INTERNATIONAL PRESS RELEASE

Uganda will not pay back odious loans under

continued Presidency of Yoweri Museveni

To: Multinational & Bi-lateral Finance Lenders to Uganda

From: Progressive NRM League (Concerned Ugandans)
Email: progressivenrmleague@yahoo.com
kasaatorashid@yahoo.com
Date: 26th January, 2016

Contacts for any querries regarding this document

(1) Dr. Rashid Kasato
Tel. +44 ***********
Email: kasaatorashid@yahoo.com
(2) Ronald Mugisha
Email: progressivenrmleague@yahoo.com
1

Contents / by topic
Introduction / Covering letter ___________ Page 3
(1) Our concerns ___________
Page 4
(2) What is an odious loan ___________
Page 4
(3) Why are loans to Uganda odious ___________
Page 4
(4) World Bank Action ___________
Page 5
(5) Loans to KCCA ___________
Page 5
(6) Auditor General's Report ___________
Page 6
(7) Governing to manage odious loands ___________ Page 7
(8) The China Factor ___________
Page 8
(9) Reckless misuse of public resources ___________ Page 8
(10)
National Income Vs. National debt _______ Page 10
(11)
The Uganda debt dilema ___________
Page 10
(12)
Purchase of fighter jets ($700m) _________ Page 11
(13)
Zaire loans under Mobutu Seseko _______ Page 12
(14)
Iraq loans under Saddam Hussain _______ Page 12
(15)
Democracy and rule of law ___________ Page 12
(16)
Young and Unemployed generation _____ Page 12
(17)
Character of the President ___________
Page 13
(18)
References ___________
Page 13
(19)
Recipients ___________
Page 18

Notice of intention NOT to pay back odious loans extended to Uganda under
continued Presidency Yoweri Museveni
We are concerned Ugandans giving notice to multinational and bi-lateral lenders
that current and future generations of Uganda shall not pay back loans to Uganda
extended under the continued corrupt, repressive, illegal and unending regime of
President Yoweri Museveni.
The Ugandan President has been in power for the last 30 years and is unfairly
seeking another term in office to make it 35 years and possibly beyond.
We believe that President Musevenis pursuit of a life presidency is not for the
purpose of developing Uganda but for his continued tapping of both national and
international resources to benefit himself, family and members of his clan. They
benefits through a sophisticated system of corruption he has put in place.
Therefore, any dealings with Musevenis government in Uganda shall be with
Museveni and not with the people of Uganda. We shall consider any loans
extended to Uganda from now on as loans to Museveni and not to Uganda. This is
because we feel that the relationship between Uganda and international lenders
cannot achieve its objectives as long as President Museveni is in Power.
We appreciate all the financial support that lending institutions have extended to
Uganda over the last 30 years. We also look forward to work with everyone in the
future should conditions change.
We have attached details of our concerns with this document for your reference.

Thank you.
Dr. Rashid Kasaato (Coordinator)
Ronald Mugisha (Coordinator)
Progressive NRM League

(1) Our Concerns in detail

While we agree with the internationally recognised arrangement that debts incurred
by a sitting governments should be respected by subsequent governments, there are
exceptions to this rule.
According to Professor Alexander Sack (1927), debts incurred by a sitting
government that are not in the interest of the nation state may not be bound by the
above rule because they can be termed as odious debts. 1, 2
(2) What is an Odious loan?
If a despotic power incurs a debt not for the needs, or in the interest of the
State, but to strengthen its despotic regime, to repress the population that
fights against it, for purposes that are manifestly personal, etc, this debt is
odious for the population of the State.. Its a regime debt, or a personal debt of
the power that got it. 1, 2
(3) Why are loans to Uganda Odious under President Musevenis regime?
What makes loans to Uganda odious is not that the money isnt needed for the
purposes intended but because in many cases the loans would not have been
required if it wasnt for the excesses and corruption of the state in Uganda on one
part and irresponsible lending by bi-lateral and multi-lateral agencies on the other.
That the lenders are aware of these excesses but continue to lend anyway makes
the loans a tool of subjugation.
The Vienna doctrine on odious debts is unambiguous; debts incurred and used for
ends which to the knowledge of the creditors are contrary to the interests of the
nation do not compromise the debtor. A loan that could have been avoided, or
whose amount could have been much less is an odious loan because it is not in the
interest of the country.
It is well documented that Uganda loses up to $500 million to corruption every
financial year, and that President Museveni has consistently refused to check
excesses of his government to save money, preferring instead to borrow from
abroad for development projects. 1, 2, 3
A combination of lies, corruption, dishonesty and incompetence has meant that
most loans for development projects cannot achieve mutual objectives of both the
lenders and the debtor (Uganda).
4

