Uganda Loses AfDB Shares After Financial Default
Uganda has lost a substantial shareholding in African Development Bank after failing to pay its subscription fees.
Uganda’s shareholding shrunk by 1,347 shares after the government failed to pay USD1.3m as subscription fees.
According to the Auditor General’s report for 2015/16, Uganda owed AfDB subscription fees amounting to $1.3m (Shs 4.6bn). After Uganda failed to pay up, the price paid was relinquishing some of its shares.
The audit said “further losses are expected if a balance of $1.7m is not cleared.” The deadline for payment is not yet clear. The AfDB is a multilateral development lender and draws its members from states in Africa and beyond. All the 54 countries in Africa are members of the bank.
Losing shares means a member can lose voting rights and also risks its membership from being suspended. Uganda still holds some shares in the bank. According to the agreement that sets up the bank, “If a member fails to fulfill any of its obligations under this agreement or any other obligation to the bank arising from the bank’s operations under this agreement, the board of governors may suspend such a member…The board of governors may, in lieu of suspension of membership, order suspension of the voting rights of such a member upon such terms and conditions as may be established by the board of governors… “.
According to the agreement, “each member shall have 625 votes and, in addition, one vote for each share of the capital stock of the bank held by that member.”
The bank is expected to use the resources at its disposal for the financing of investment projects and programmes in the member countries, especially infrastructure.
Meanwhile, the auditor general also noted that Uganda has more outstanding obligations with other organisations, which curtail its participation and benefits from them.
In the audit report dated December 15, 2015, the auditor general said the country was indebted to international organisations to the tune of Shs 38.4bn. That amount appears to have reduced, though.
“Overall outstanding commitments to international organizations as at 30th June 2016 amounted to Shs 27.3bn in 17 organizations,” said another auditor general report, the latest.
“Failure to make timely subscription will continue to affect the country’s ability to benefit from these international organizations,” said the audit report.