Business Corruption

One of the most common types of corruption in local government bodies is to give contracts and jobs to supporters and family members. According to the PPDA, IGG & USAID National Public Procurement Integrity Baseline Survey 2006, the majority of the respondents indicated that the Secretary to the Tender Board and the Tender Board members as being most corrupt.

Companies should note that corruption is widespread in the public procurement sector. According to Global Integrity 2009, despite that conflicts of interest is covered under law; it is not always being enforced in practice. Therefore, public officials are still able to reward contracts to themselves through a third party, or reward contracts to non-existing companies. Global Integrity 2009 also reports that if a company is found guilty of bribery, it will be prohibited from future bids. Nevertheless, there are cases where violating companies are found to continue to place bids using their political influence. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Uganda.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to a 2008 news article by Anti-Corruption Coalition Uganda, corruption within the water sector is widespread, and many contractors are rewarded contracts as a result of non transparent procurement procedures, bribery or their connections. This has caused an uneven supply of clean water in Uganda.

According to Global Integrity 2009, there are examples of political interference with the public procurement process despite that the law mandates competitive bidding in the country. This is especially the case when procurement involves high-ranking government officials’ interests. One example cited in the Global Integrity 2008 was when the company, Kenlloyd-Logistcs, was suspiciously granted a USD 22.3 million contract to replenish the fuel reserves over well-established oil companies such as Shell, Caltex and some others. The Public Procurement and Disposal of Public Assets Authority (PPDA) stopped the contract and further investigation has revealed that the manager of Kenlloyd-Logistcs is closely linked to the Foreign Minister and the President. Freedom House 2010 also reports that corruption often stems from the award of national and district government contracts. President Museveni has frequently suspended rules requiring competitive bidding to designate a recipient.

According to the US Department of State 2010, government procurement, particularly for defence items, is not transparent. In recent years several high-profile governmental tenders for infrastructure projects were suspended as a result of allegations of corruption. The same source also reports that there are cases where government officials signal that companies interested in procurement contracts can provide ‘under-the-table’ cash payments directly at local agency offices. According to a September 2009 study conducted by the Public Procurement and Disposal of Public Assets Authority (PPDA), and cited in the US Department of State 2009, corruption in the public procurement process accounts for an annual loss of USD 250 million from Uganda's national budget.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.0 on a 7-point scale (1 being 'is common' and 7 'never occurs').

- Business executives give the favouritism of government officials when deciding upon policies and contracts a score of 2.4 on a 7-point scale (1 being 'usually favour well-connected companies and individuals' and 7 'are neutral').

Inspectorate of Government: The 3rd National Integrity Survey 2008:
- Securing contracts constitutes the 11.3% of all public services companies report having to pay bribes for, thereby ranking as the third most corrupt public service-related activity.

The World Bank & IFC: Enterprise Surveys 2006:
- 45.5% of companies expect to give gifts in order to secure a government contract.

- Companies report that a gift valued at approximately 5.5% of the contract value is expected in order to secure a government contract.