Government paid at least UGX 46.8 billion in terminal benefits to staff of rationalised agencies who were later re-appointed into public service.
The payments, the Auditor General noted in the report for the period ended December 31, 2025, were, however, against guidance from the Attorney General, who had stopped such payments where there was continuity of service.
The revelations raise fresh concerns about inconsistencies in the implementation of the Rationalisation of Public Expenditure (RAPEX) programme.
RAPEX was approved by Cabinet on February 22, 2021, to merge, mainstream and rationalise government entities to improve service delivery, eliminate mandate overlaps and reduce duplication across ministries, departments and agencies.
By December 2025, 35 bills had been assented to, enabling the rationalisation of 40 government entities.
Of these, 23 entities had been fully rationalised, while 17 were yet to be concluded. Among the rationalised entities, 17 were mainstreamed into successor institutions, and six were merged to form new entities.
However, a detailed review of eight rationalised entities revealed serious weaknesses in the handling of staff exit costs, particularly the payment of terminal benefits.
At the time of reporting, none of the eight entities had standalone budgets for rationalisation costs such as terminal benefits.
Instead, their budgets were amalgamated under successor ministries, departments and agencies, an arrangement the Auditor General noted may have rendered the original budgets unrealistic.
As of closure, the eight entities employed 1,917 staff, of whom 1,492 (78%) were absorbed into other government entities, while 425 (22%) were not absorbed.
Despite guidance from the Attorney General and RAPEX directives from the Ministry of Public Service stating that re-appointed staff were not entitled to terminal benefits because their service constituted continuity, the Auditor General found that such payments were still made.
Of the 1,492 absorbed staff, 1,389 employees from seven entities were paid UGX 46.8 billion in terminal benefits, contrary to the Attorney General’s advice and RAPEX guidelines.
Specific cases
At the Cotton Development Organisation (CDO), eight former staff absorbed by the Ministry of Agriculture were paid UGX 50.08 million in terminal benefits.
One additional absorbed staff member claimed UGX 65.59 million, which remained unpaid at the time of reporting.
The Ministry did not allocate a specific budget for CDO terminal benefits, relying instead on an amalgamated budget of UGX 16 billion for five rationalised entities.
Overall, 30 CDO staff were terminated and entitled to UGX 881.91 million, of which UGX 806.24 million was paid, leaving a balance of UGX 75.67 million.
Similar inconsistencies were identified at the National Agricultural Advisory Services (NAADS). Ten former staff absorbed by the Ministry of Agriculture were paid separation benefits totalling UGX 272 million, contrary to RAPEX guidance.
Eight retired staff were fully paid UGX 299.2 million, while 27 others were partially paid UGX 77.93 million, leaving an unpaid balance of UGX 1.99 billion.
At the Uganda Coffee Development Authority (UCDA), 92 absorbed staff were paid UGX 1.738 billion in terminal benefits, including golden handshakes, transport allowances and payment in lieu of notice, contrary to RAPEX and the Human Resource Manual.
Meanwhile, 17 absorbed staff members were not paid any benefits.
Diageo Says Kenyan Distributor Weaponising Case to Frustrate its Exit From EABLA recomputation revealed underpayments of UGX 26.13 million to six staff and overpayments of UGX 8.84 million to two staff.
UCDA had 152 staff at closure, of whom 109 were absorbed and 43 were not. Additionally, 36 terminated staff were paid UGX 1.24 billion, while seven retired staff were not paid due to expired contracts or having reached retirement age.
The Auditor General also noted that UCDA was involved in 11 court cases, with government interests represented by both private lawyers and UCDA legal staff, all of whom were affected by RAPEX.
At the Uganda National Roads Authority (UNRA), terminal benefits for 1,380 former staff amounting to UGX 67.69 billion were correctly computed.
However, payments to some eligible staff remained outstanding, particularly among the 265 staff not absorbed into public service.
Following the rationalisation of the Uganda Road Fund (URF), 31 staff were affected, with 19 absorbed into the Ministry of Works and 12 not absorbed.
Terminal benefits of UGX 671.85 million were paid, although UGX 83.01 million paid as leave in lieu was contrary to the URF Human Resource Manual, and no approval from the Ministry of Public Service was provided.
Wider findings
Overall, the Auditor General reported that 85 absorbed staff from five entities were not paid terminal benefits, reinforcing the RAPEX position that absorbed staff were not entitled to such payments.
Additionally, 425 staff retired following rationalisation. Of these, 410 retirees from six entities were paid UGX 30.4 billion, while 20 retirees from two entities had not been paid.
Retired staff from three entities also lodged claims amounting to UGX 2.08 billion.
Meanwhile, 66 terminated staff from two entities were entitled to UGX 1.03 billion but received UGX 930.11 million, leaving an unpaid balance of UGX 101.80 million.
The Auditor General recommended that accounting officers seek further clarification from the Attorney General, Ministry of Public Service and other stakeholders to resolve ambiguities and inconsistencies in the interpretation and computation of terminal benefits under RAPEX.
Asset and liability concerns
Beyond staff payments, the report raised serious concerns over asset and liability management. Assets in handover reports of four entities valued at UGX 564.71 million differed from the fixed asset registers, while assets worth UGX 54.44 billion in three entities differed from the closure financial statements.
Twelve assets valued at UGX 779 million were omitted from handover reports, and seven parcels of land were excluded from both handover reports and financial statements.
Only one entity conducted a board of survey as required.
Physical verification revealed 19 encumbered land parcels, 79 untitled parcels, and five parcels with expired leases.
Receivables of five entities totalled UGX 474.79 billion, while liabilities of five entities stood at UGX 932.39 billion, exposing government to potential litigation risks.
The Auditor General advised successor entities to verify all assets and liabilities before recognition and to resolve land encumbrances promptly.
The report concludes that while RAPEX was intended to streamline government operations and reduce expenditure, inconsistent terminal benefit payments, unresolved liabilities and weak asset management continue to pose significant financial and governance risks.
