Uganda Air Cargo’s Aircraft Deal Faces Going Concern Amid Parliamentary Investigation

Overview of the Aircraft Deal

Uganda’s parliament has initiated an investigation into a significant aircraft deal made in 2024 between the Ministry of Defence and Veteran Affairs (MoDVA) and the Dubai-based investment firm Alpha MBM. This inquiry seeks answers regarding a joint venture that aimed to reinvigorate the state-owned Uganda Air Cargo (UACC), which has remained inactive for years due to insufficient funding.

Key Details of the Agreement

As part of this deal, UACC received a B737-400(F), P4-JMD (msn 27914), with plans for an additional six aircraft. This was formalized through a memorandum of understanding signed on May 23, 2024. The private investment office belongs to Sheikh Mohammed bin Maktoum bin Juma Al Maktoum of Dubai. During a meeting held on July 17, the chairman of Uganda’s Committee on Commissions, Statutory Authorities, and State Enterprises (COSASE), Medard Lubega Sseggona, expressed dissatisfaction with the deal. He pointed out that only one of the seven promised aircraft had been delivered before the partner reclaimed it, leaving UACC without a functional fleet.

Legislative Concerns

Critics contend that the private partner’s contributions have been negligible, raising questions about the overall value of the initiative. “For the past year, the joint venture partner has failed to meet its obligations, yet the ministry insists UACC abides by the deal. The partner contributes no equipment, no business ideas – what value do they bring?” asked Sseggona. In light of these concerns, the committee directed UACC to conduct a value-for-money audit concerning the agreement.

Financial Hurdles

The inquiry has revealed pressing financial issues, prompting COSASE to summon the Ministry of Defence and Veteran Affairs to explain its failure to pay UGX29 billion shillings (USD8 million) owed to UACC for troop transport services to Somalia. There are escalating worries regarding financial mismanagement within the state-owned airline.

Debt and Liabilities

The Auditor General’s findings indicate that UACC is burdened by uncollected debts and substantial liabilities. Members of parliament have expressed frustration with the ministry, which is the largest debtor of UACC, questioning why it continues to seek recapitalization while owing payments. The ministry’s interference in UACC’s management is also under scrutiny. Sseggona has called for the establishment of a functioning board to improve UACC’s independence from the Defence Ministry.

Budgeting and Operational Setbacks

Adding to UACC’s woes is its UGX8 billion shilling (USD2.2 million) annual budget allocated for salaries and maintenance, despite the lack of operational aircraft. MPO Yusuf Nsibambi labeled UACC’s situation as an “economic liability,” urging immediate actions to restore the airline’s functionality.

Future Plans for Resumption

To revive operations, UACC has requested UGX381 billion (USD106.2 million). Since losing its air operator’s certificate (AOC) back in 2014, the carrier’s ability to generate revenue has been severely crippled. Notably, the primary revenue-generating asset, a Lockheed Hercules L100-30, has been out of commission, grounded at Jordan Aeronautical since November 2022. Observations showed that alongside being grounded, the aircraft required an avionics upgrade to meet civil aviation regulations. Furthermore, anticipated capital infusion from MoDVA, as previously approved by the Cabinet, has yet to materialize, complicating UACC’s path to operational recovery.

Logistical Implications and the Path Ahead

The implications of UACCs operational setbacks ripple across the logistics sector. Live cargo operations hinge on reliable transport systems, and UACC has historically played a critical role in this aspect of logistics for Uganda. When an airline falters, the logistics associated with air freight also deteriorate, impacting everything from shipment scheduling to delivery timelines.

Conclusion and Moving Forward

As the investigation unfolds, Uganda Air Cargo stands at a crossroads. The concerns raised by parliament members regarding operational efficiency and financial transparency highlight the intricate relationship between governance, investment, and logistics. This situation underscores the importance of reliable cargo transportation systems in supporting economic infrastructure and regional trade.

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