Halting of operations of some NGOs due to non-compliance

Our attention has been drawn to a press release statement made by the Executive Director of the NGO Bureau issued on 2oth August 2021 and addressed to the public regarding non-compliance by NGOs in relation to the rules and regulations governing NGOs and the NGO Act in Uganda. Fifty-four NGOs were mentioned in the statement. The purpose of this alert is to provide an analysis of the impact of the NGO Bureau’s decision as contrasted with recent developments in the NGO sector and provide insights on how NGOs and other affected actors can best conduct their operations.

1. Introduction

The National Bureau of Non-Governmental Organisations (NGO Bureau), an entity under the Ministry of Internal Affairs is a body corporate established under Section 5(1) of the NGO Act of 2016.The NGO Bureau is mandated to monitor and regulate the NGO space in Uganda and enforce the provisions of the NGO Act 2016. The NGO Bureau derives its powers from Section 7 of the NGO Act 2016. The press statement addressed to the public pointed and referred to above, the NGO Bureau states that it has noted with great concern the increasing non-com-pliance practices involving some NGOs and members of the general public. These non-compliance practices mentioned are in three categories;

  1. The first one being NGOs operating with expired NGO permits.
  2. The second one category was about NGOs that have consistently failed to file annual returns and audited books of accounts and have other non-compliance issues.
  3. Lastly the third category was about NGOs operating without registering with the NGO Bureau.

The Bureau therefore:

  1. Halted the operations of 23 NGOs who it accuses of operating with expired permits.
  2. Indefinitely suspended 15 NGOs who it accuses of consistently failing to file annual returns and audited books of account and/or other non-compliance issues.
  3. Halted the activities of 16 NGOs who it accuses of operating without registering with the NGO Bureau.

Accordingly, the NGO Bureau:

  1. Informed the general public of the above developments and further informed the general public that NGO Bureau is currently carrying out investigations into a number of non-compliance related cases involving some NGOs hence it calls upon the general public to report such cases and avail information to the NGO bureau.
  2. Warned the general public and key stakeholders that in their dealings that NGOs should always be more vigilant and comply to the rules and regulations governing NGOs in Uganda.
  3. Cautioned the NGO sector to be more transparent and accountable in their operations since it tarnishes their credibility image and reputation of the sector as a whole.

2. Recent Developments in the NGO Sector: Center for Constitutional Governance vs. National Bureau for Non-Governmental Organizations- Miscellaneous Cause 374 of 2020

The Bureau’s press release comes in the wake of the ruling in Center for Constitutional Governance Vs. National Bureau for Non-Governmental Organizations Miscellaneous Cause 374 of 2020 which has had a significant impact on the interpretation of non-profit activities and the NGO sector.

In that case, the applicant, Center for Constitutional Governance (CCG), commenced an application for judicial review of the decision of the NGO Bureau to suspend the operations of the National Election Watch Uganda(NEW-U), an association of different NGOs and private persons, on account of the fact that NEW-U was neither registered nor a licensed NGO.

CCG argued that NEW-U was merely a citizen association under Article 29 of the Constitution and did not require to be both registered and licensed as an NGO since it was not an “organization” within the meaning of the NGO Act, 2016. The NGO Bureau for its part argued that NEW-U was an unregistered entity which operated like an NGO and had was a scheme to flout compliance with NGO registration and licensing requirements.

The court held that NEW-U was being run like an NGO and the argument that it was a citizen association was merely an afterthought after NEW-U was found to be in non-compliance with NGO registration and licensing requirements.

Impact

The NGO Bureau, emboldened by this ruling has now gone ahead, through the above referenced press release, to suspend the operations 16 NGOs which it claims are operating without licenses.

We must state here that the impact of the ruling above is not to confer limitless authority on the NGO Bureau to suspend the operations of any entity whose operations are similar to those of a conventional NGO. In fact, it is our opinion that the decision of the court in the matter referenced above was made in the specific circumstances of the case before it, and was premised on a finding of fact-considering that many members of NEW-U were actually registered with the bureau. At page 11 of the ruling, the court made a finding of fact on which the decision to suspend the operations of NEW-U was found to be legally justified. Court held thus:

“The evidence on record is clear that that the National Election Watch-Uganda (NEW-U) was operating under a registered NGO (UNNGOF) and all its activities and intentions were crafted as a Non-Governmental Organization which must be issued with a permit to operate. The respondent (NGO Bureau) was right to halt the operations of National Election Watch-Uganda (NEW-U) in the circumstances of this case.”

Accordingly, this decision should not be used to advance the argument that any non-profit organization whose activities are similar to a conventional NGO must register with the NGO Bureau. This would mean that all faith based organizations, social associations, clubs, social enterprises and such similar entities would be required to register. We do not find this to be the true position of the law or the intention of the framers of the NGO Act and any decision made on such premise would, in our opinion, be made in error.

Sections 29 and 31 of the NGO Act, 2016 require all “organizations” to register and be licensed by the NGO Bureau before they can commence operations in Uganda. Section 3 of the same act defines an “organization” as an entity established to provide volunteer services to the community (or any part of the community) but not for profit or commercial services.

Entities registered as companies limited by guarantee (not for profit) with the Uganda Registration Services Bureau are governed by the Companies Act and have governance provisions that provide for the process of winding up.​

3. Recommendations

The affected NGOs can appeal the decision by the NGO Bureau under Section 53 of the NGO Act of 2016 to the Adjudication Committee or pursue mediation with the bureau to ensure that the NGO’s many of whom are providing essential services to the communities can be able to resume their operations or remedy the non-compliance issues mentioned.

The affected NGOs, as well as other actors, may also elect to pursue redress in courts of law.

We advise that the NGOs should put in place the following;

  1. NGOs should strengthen internal controls. Internal controls are processes and procedures implemented to ensure the integrity of accounting and financial information. Weak internal controls such as poor separation of duties, lack of supervision, and poor documentation of processes rise to non-compliance practices. We encourage the NGO sector to strengthen internal control systems.
  2. We recommend that the NGOs should carryout constant audits for books of accounts, files, employee assessments & appraisals among others.
  3. We recommend that the NGOs should put in place internal governance structures and strengthen the board the board of directors, management structures, among others and streamline the administrative processes within the organization to promote transparency and efficiency.
  4. Lastly we recommend that the NGO sector should strengthen their record keeping systems to avoid instances of misplacing documents like minutes, attendances lists, among others that are crucial requirements for every compliance related issue at the NGO bureau.

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