Research: Ugandan Officials Might Have Hidden UGX 267bn Aid Money

Ugandan officials could have stashed away a whopping USD 73M (UGX267B) of the aid money from the World Bank between 1990 and 2009, a new research paper suggests. 

The controversial paper written by researchers from the Norwegian Business School, University of Copenhagen, and The World Bank observed that every time the institution released money to aid-dependent countries like Uganda, “there was correlating increment in the amount of money deposited in countries praised as havens” – usually used to hide stolen cash.

The countries where they hide money include Switzerland, Luxembourg, Cayman Islands, Bahamas, Hong Kong and Singapore. The paper is titled “Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts” was on Tuesday published on the bank’s website.

For Uganda, researchers found that money hidden in havens by Ugandans grew by 2.4% per quarter when the World Bank released money for the country. This is higher than the quarterly growth in the country’s economy at just  an average of 1.6%.

The amounts hidden in these countries had reached Shs 267bn by 2009. Uganda receives annually up to 3.3% of its GDP in aid from the World Bank, the paper’s analysts found. The paper only looked at aid from World Bank but Uganda receives much more money from other institutions and countries including the USA and the Scandinavian countries like Norway, Sweden, and Denmark. 

This means money stolen could be much more. The research paper does not name the officials who hid the money. In East Africa, Tanzania was also studied and researchers found at least $145m had been hidden by its elites. Researchers concluded that this was because politicians, elites and their cronies got access to aid money and instead of using it to work on projects that developed their countries, they hid it away for personal use.

The paper had reportedly been spiked by the Bank after it put a spotlight on the World Bank’s work. It was released on Tuesday after the World Bank’s chief economist Penny Goldberg resigned and after the paper was leaked to the UK’s Economist and Financial Times.

The World Bank has said in a statement that “management takes corruption and related fiduciary risks very seriously, especially given the challenging environments in which we need to work to achieve our poverty mission.”  It reignites questions on whether aid money was actually helping the intended people but also on corruption by ruling class in countries receiving this aid. 

Several papers aid money doesn’t necessarily help the most disadvantaged people. The paper says: “The results are consistent with aid capture by ruling elites: diversion to secret accounts, either directly or through kickbacks from private sector cronies, can explain the sharp increase in money held in foreign banking centers specializing in concealment and laundering.”