Op-Ed: Parliament should not guarantee the International Specialist Hospital

I read with interest the report in the New Vision on Parliament’s rejection of a guarantee on the promissory notes for the construction of the 1.4 trillion U.Shilling International Specialist Hospital. This is a project that has been in the pipeline for several years, and for which government has already allocated a prime piece of land in Lubowa. Now the Ugandan taxpayer is being asked to guarantee their loans!

Some years ago the President was approached by an Italian company, Finasi, to build a state of the art hospital where Ugandans could access highly specialized treatment. At that time it was thought that government was spending huge sums on sending civil servants abroad for treatment, so such a hospital would ensure that this money was spent in Uganda.

I was approached by a Ministry of Health official, who was trying to gather statistics on how many Ugandans went abroad for treatment. Realistically I did not have a clue because, although many Ugandans get treatment abroad, it is difficult to quantify. On the other hand it should have been relatively easy to ascertain what government itself was spending on patient treatment abroad, since there is a medical board that sits to approve such expenditure, but I understand that this is a relatively small amount.

A figure of $75,000,000 per annum was apparently generated as an estimate of what Ugandans spend on medical treatment abroad, but I doubt that anyone could verify this.

This figure was then used by the investor in the business plan to justify an investment of $370,000,000 to build and operate a specialist hospital in Uganda for eight years. The Joint Clinical Research Centre (a wholly owned government company) owned a prime site at Lubowa, which the government then allocated to this new Finasi International Specialist Hospital. JCRC were not thrilled about this development because they had planned to use the site themselves to develop a new hospital, but they had no choice in the matter.

To this point in the story this was a private sector project that had been given land by the government, which is not unusual. But then the story became more complicated. The budget for this project was enormous, compared to any other hospital in Uganda, so although the project was launched two years ago with much fanfare, it stalled because the investors could not raise the finance.

Certainly if the government had been able to guarantee the payment of $75,000,000 per year to this hospital (which was the amount estimated for treatment abroad), the project would have taken off, but there is no $75,000,000 (280,000,000,000 U shillings) in the budget.

So it seems that someone may have come up with plan B, and the project has now been labeled as a government owned hospital, which will be operated by the Papa Giovanni XX111 Hospital in Bergamo, Italy for eight years. The project will now also include a hotel and a school. This project started as a commendable plan, when an Italian investor approached the President with a grand plan to build a specialist hospital, which would stop the outflow of hard currency from Uganda.

And if the business plan been verifiable by commercial banks, the project would have been up and running by now. But this is not the case, and we find the investors back seeking a government guarantee. If the project is not commercially viable the investors will be able walk away in eight years, leaving the Ugandan taxpayer to foot the bill. They also sold the idea of training and building capacity among Ugandan doctors, but I wonder how this will happen since the hospital will be staffed by Italians doctors.

As Chairman of the Uganda Healthcare Federation I am passionately committed to the development of the health sector in Uganda, but I am against quasi-private projects, which put the risk back on the Ugandan taxpayer. I would be happy for such a project to go ahead if they shoulder their own financial risk: they have been given a prime piece of land as a kick-start, so let them raise their own finance like all the other private hospitals in Uganda.