(4) World Bank Action

World bank President Jim Jong Kim rightly pointed out while announcing
cancellation of a $265 loan for road projects in Uganda last December:
The Multiple failures weve seen in this project on the part of the World Bank,
Government of Uganda and Government Contractor are Unacceptable. 4, 5
However, we are saying that the above action does not go far enough. We want a
total ban on loans to Uganda as long as President Museveni is in power. We
believe that many of these loans would not have been necessary, or the amounts
required would have been far less if there was responsible fiscal management and
respect for rule of law in Kampala. 6, 75
(5) Loan of $250 million to Kampala Capital City Authority
Consider the $250 million loan approved by the World Bank for Kampala Capital
City Authority. All looks well and good, but was the World Bank aware of the
conditions below: 7
a) Was the World Bank aware that the peoples authority in the Capital has

been removed forcefully by the government? 8, 9, 10

b) Was the World Bank aware that the authority mandated to oversee

accountability on behalf of the people was forcefully denied entry to his

office by the government? 8, 9, 10
c) Was the World Bank aware that the citys AUTHORITY, the capitals
supreme governing body has not had a session since the Lord Mayor was
impeached and then refused to return to office even when courts had ruled
that the impeachment was null and void? 8, 9, 10, 74
d) Was the World Bank aware that the Citys Public Accounts Committee has

not had a session since the authority was instituted and that the Minister in
charge of administering the city refused to approve names nominated by the
Lord Mayor to serve on this committee? 8, 9, 10, 74
Information we have indicates that the World Bank was aware of all the
circumstances above but they ignored and extended the loan anyway!
Therefore, why should the people of Uganda pay for monies that have been
loaned to KCCA, a body that has been stripped of its oversight organs by the

ruling executive? Why should current and future generations of Uganda pay for
monies loaned without our accountability systems in place?
(6) Auditor Generals reports, quality of work and overpricing
In his report of 2010, this is how Ugandas Auditor General describes the rot on 50
road projects many of which are funded by loans from the World Bank and other
bi-lateral and multi-national agencies:
Work on 50 roads in the country have been very expensive but the quality is
embarrassingly poor.theres failure to ensure value for money, money is
being spent to maintain roads that have been earmarked for rehabilitation, .. there
is no cost control and a lot of unexplained variance in costs of construction from
one area to another. .. There is over inflation of rates in order to pocket
more public funds. There is no linkage between the activities of the Uganda
National Roads Authority (UNRA) and the National Roads Sector Master Plan.
Sometimes contractors quote different unit rates for the same work items for
similar projects and the difference is quoted is 300% in variance 11, 12, 13, 14, 15,76
The Kampala-Entebbe Express Highway under construction is an example of an
insanely expensive and over priced road. At $9 million per km, the road is not far
from being one of the most expensive in the world. It will be 4 lanes and 54 km
with a 12 km spur road to a privately owned Commonwealth Resort Beach at
Munyonyo on the shores of Lake Victoria. The above cost does not include the
cost of land acquisition for the project! 11, 12, 13, 14, 15
A similar road in neighboring Kenya (Nairobi-Thika Highway, 56 km) is costing
about half that and is 8 lanes. Surprisingly, both roads are built by the same
company CCCC. (China Civil Construction Company) on loan from China. 11, 12,
13, 14, 15

