Pharmaceutical company boosted as supplementary budget is approved

Parliament has approved a supplementary expenditure budget worth Shs1.106 trillion for settling the offtake arrangement between government and DEI Pharmaceuticals, wage and pension and gratuity shortfalls.

During plenary on Tuesday, 30 April 2023, the Deputy Chairperson of the Budget Committee, Hon. Achia Remigio presented the committee’s report approving the supplementary.

Achia said the government has initiated the process of acquiring equity in DEI BioPharma Ltd as a strategic intervention to increase the local production of pharmaceutical drugs.

DEI Pharma Limited is being allocated Shs578.4 billion to enable it complete business production and ensure it comfortably meets its debt obligations and operational requirements.

“It should be noted that the Minister of Science, Technology and Innovation provided a written commitment to the committee, stating that ‘no funds would be disbursed to the company until the valuation process is completed and the government’s stake in the Company is formally established’,” the report reads in part.

Kira Municipality MP who is also the Shadow Minister of Finance, Hon. Ibrahim Ssemujju Nganda  presented a minority report opposing the request stating that it did not comply with the law.

“We oppose donating Shs578 billion to Mr Mathias Magola (DEI Pharma Ltd). All the activities and items the government is seeking to finance through the second supplementary do not meet the requirements of the Public Finance Management Act,” he said adding that, ’money for Magola is being diverted from debt service; the government has diverted Shs666 billion from our debt servicing vote’.

Hon. Simon Peter Okwalinga (NRM, Kachumbala County) said he supported the majority report but objected to funding Magola’s DEI Pharma Limited.
“I would like the government to come clean on this issue and tell us where this money is heading,” he said.

The Minister of State, Office of the Prime Minister (Northern Uganda), Dr Kenneth Omona supported the report of the committee indicating that the government is supporting local manufacturers as a measure to enhance import substitution.

“Uganda is already beginning to export pharmaceutical products which is good for our country,” Omona said.

He however, said that the government must be very serious and ensure that there is value for money in the investment.

Kampala Central MP, Hon. Muhammad Nsereko criticised the prioritisation of funding of a private investor DEI Pharma Limited amidst challenges in the health. He also said in order to seek a supplementary, it should be unforeseeable and unavoidable.

Hon. Muwanga Kivumbi (NUP, Butambala County) added that the government has an investment vehicle in Uganda Development Corporation (UDC) that they should use instead of Parliament directly giving money to Magola.

The Minister of State for Finance (General Duties), Hon. Henry Musasizi told the House that when the valuation has been completed, they will now come to equity.
He said the company as it stands is “sick” and they do not want the company to “die”.

The Speaker Anita Among said that much as there is a commitment on valuation, the government must do the valuation.

She instructed the Budget Committee to monitor and ensure that the valuation is done. She demanded a full valuation report of the assets and finances.

“No disbursement of this money before the valuation is done. Upon the valuation and this money is paid, the security must be kept with the treasury and not with the owner,” she ordered.

In the other allocations, Shs166 billion goes to the Ministry of Lands, Housing, and Urban Development for Uganda Support to Municipal Infrastructure Development – additional Support (USMID) and external financing for competitiveness and Enterprise Development project- Additional Funding (CEDP-AF), and an additional Shs66 Billion for compensation among others.

The Ministry of Gender, Labour and Social Development was allocated Shs3 billion for the Anglican, Catholic and Muslim martyrs shrines in Namugongo and Shs1 billion will go to Nebbi Diocese who will host this year’s 03 June Martyrs day celebrations.

Shs 13.6 billion will be given to cater for wage shortfalls of Kampala Capital City Authority cleaning casual workforce among others.