Audit Exposes Shocking Billions Lost in Pensions, Expired Medical Supplies, and Mineral Revenue Leakages

An audit report released by Uganda’s auditor general for the financial year ending June 2024 has revealed shocking levels of financial mismanagement, resource misallocation, and theft across government ministries, departments and agencies (MDAs), and local governments.

From systemic overpayments in pensions to the expiration of billions of shillings worth of essential medical supplies, the findings expose glaring inefficiencies and accountability gaps in public sector operations. These lapses not only undermine service delivery but also raise critical questions about fiscal discipline and oversight within the country’s governance framework.

A major highlight of the report is the overpayment of Shs 20.37 billion to 15,000 pensioners and 2,193 retirees, signaling deep flaws in the management of pensions and gratuities.

The report notes that Shs 11.393 billion was overpaid as gratuity benefits, while Shs 8.98 billion went to pensioners as excess payments across 23 MDAs and 104 local governments. Such discrepancies, according to Auditor General Edward Akol, are recoverable, but they highlight a consistent failure in accurately administering payrolls and financial entitlements.

The report also emphasized the broader inefficiencies in pension management, with over 10,000 pensioners failing to appear for verification, raising concerns about ghost beneficiaries and record mismanagement.

Beyond pensions, the report highlights severe issues in budget utilization and misallocation of funds. Out of the Shs 3.685 trillion released to MDAs and local governments, Shs 0.38 trillion was left unutilized, while Shs 14.63 billion was diverted to activities unrelated to their original purpose.

Further compounding the inefficiency, Shs 66.902 billion was charged on incorrect account codes. These misallocations suggest lapses in financial planning, execution and accountability, which undermine public confidence in government systems.

HEALTH SECTOR

The health sector was also a significant focus of the audit, revealing an alarming Shs 316.65 billion worth of expired Covid-19 vaccines, ARVs, test kits, and related supplies. This wastage represents an 857 percent increase compared to the previous financial year, where expired supplies were valued at Shs 33 billion.

Poor planning, delayed distribution, and funding shortfalls were identified as the root causes of this wastage, resulting in financial losses and compromised health services. A further under-distribution of essential medicines worth Shs 59.147 billion to over 3,200 health facilities was noted, with some facilities receiving less than 70 per cent of their budgeted medical supplies.

The auditor general called for better coordination between the ministry of Finance and National Medical Stores (NMS) to ensure timely distribution of critical medicines and avoid wastage. The audit also exposed significant lapses in Uganda’s mineral management sector. Gold exports worth US$3.014 billion (Shs 11 trillion) were done without the requisite export permits from the minister of Energy, violating legal requirements and resulting in a loss of government revenue.

Additionally, unpaid export levies of Shs 68.84 billion and outstanding mineral rent fees of Shs 439 billion point to weak regulatory enforcement in the mining sector. These issues reflect not only lost revenue but also a failure to leverage the country’s natural resources for economic growth. Auditor General Akol recommended the invocation of penalty clauses against non-compliant mineral exporters to enforce compliance and recover lost revenue.

The government’s underutilization of external grants further compounds the inefficiencies outlined in the report. Of a combined grant value of $87.171 million, only $46.949 million was absorbed by the end of FY 2023/2024. This left $40.223 million (equivalent to Shs 149.895 billion) unspent, even as the grant periods elapsed.

Such under-absorption not only denies intended beneficiaries access to essential services but also raises doubts about the government’s preparedness and capacity to utilize funds efficiently. The auditor general urged punitive measures to ensure that accounting officers fully utilize grant funds by implementing the intended activities.

Procurement management also emerged as a weak link in public sector accountability. The report detailed Shs 59.02 billion spent on unplanned procurements, in addition to contracts worth Shs 47.13 billion issued without performance securities, exposing the government to financial risks.

The findings also revealed that, despite introducing the Electronic Government Procurement (e-GP) system to improve transparency and accountability, its implementation has been sluggish, with only 36 of 200 planned entities onboarded.

The gravity of these findings underscores the urgent need for comprehensive reforms in Uganda’s financial management systems. The auditor general recommended better oversight, streamlined processes, and strict enforcement of accountability mechanisms to curb financial wastage and improve efficiency.