The variance in quotations by contractors for doing similar work nationally and in
neighboring countries sometimes goes to as much as 100-300%. 11
In addition, the detailed designs for the Express Highway which were released to
the press indicate that the highway is supposed to have 8 lanes. But eye witnesses,
including ours, reveal that the road being built is 4 lanes only! 11, 12, 13, 14, 15
Furthermore, instead of giving priority for the construction of the Kampala
Southern By-Pass as part of the Express way, authorities decided to give priority
for construction of a spur road to a privately owned beach as part of the Express
Highway loan deal.

This meant that Ugandans still have to look for money for the construction of the
Kampala Southern By-pass, a road that should have been constructed as part of the
Chinese loan for the Entebbe Express way. 11, 12, 13, 14, 15
All decisions to work in this irresponsible, reckless and costly manner are made at
State House Entebbe by none other than President Yoweri Museveni, who is
believed to have interests in the privately owned Commonwealth Resort
Munyonyo Beach. 11, 12, 13, 14, 15
Today, no road being built in Uganda is estimated to last the next 10 years. This
means that the current generation will be asked to pay the loans and also re-build
new roads.
Theres overpricing of everything government does, at all levels and in all sectors
and all the time!
(7) Governing to manage odious loans
While the President is happy to show off the outcome of the loans to Ugandans in
whatever form or state, he at the same time passes bi-laws to ensure that the rot in
public hospitals, schools and other public facilities, where Uganda tax payers
money is supposed to be spent are not exposed to the public and the international
community. 16, 17, 18, 19, 20, 21
In one of the districts, the 5 MPs representing in Parliament earn a total of
$540,000 per year. But the referral hospital in the district they represent is only
allocated $60,000 pa, yet it looks after approximately 500,000 people. 25
This disparity and unfair distribution of national resources, which is burdening the
tax payers is possible because President Museveni ensures that MPs are paid
extremely well so that they rubber stamp legislation the way he wants, including
approvals of foreign loans. Democracy or whatever we have in name is being used
to cheat the very people it is intended to serve!
This is what explains why the Ugandan President has become the countrys main
Procurement Officer, even when the countrys laws suggest otherwise.
And why not? If you had authority to determine contractors for projects involving
huge sums below, would you give up that privilege?

Project

Cost

Status

National Identity Card Project

$100 million

Done 51, 52

Bujagali Hydropower Dam

$1.3 billion

Done

Karuma Hydropower Dam

$1.9 Billion

Being done 52,73

Oil Pipeline

$4 billion

Being done

Oil Refinery

$4 billion

On the way

Standard Gorge Railway

$8 Billion

About to start-16, 17, 18, 19, 20, 21, 53,74

Others

$2 Billion

Being done

Total

$22.3 Billion

If I was president Museveni, why would I want to relinquish power at a time when
I have both my hands firmly on such a fruity dish, even if I have been in power for
the last 30 years? 16, 17, 18, 19, 20, 21
(8) The China Factor
Having secured the loans, Uganda government then goes on to contract Chinese
companies to do the work, completely sidelining Ugandan companies. The
Chinese in return go on to import everything they use from China- from cement to
manual labor and reducing Ugandans to spectators on projects in their own
country, even when its them who will eventually pay back the loans.
Theres little or no attempt to strengthen the Ugandan road construction sector or
to train Ugandan engineers to do quality work. This means that future
maintenance of these roads will be contracted out to the Chinese.
In a country where 83% of graduates cant find work, these are odious loans that
are helping Museveni and his government to siphon locally available resources.
(9) Reckless misuse of public resources
President Museveni has been seen on several occasions giving out money in sacks
to unsuspecting supporters and it is widely known that he moves around with a van
full of money for the purpose of buying political support. 22, 23, 24
It is also well documented that his government is spending up to 60% of the
national resources to public administration largely due to his policy of big
government and lavish expenditure on his presidency. This comprises of 70
Ministers, 140 Administrative districts and 400 Parliamentarians among others.
In the last financial year, his well paid parliament allocated a hooping $103 million
to matters concerning the President, his family and administration. The entire
national health system looking after 34.5 million people was allocated only $17
million or $0.49 cents per person.

