Selfish interests shroud decision to purchase Uganda airlines aircraft

Selfish interests shroud decision to purchase Uganda airlines aircraft

The Airbus A330Neo owned by Uganda Airlines. (Photo Courtesy of ugandaairlines.com)

Uganda Airlines continues to be in the spotlight for the wrong reasons. Currently, the young airline is being probed by the Parliamentary Committee on State Authorities and State Enterprises (COSASE), flagging management issues that have largely boarded on the recruitment process of the current Chief Executive Officer, Bamuturaki Jenifer, to the salary disparities and corruption in the award of contracts.

At the heart of these management woes, is political interference and selfish interests that pose a threat to the young airline, and if not dealt with at an early stage, might strangle the re-born national carrier before it sees its 5th birthday.

At the time cabinet approved the decision to revive the national airline in 2017 and later in 2019 when parliament approved a budget of UGX 280 billion ($73.3 million) to purchase the airlines, the airline line task force at that time was advised to take the path of leasing the aircraft as opposed to direct purchase. Experts in the aviation industry including captain Francis Babu argued that for a start-up business like Uganda Airlines, it was not economically viable to tie up capital in purchasing aircraft before the industry had fully developed with profitable established routes.

Recommendations were given to the technical team that comprised members from the Ministry of Works and Transport, and the Ministry of Finance, Planning and Economic Development at that time to pursue the option of leasing the aircraft. The leasing option was considered cheaper even though it had smaller profit margins since it insulated government from huge capital investments for start-up businesses. The experts advised that a direct purchase would be ideal after Uganda airlines is established and making profits, within a speculated period of 5 to 10 years.

The secret known is that this advice was disregarded because of the selfish interests that shrouded decision-making. A lease option was not favored because the mafias had moved very fast within the procurement process to start negotiations with potential suppliers. Within the negotiations, they embedded their ‘cuts’ and ‘kickbacks’ hence their reason to defend direct purchase as a viable option. The secret known is that the propagators of direct purchase were more interested in ‘making a kill’, as corruption defeated business logic in pursuing the option of leasing.  This powerful group convinced the President that direct purchase was better than leasing.

Currently, Uganda owns 4 Bombardier jets and 2 Airbuses. The Bombardier jets of make CRJ900 cost taxpayers $190 million (UGX 700 billion) while the Airbus of make A330-800Neo order, cost $20 million (UGX 76.4 billion). In essence, government would have spent much less on this fleet if a lease option had been pursued.

It is such corrupt tendencies that have defeated good and well-intentioned government projects, costing taxpayers money. Uganda airlines has not been spared either and joins other similar projects frustrated by selfish interests.

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