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Merger process should comply with the law – Monitor

Author: Olive Zaale Otete. PHOTO/COURTESY
By  Guest Writer

Prior to establishing autonomous entities such as Uganda Revenue Authority, National Environment Management Authority, National Forestry Authority, Capital Markets Authority, National Information Technology Authority and Insurance Regulatory Authority, the relevant ministry had to make a strong case to Cabinet to approve the principles for drafting a law for their establishment. Many of these entities were formally departments of their respective ministries. 
The relevant ministry prepared a technical paper known as a Memorandum to Cabinet outlining the benefits of establishing an independent authority as opposed to the department staying as part of a government ministry. 
Reasons largely rotated around ability to manage own funds so as to achieve objectives expeditiously, ability to hire own staff in record time as opposed to delayed processes followed by the Ministry of Public Service, and having in place a competent Board of Directors to provide strategic direction to the entities, among others. 
If Cabinet agreed with the reasons for establishing the entity, a minute was raised, authorising the ministry responsible for Justice to draft a Bill to establish the entity. The responsible minister then made a case to Parliament why the law establishing the entity should be passed and if Parliament was convinced, it passed the law. 
Many years later, government has now realised that the cost of maintaining these entities is staggering, among other reasons given for their merger with their parent ministries. 
The Ministry of Public Service has notified the public of the entities that are to be merged. It is not yet clear why the legislative process to give effect to the merger policy has not commenced since the announcement was made. It is possible government is still trying to find money to implement this policy. 
The delay has caused uncertainty and affected the morale of employees in these entities. Getting tired of this uncertainty, some permanent secretaries have started to ‘implement’ the merger process without following the law. Upon the expiry of the boards of directors of some of the entities slated for merger, the responsible minister is not appointing a new Board, because the entity is identified for merger anyway. 
There is a danger of committing illegalities by retiring Boards of Directors before the law establishing these entities is repealed. The boards were given specified functions under the law. The minister or permanent secretary cannot assume the board functions unless the law gives him or her that function. 
The smart thing to do is for the relevant ministry to again take the case back to Cabinet and seek authority to repeal the law establishing the entity.  Since in this case it appears that government has already made this decision, and considering that many entities are affected, government could authorise the drafting a miscellaneous repeal Bill, to repeal all the affected laws using one law. 
Before the laws are repealed, the entities do exist and the ministries cannot legally perform the functions of the affected entities. 
Ms Zaale Otete is an advocate of the High Court of Uganda and Fellow of Chartered Institute of Arbitrators
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.