According to 2014/15 figures, the national budget is approximately $7 billion, of

which 15% or approximately $1 billion is supposed to be allocated to health sector
As agreed by the 2001 Abuja Declaration which Uganda is a signatory.
However, due to reckless public expenditures, only about half of the health
requirement is allocated leaving a gap of about $987 million. Loans from the
World Bank, Africa Development Bank and other lending agencies fill this gap.
Anybody who looks at Ugandas public expenditure can easily discover that the
loans would not have been necessary if there was prudent management of available
public resources.
A senior World Bank Economist in Kampala, Ms. Rachael Sebudde confirmed this
when she observed that: 40
. it speaks volumes that a government that borrows to fund its priorities,
especially roads and railway, would create additional administrative unitsthe
government suspended creation of new districts. But each time elections come
close, we see them [districts] coming back yet Uganda has a weak economic base
because of few revenue source . with revenue collection currently standing at
only 13 per cent of the GDP, it means government cannot finance its development
projects while at the same time financing public administration. 25, 26, 27, 28, 29, 30, 31,32,
40, 41

But because everyone who matters receives some kind of economic benefit from
the President, the regime is able to use its rubber stamp parliament to pass
oppressive, sometimes unreasonable legislation which include blind approval of
foreign loans. 33, 34
In addition, the ruling National Resistance Movement continues to outspend all
other political organizations without satisfactory explanation of the source of
income. We suspect that the party is using state resources with impunity because
since 2005, the NRM party has not filed its accounts with the Electoral
Commission and the Registrar General as the law requires 35, 36, 37
This none-compliance is in total contravention of article 9 of the political party and
organizations Act 2005. According to the Law, the ruling NRM party is supposed
to be disqualified from participating in elections but no one can raise these matters
in Uganda without being silenced. 35
These acts of impunity and excesses in Kampala are possible because when it
comes to the reality on issues of development, theres foreign money available to
cover up for the excesses and abuse of locally available resources this makes
9

them odious loans because without them, locally available funds would not be
abused and probably going towards development. 38, 39
(10)

National Income Vs. National Debt

The President has rightly pointed out that when he came to power 30 years ago, the
country was collecting only $1.5 million in taxes per year. But today, Uganda
government collects $2.4 billion. 42
However, despite the improvement in revenue collections, the national foreign debt
which had reduced to about $1.6 billion after foreign debt relief of $3.6 billion
from the Paris Club and other creditors has now increased again to $7.4 billion as
we draft this document. Experts estimate that it is about $10 billion. 43, 44, 45, 54
The current debt is costing the country $606 million in interest alone per year. 77
Bureaucrats in Kampala justify continued borrowing, arguing that the national debt
is still just 24% of GDP. But this figure does not include the $23 billion Uganda
owes to the Democratic Republic of the Congo and more inevitable borrowing in
the pipeline. 45,
In 1997, President Museveni sent Ugandan Soldiers to the Congo without
parliamentary approval. While there, the soldiers plundered Congos natural
resources, they looted property, rapped women and committed all sorts of abuses
against the people of the DRC.
In July 2000, the government of President Kabira of the DRC successfully sued
Uganda at the International Court of Justice for the invasion, abuse of her people
and plunder of Congos natural resources. Uganda was found guilty on all counts
and the DRC was awarded $10 billion in 2001. With interest since then, that figure
has grown to $23 billion as we stand. 46, 55
Authorities in Uganda do not want to talk about the Congo debt and international
lenders dont want to know about it either. But the truth is that the Congolese will
want Uganda to pay. Its only a matter of time and when they do, Ugandas debt
will be at an established reality of $33 billion and counting. 47, 55
If one adds on planned expenditure on new projects of $22 billion (SGR Railway,
Oil Pipeline and Refinery), we are looking at $55 billion worth of international
debt, most of it unnecessary. Uganda is an insolvent country with a debt of over
120% above her annual GDP! 48, 49

