Report Uncovers Sh44bn Seedling Arrears, Sh15.9bn Debts & Illegal Payouts at NAADS after merger with MAAIF

Kampala — For years, the National Agricultural Advisory Services (NAADS) sold itself as the engine of Uganda’s agro-industrial transformation. Tea seedlings. Apple orchards. Hass avocado dreams. Irrigation schemes. Heifers for farmers. Etc.

But the December 2025 Auditor General’s report paints a different picture — one of ballooning arrears, questionable payments, dormant Letters of Credit and a financial hangover that now threatens to overshadow the agency’s merger into the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF).

And right at the centre of the storm stands the long-serving Executive Director, Dr. Samuel Mugasi.

An Unqualified opinion may sound clean on the surface. But dig deeper, and the numbers tell a story of strain, poor planning and controversial decisions.

As at 1st July 2024, NAADS had arrears worth UGX 15.9 billion. Shockingly, only UGX 161.1 million was budgeted for settlement during the year — leaving an under-provision of UGX 15.74 billion. In simple terms, the agency entered the financial year knowing it had huge unpaid bills, yet barely set aside money to clear them.

Then came the bombshell: NAADS recognized new arrears worth UGX 44.6 billion relating to tea and apple seedlings procured and distributed to farmers back in FY 2021/22. These arrears were only verified three years later, in FY 2024/25.

By the time verification was attempted, tracking the beneficiaries and even confirming the gardens where the seedlings were planted had become “challenging” due to the passage of time. In other words, billions’ worth of seedlings were distributed — but confirming who received them and where they were planted became a puzzle years later.

Even more troubling, NAADS had 51 outstanding Letters of Credit worth UGX 13.84 billion for the construction of markets, irrigation schemes, boreholes and the supply of agricultural equipment and heifers. These LCs had not performed more than 12 months after being opened.

Markets not built. Irrigation schemes incomplete. Equipment undelivered. Heifers not supplied.

Yet money was tied up.

Critics are now asking whether these delays were due to weak contract management, poor supervision or deeper systemic inefficiencies.

The merger of NAADS into MAAIF under the National Agricultural Advisory Services (Amendment) Bill, 2024 was meant to streamline agricultural agencies and eliminate duplication. Dr. Mugasi personally oversaw the handover, announcing the creation of a new Department of Development within MAAIF to absorb key staff and functions.

He emphasized integration and continuity. With over 24 years of experience in agricultural research and rural development, and a track record of promoting high-value crops like Hass avocado and tea, Mugasi projected confidence.

But the audit findings have complicated that narrative.

The entity lacked a specific budget for terminal benefits of staff affected by Rationalisation of Agencies and Public Expenditure (RAPEX). Instead, management relied on an amalgamated UGX 16 billion budget for all five rationalised entities under MAAIF.

The result? Budgets for individual entities, including NAADS, may not have been realistic.

Even more controversially, ten former NAADS staff (name withheld for now by RedPepper) who were absorbed by MAAIF were fully or partially paid separation benefits amounting to UGX 272 million. This contradicted RAPEX guidelines and advice from the Attorney General that re-absorbed staff should not be paid terminal benefits because their service was considered continuous.

Eight former staff who retired were fully paid UGX 299.2 million in separation benefits. Meanwhile, 27 staff who retired were only partially paid UGX 77.93 million, leaving an unpaid balance of UGX 1.99 billion.

So while some were allegedly paid in contradiction of guidelines, others who genuinely retired were left underpaid.

The growing arrears, dormant LCs, delayed verification of seedling beneficiaries and questionable terminal benefit payments have sparked uncomfortable questions about leadership accountability.

Is Dr. Mugasi to blame?

Supporters argue that NAADS operated in a complex environment of shifting mandates, budget constraints and eventual merger pressures. They point out that the agency has been central to promoting commercial agriculture, distributing seedlings and improving farmer access to inputs.

Critics, however, say long-serving leadership carries responsibility for institutional culture. “When arrears balloon to UGX 44.6 billion and are only verified three years later, that reflects systemic weaknesses,” an economist said. “Systems don’t fail overnight. They erode over time.”

The merger into MAAIF may have been designed to fix fragmentation in Uganda’s agricultural sector. But it has also exposed the financial skeletons of agencies being absorbed.

Farmers who were promised irrigation schemes and modern markets are still waiting. Contractors with unpaid bills are restless. Retired staff are counting their unpaid balances. And taxpayers are staring at tens of billions in arrears that should have been anticipated, budgeted and managed.

The big question now is whether the transition to MAAIF will bury these issues quietly or trigger deeper accountability.

Dr. Mugasi recently spoke of integration and strengthening agricultural transformation. But as the dust settles on the audit report, many are asking whether transformation can truly happen without first confronting the financial and management cracks laid bare.

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