Bireete: Flawed finance certificate puts Sovereignty Bill on shaky ground

The Attorney General has significantly amended the controversial Protection of Sovereignty Bill. However, no amount of redrafting can cure what remains its Achilles heel.

The certificate of financial implications that accompanied the Bill to Parliament does not comply with the law. The Bill is therefore invalid.

A certificate of financial implications is a mandatory document that must accompany any Bill before it is introduced in Parliament. It is issued by the Minister of Finance and explains what the Bill will cost, what revenue it may generate, and how it will affect the economy.

This requirement is set out in the Public Finance Management Act and reinforced by guidelines issued by the Ministry of Finance.

The certificate is the mechanism through which the government demonstrates to Parliament, and to the country, that a Bill’s financial consequences have been assessed and can be met. Without it, Parliament legislates without full information.

The law requires the certificate to provide estimates of revenue and expenditure over at least two years. It must also assess the economic impact of the Bill. The guidelines further require a detailed analytical framework for evaluating that impact.

The certificate issued for the Sovereignty Bill falls short on all these requirements.

It presents an additional financial burden of Shs29 billion as a single lump sum. There is no itemisation, no explanation of the methodology, no timeframe, and no distinction between capital and recurrent expenditure. This is precisely the type of opaque presentation the guidelines were designed to prevent.

The certificate also states that the Bill is not expected to generate revenue. This is incorrect. The Bill creates multiple revenue streams, including registration and renewal fees, fines, forfeitures, and penalties payable to the Consolidated Fund.

The Uganda Law Society has highlighted these omissions and criticised the certificate for presenting only the expenditure side of the fiscal equation.

There are further inconsistencies. The description of the Bill in the certificate does not match the actual contents of the Bill. It even refers to concepts that do not appear in the text, raising doubts about whether the correct version was analysed.

Most critically, the certificate lacks a proper economic impact assessment. Its analysis is reduced to a single paragraph claiming that the Bill will strengthen policy autonomy and national security. This does not meet the legal standard.

A comprehensive economic assessment would examine macroeconomic risks. It would analyse effects on investment, financial stability, and external balances.

The Bank of Uganda has already provided such an assessment.

The central bank warned that the Bill could destabilise the balance of payments and lead to a sharp depreciation of the shilling. It raised concerns about possible grey-listing by the Financial Action Task Force, the loss of correspondent banking relationships, and the risk of criminalising legitimate economic research.

It also cautioned that the Bill could reverse decades of financial sector progress.

None of these concerns appears in the certificate.

The guidelines require stakeholder consultation, risk assessment, and economic modelling. Had these steps been followed, the central bank’s concerns would have been identified and presented to Parliament before debate. This did not happen.

A document that fails to meet the requirements of the law cannot be considered a valid certificate. It is a label without substance.

Proceeding with a Bill under such circumstances breaches a mandatory step in the legislative process.

There are counterarguments based on case law.

In Fox Odoi-Oywelowo v Attorney General, the Constitutional Court held that the economic impact requirement does not go to the root of the certificate. The court suggested that deficiencies would not necessarily invalidate an Act.

In Male Mabirizi v Attorney General, the Supreme Court addressed the issue by striking out only amendments that lacked proper certification.

However, these cases are distinguishable.

In Fox Odoi, the deficiency is related to a law with minimal fiscal implications. The Sovereignty Bill is fundamentally different because of its potentially significant economic impact.

The current certificate is not merely incomplete. It is defective in nearly every respect. It lacks proper costing, fails to identify revenue, misrepresents the Bill, and omits any meaningful economic analysis.

Such a document cannot be equated with one that has only minor omissions.

The statutory provision that deems a certificate issued after 60 days is intended to prevent executive inaction. It does not permit the issuance of an empty or defective certificate.

The Bill is now scheduled for plenary debate. Yet the certificate has not been corrected or reissued.

The Minister of Finance has not responded to concerns raised, including those from the Uganda Law Society.

Parliament is being asked to consider a Bill with potentially serious macroeconomic consequences that remain unknown and unquantified.

Even the Attorney General’s amendments require a fresh financial assessment. Any change to the regulatory framework alters the fiscal implications.

Parliament cannot make informed decisions without this information.

The appropriate course is clear. Parliament should suspend consideration of the Bill until a compliant certificate is issued.

Such a certificate must provide itemised costs, quantify expected revenue, assess economic impact, incorporate stakeholder input, and disclose risks.

Only then can Parliament properly discharge its legislative duty. Legal challenges are likely if the Bill proceeds in its current form.