10

(11)

The Uganda debt dilemma

We are in a situation of low local revenue base, ballooning public expenditure,

massive international borrowing to finance public infrastructure development and
falling oil prices - (Uganda based her expenditure on oil revenues. But we might
not even be able to drill at the moment given the current price of $30 per barrel,
from a high of $150 per barrel when the Oil sharing agreements were made). 71, 72
NOTE: Uganda government ensured that the Oil Sharing Agreements remain
confidential, but some details emerged showing that the burden of risk was placed
entirely on the people and republic of Uganda. Someone is benefiting from
making bad deals for Uganda and that person is Yoweri Museven. These are the
reasons why he will not relinquish power 60, 72
Why should Ugandans be committed to repay huge public debts that arise out of
Oil Sharing Agreements, whose many terms remained a secret between the
President and Oil explorers?
What is happening in Uganda today is a clear demonstration that squandering own
resources while depending on borrowing to implement development projects
cannot create sustainable economic growth, never mind development.
(12) $700 Million spent on Fighter Jets
A further case in mind is the decision by the President to almost deplete national
foreign exchange reserves by spending $700 million for the purchase of fighter jets
from Russia without parliamentary approval as the law requires. 50, 52, 53
In value terms, $700 million could have covered loans to Uganda for almost all
public infrastructure developments in the last 2/3 years.
These reckless and unreasonable decisions are made possible because at the end of
the day, the President knows that theres a source of foreign money available for
development projects. Therefore, he can spend Ugandas money recklessly.
(13) Zaires loans under Field Marshal Mobutu Seseko.
We have looked at loans to Mobutus Zaire to further justify our intentions. Under
President Mobutus reign of 31 years, Zaires debt increased to from $4 billion
when he took over power (1965) to $18 billion at the time of his death(1997).
During the same time, the personal wealth of President Mobutu also increased
from nothing to an estimated $4 billion. 56
11

Lenders ignored all available information regarding Zaires debt under Mobutu and
loaned anyway. After the fall of Mobutu the government of Josef Kabila sought
relief under the Odious loan doctrine.

(14) Iraq under Saddam Hussein

Iraq had a cash surplus of $36 billion on the eve of invading Iran in 1980. They
then went on a borrowing spree that depleted their resources and by the time
Saddam Hussein was deposed in 2003, Iraq was in debt of $156 billion. Lenders
knew that Saddam Hussein was borrowing to finance his wars but they ignored all
warnings and lent him anyway. Consequently, most of the money lent to Iraq
under Saddam Hussein qualified as odious loans and will never be recovered. 57
As Ugandans we are looking at Musevenis excesses and unreasonable use and
abuse of local revenues versus his insatiable quest for foreign loans on behalf of
Uganda as the basis for considering all loans to Uganda as odious loans.
(15) Democracy and rule of law
Uganda under President Museveni and on paper Uganda is a democracy but in
practice it is a constitutional dictatorship.
The Ugandan President has resisted all logical calls for electoral reforms; his
police have continued to be a force of discrimination, kidnap, torture and killings
of innocent Ugandans. The president acts with impunity when it comes to abuse of
matters concerning good governance. 61, 62, 80
The ongoing electoral process is by law a nullity because the government
substituted the legally binding voters register with one compiled by the police and
the army. We are participating in this exercise because boycotting would be
counterproductive towards efforts for democratization. 78,79
Abuses of power, nepotism and corruption have become the norm of the day.
Uganda is among the most corrupt nations in the world. The vice is losing the
country over $500 million per year with no end in sight.
(16) Young and unemployed generation

