Districts across Uganda are grappling with financial challenges, but for Luwero, the situation is unpleasant.
A Ugx740 million debt hangs over the district after the government declined to intervene.
This financial strain has severely affected the district’s ability to provide essential services, leaving local leaders in a tough spot.
The trouble began in 2014 when Luwero District contracted Busenvi Enterprises Limited to construct three key access roads under the District Livelihood Support Programme (DLSP).
The project, initially valued at Ugx522 million, aimed to boost local connectivity. However, the contractor exceeded the agreed budget by carrying out additional works not covered in the contract.
When the district refused to pay for the extra costs, the contractor sought arbitration.
The Uganda Institute of Professional Engineers reviewed the works, certifying them and recommending that Luwero pay Ugx216 million plus Ugx5.2 million in adjudication fees.
In 2016, the High Court ruled in favor of the contractor, ordering the district to pay the sum with an annual interest rate of 26%.
By October 2024, the accumulated debt had swelled to Ugx740 million.
In a bid to avoid financial collapse, Luwero’s Chief Administrative Officer (CAO), Innocent Asaba Birekayaho, appealed to the Ministry of Finance, arguing that since the project had been executed by the Ministry of Local Government, they should cover the debt.
However, the Finance Ministry rejected the request. “You are advised to prioritise this payment using your local revenue collections over the medium term,” wrote Permanent Secretary Ramathan Ggoobi in response.
Describing the directive as “unfair,” Birekayaho urged both the Finance and Local Government Ministries to reconsider.
“Although the district signed the contract, the Ministry of Local Government was responsible for execution, so they should bear the costs,” he argued.
The district’s Chairman, Erastus Kibirango, expressed concern about the impact on public services.
“Our annual local revenue is only Ugx2.8 billion. Clearing this debt will cripple essential services,” he warned.
There are fears that Busenvi Enterprises may take further action to recover the money, including seizing district assets.
In 2022, the contractor obtained a court order to freeze the district’s Stanbic Bank account.
However, Justice Anna Mugenyi blocked the move, ruling that impounding government funds meant for salaries would be illegal.
“While it is just that the contractor be paid, the court cannot endorse illegal recovery methods,” Justice Mugenyi stated.
With no resolution in sight, Luwero’s financial crisis continues.
District leaders are calling for urgent dialogue with the government to find a way forward before service delivery grinds to a halt.
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