have worse money problems. “It will be a `yes sir parliament’ full of youths, they are terrible opportunists. They’ll do anything for money and whatever the president will say; they’ll just be nodding in approval”. But that too is unlikely to help, unless the MPs learn to better manage their cash flow.