For instance, in the pension sector, the ministry of Public Service was tasked with annually computing the effects of price indexation and collaborating with the ministry of Finance to secure sufficient budgets for pension obligations. Similarly, stricter coordination between NMS and the ministry of Finance was advised to prevent future health-sector inefficiencies.

The revelations of the audit paint a dire picture of systemic mismanagement across critical government sectors, from pensions and health services to mineral resources and procurement. Without immediate reforms, these inefficiencies will continue to erode public trust, stall development, and deny essential services to millions of Ugandans.

EXPIRED DRUGS AND INEFFICIENCIES IN MEDICINE DISTRIBUTION

During the review period, essential medical supplies valued at Shs 316.65 billion—including Covid-19 vaccines, ARVs, and test kits—were declared expired and non-viable. This marks a staggering 857 percent increase compared to the Shs 33 billion worth of expired supplies recorded in the previous financial year.

The Auditor General attributed this to poor planning, overstocking, and delays in distribution, which not only resulted in financial losses but also severely compromised service delivery in Uganda’s health sector.

The expiration of such critical supplies exacerbated existing deficits in meeting Essential Medicines and Health Supplies (EMHS) demands at health facilities. A total of Shs 562.545 billion was appropriated for EMHS during the year, but medicines worth only Shs 503.398 billion were distributed, leaving a shortfall of Shs 59.147 billion.

Out of 3,546 health facilities assessed, only 342 received their full budgeted deliveries valued at Shs 239.582 billion, while 3,204 facilities received less than their allocated supplies. Of these, 177 facilities experienced severe shortages, receiving less than 70 percent of their budgeted deliveries, amounting to Shs 33.756 billion.

The report identified delays in funding from the ministry of Finance as a key factor behind the under- distribution. The auditor general advised the National Medical Stores (NMS) to work closely with the ministry of Finance to ensure timely availability of funds for procurement and distribution.

Additionally, the auditor general recommended better demand-based budgeting for EMHS to avoid overstocking and wastage while improving supply chain efficiency to meet health facility needs promptly.

MISMANAGEMENT IN MINERAL EXPORTS AND REVENUES

In the mineral sector, the audit uncovered gross irregularities in the management of Uganda’s natural resources, leading to substantial revenue losses. Gold exports worth $3.014 billion (equivalent to Shs 11 trillion) were conducted without obtaining the legally required export permits from the minister of Energy.

This practice, according to the report, undermines Uganda’s regulatory framework and deprives the government of crucial revenue. Unpaid export levies tied to these transactions amounted to Shs 68.842 billion, reflecting lack of enforcement in tax collection.

The report further highlighted that exploration and mining companies owe Shs 439 billion in outstanding mineral rent fees, a violation of the Mining and Minerals Act. Despite these mounting arrears, enforcement mechanisms remain weak.

The Mineral Royalties’ Sharing Fund account within the ministry of Energy received Shs 5.69 billion during the year, which, combined with a closing balance of Shs 1.36 billion from the previous financial period, totaled Shs 7.05 billion. However, only Shs 3.14 billion was distributed to beneficiaries, leaving Shs 3.91 billion unaccounted for.

The auditor general called for stronger follow-up mechanisms to recover outstanding mineral rent fees and enforce compliance with legal provisions. It was recommended that the ministry of Energy invoke penalty clauses under section 149(5) of the Mining and Minerals Act to deter non-compliance by mineral exporters and exploration companies. By doing so, the government could recover lost revenues and strengthen its regulatory oversight in the sector.

BROADER IMPLICATIONS

The findings from these two critical sectors—healthcare and minerals—underscore the far-reaching consequences of inefficiency, mismanagement and weak enforcement in Uganda’s public administration. The wastage of critical medicines deprives health facilities
of essential supplies, compounding challenges in service delivery for millions of Ugandans.

Meanwhile, the lack of proper oversight in mineral management raises serious questions about the government’s ability to harness its natural resources for sustainable development.

The auditor general’s recommendations call for urgent reforms, including improved planning, enhanced coordination between agencies, and stricter enforcement of regulatory requirements. Without immediate action, these inefficiencies will continue to cost Uganda billions of shillings annually while eroding public trust in the government’s ability to manage public resources effectively.