12

Our concerns are also derived from the fact that over 70% of Ugandas population
are below the age of 30 years and 83% of the people of working age cannot find
work.
These young peoples fate and future is being decided by a man who has been in
power for 30 years and counting, and by the time the bills come, there will be no
means to pay and he will not be around.
(17) Character of the President
President Museveni is a ruthless operator with a track record of killings, repression
and insatiable desire for power and wealth. He has caused and fought wars in
almost every part of Uganda and exported war to almost the entire region
(Rwanda, S. Sudan, DRC etc). Forbes Magazine rated him recently as the Worlds
6th worst dictator. He has formulated laws to silence the press, Civil Society
Organizations and anyone who can talk about his ills. 51, 59, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70
In May 2011, Professor James Fallon, a leading researcher in psychology and
psychopathic behavior made a presentation to a world forum in Oslo : Inside the
mind of a Dictator; Below is how he described leaders who dont give up power:
they are usually charming, charismatic and intelligent. They brim with self
confidence and independence. .. are also extremely self-absorbed masterful liars,
companion-less, often sadistic and possess a boundless appetite for power.
President Museveni has all these traits. 59, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70
The President has brought some good degree of stability and economic progress to
the country, but this cannot be a traded for future economic Armageddon.
Pursuit of stability in exchange for deficiencies in democracy and accountability
will end up achieving neither stability, nor economic development in the long run.
On the eve of the visit of President Clinton to Uganda in 1998, then US Secretary
of State Madeline Albright and the entire USA government considered President
Museveni as one of the few African leaders who would bring democracy and
transform the lives of Ugandan people by making the remarks below:
The era of a strongman coming to power, staying 20 years and robbing his people
blind is over.
Well,17 years since the above Albright pronouncements, this era of a strongman is
now 30 years and forcing its way to make it 35 years. It is a scenario that troubles
current USA President Barak Obama. Recently on his visit to Kenya, this is what
President Obama had to say about leaders like Yoweri Museveni:
13

"I don't understand why people want to stay so long, especially when they have got
a lot of money..."Nobody should be president for life," ....Africa doesnt need
strongmen. It needs strong institutions...... sometimes youll hear leaders say,
Well, Im the only person who can hold the nation together. If thats true, then
that leader has failed to truly build their nation 81
President Museveni falls in this category of 'Strongman' leaders. The reason why
such strongmen don't relinquish power is because they use the state and state
institutions to accumulate unimaginable wealth. They turn the state into a personal
business as was done when signing Oil Sharing Agreements for Uganda.
President Museveni handled Uganda's oil agreements personally ........ the oil
deals were not discussed in Cabinet, according to former Prime Minister John
Patrick Amama Mbabazi. Yet these are the agreements (with secretive closes)
against which the President is committing the country to a huge public date for
current and future generations of Ugandans to pay.82
Senior politicians have already impressed upon lenders of these concerns. Writing
in the Observer, this is how Dr. Kizza Besigye warned Uganda's happy lenders:
In order to deliver the astronomical amounts needed to sustain Mr Museveni in
power, big government projects are being used as vehicles........all are negotiated
in State House and invariably breach established procurement laws and
regulations! The lenders and others involved know that the contract prices are very
abnormal. ..... Odious debts, contracted and utilised for purposes which, to the
lenders knowledge, are contrary to the needs and the interests of the nation, are
not binding on the nation.83
After 30 years, Ugandans are in captivity and cannot free themselves from an
insanely rich and heavily armed strongman by themselves. We no longer have the
capacity to check the excesses of abuse of power, corruption and effort to
mortgage the country by the President. But we can warn about the dangers of
continuing to lend to Uganda under President Museveni.
We therefore place a notice to all happy lenders to Uganda that as long as
Museveni is in power, your loans are to him NOT to us. 72, 73
For God and our country.

14

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