Uganda’s grand industrialisation project, fronted by the Uganda Development Corporation (UDC) under the stewardship of its Executive Director Patrick B. Birungi, is facing a reckoning.
A forensic review of UDC’s books for the financial year 2023/2024 reveals a sobering pattern: over UGX 1.089 trillion invested in 17 companies, yet more than UGX 10.5 billion in loans remain uncollected, UGX 92.5 billion sits unspent, and core projects are stalled by legal ambiguities, poor governance, and delayed decision-making.
At the heart of this financial quagmire is a leadership vacuum: for the better part of three years, UDC has operated with an incomplete Board, and as of November 2024, the Corporation had no Board at all.
Without a Board, UDC is statutorily incapacitated—unable to approve new investments or oversee critical decisions, despite managing an industrialisation war chest exceeding a trillion shillings.
“The Corporation cannot execute its core mandate of investment without a Board in place,” the Auditor General warned, urging the Minister of Trade to urgently appoint a full Board to restore governance oversight.
Billions Pledged, Billions Delayed: A Tale of Stalled Projects
UDC’s investment portfolio spans high-impact sectors—tea, sugar, fruit processing, pharmaceuticals, hospitality, and manufacturing. Yet, of the UGX 262.6 billion available for use in FY 2023/24, only UGX 170.1 billion was spent, leaving UGX 92.5 billion unutilised. Key projects worth UGX 66.7 billion—from the Busoga Sugar Factory to the Cocoa Processing Plant, Potato Processing Factory, and Sponge Iron Manufacturing Plant—remain completely unimplemented.
For instance:
- The Busoga Sugar Factory project was derailed when NEMA declared 150 acres of earmarked land as wetlands, forcing UDC back to the drawing board.
- The Potato Processing Factory remains a feasibility study in progress.
- The Sponge Iron Plant has yet to pass due diligence and investment structuring.
A Trail of Uncollected Debts: UGX 10.5 Billion and USD 999,412 at Risk
UDC’s model of catalysing industrial growth through loans has backfired. The Corporation is owed a staggering UGX 10.553 billion and nearly USD 1 million by tea factories—Mpanga, Mabale, and Kigezi Highland—whose grace periods have long expired.
| Company | Loan Date | Loaned (UGX Bn) | Outstanding (UGX Bn) | USD Outstanding |
|---|---|---|---|---|
| Mpanga Growers Tea Factory | Aug 2022 | 6.386 | 2.014 | – |
| Mabale Growers Tea Factory | Dec 2020 & Sep 2022 | 11.68 | 6.424 | – |
| Kigezi Highland Tea Factory | Sep 2016 | 9.243 | 2.115 | 999,412 |
While tea prices at the Mombasa auction may have slumped, the Auditor General cautioned that UDC must enforce recoveries or risk eroding its investment model.
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Perhaps the most glaring misstep under Patrick B. Birungi’s leadership is UDC’s disbursement of over UGX 113 billion in lease financing—UGX 4.3 billion to Kayonza Growers Tea Factory and UGX 108 billion to Horyal Investment Holding Ltd (Atiak Sugar Factory)—without legally binding lease agreements.
For Kayonza, UDC is now rushing to convert the lease into equity, an after-the-fact strategy that exposes the Corporation to valuation disputes and governance headaches. For Horyal, while some paperwork was cleared by the Solicitor General, final agreements remain pending, raising the spectre of legal battles or financial losses.
The Auditor General minced no words: “Failure to execute legally binding agreements before disbursement exposes UDC to risk of loss.”
A Transaction Fee That Slipped Through the Cracks
In another revenue oversight, UDC failed to collect UGX 261.5 million in transaction fees from Abubaker Technical Services on a UGX 26.15 billion equity investment—despite a signed agreement to deduct the fee before funds were disbursed. This lapse underscores UDC’s weak financial controls and raises questions about oversight.
Procurement Gaps: Market Assessments Missing for UGX 2.7 Billion
Even basic procurement protocols faltered. The Auditor General found that UDC failed to conduct market assessments for procurements worth UGX 2.685 billion, including a UGX 1.49 billion consultancy for the Luwero Fruit Factory and a UGX 540 million study for the National Marketing Company. Without market benchmarks, UDC risks overpaying and misallocating public resources.
The Path Forward: A Blueprint for Urgent Reform
The Auditor General’s report outlines a stark agenda for action:
- Restore Governance: Reconstitute the Board to unlock investment decisions.
- Fix Policy Gaps: Finalise guidelines for lease financing, exploration costs, and loan recovery.
- Enforce Debt Recovery: Engage debtors, formalise repayment plans, and pursue legal remedies if necessary.
- Accelerate Project Delivery: Resolve bottlenecks in due diligence and land acquisition to kick-start stalled projects.
- Strengthen Financial Controls: Collect outstanding transaction fees and enforce procurement discipline.
Under Patrick B. Birungi’s leadership, UDC’s mandate to transform Uganda’s industrial landscape hangs in the balance. The numbers tell a story of potential unrealised—UGX 1 trillion invested, but results mired in delays, debts, and dysfunction. Without swift and decisive action, Uganda’s industrial dreams risk becoming just that: dreams.
