As Government embarks on a plan to raise more taxes to finance the budget, a review of FY2016/17 proposed budget presents a cocktail of views. The proposed budget at UGX. 26.3 trillion from 24 trillion in 2015/16 is a step in the right direction since Government is expected to check her spending given the huge debt that needs servicing. Government must also be applauded for its efforts that have seen the country take third place in budget transparency on the African continent, thanks to the civic education coupled with opening up spaces for constant citizen engagement and participation in the national budget processes at both local and national level.
FY 2016/17 budget priorities are aligned to Vision 2040 and the National Development Plan FY 2015/16 to FY 2019/20 which include: Enhancement of national security, Promotion of production and productivity through support to NAADS and value addition in the key growth sectors of the economy, Scientific research and innovation, Infrastructure development, Supporting wealth creation with special focus on the Youth and Women Entrepreneurship Programme and Microfinance and Raising the quality of social services to improve the general welfare of Ugandans.
Hon. Fred Omach Minister of State for General Duties MoFPED giving a key note address during the Pre-Budget Dialogue for FY 2016/17, March 2016.
One of the key sectors that is of interest to most Ugandans is agriculture, and rightly so for being the main driver of poverty reduction over the years; from 24.5% in 2009/2010 to 19.7% in 2012/2013 according to the 2014 Uganda Poverty Status Report. Government’s move to increase allocations to agriculture from 474 billion in FY 2015/16 to 794.63 billion in FY 2016/17 is, at face value a commendable move. However such increment should be directed towards strengthening the existing infrastructure including human resource and enforcing quality rather than quantity in the sector.
Part of Uganda’s debt portfolio is characterized by non-performance. UDN Report on Public Debt (2015, p.34) and 2015 Auditor General report raise issues relating to low absorption capacity since FY 2009/10 resulting from poor project management, procurement challenges and poor financial management among others. The AG Report further highlights the persistent challenge of low absorption of external debt indicating that, the national debt portfolio was still underperforming with absorption levels below 50%. With the proposed FY2016/17 budget, Ugandans expect public debt to be managed efficiently for purposes of economic growth.
Civil Society Organizations and General Public during the FY2016/17 Pre-Budget Dialogue, March 2016.
It is therefore a continual responsibility of all Ugandans to shrewdly monitor the utilization of budgeted resources and demand for prudent accountability and transparency in resource allocations and utilization for efficient service delivery.
Our Budget, Our Responsibility!
Uganda’s debt situation dates back to 1950s, where it had major debt relationships with the western world institutions, especially the World Bank (WB) over construction of railways and Owen Falls Dam– Jinja. As such, Debt acquisition processes and transparency thereof, coupled with absorption and outcomes remain serious issues. Moreover, the global financial crisis of 2008 that triggered a near economic crisis and the effects thereof, imply more serious issues and repayment challenges amongst both the Creditors and Lenders.
Memories of previous economic crises like the Mexican crisis of 1994 and the Asian crisis of 1997 remain apparent. More lately the Chinese economic is on a draw down, while there are also emerging Lenders beyond the historical WB and IMF. For such creditors are EAC nations, including Uganda, the need to continuously review the global Debt dynamics is inevitable. Such review must anchor their policy options on public transparency, wider stakeholder participation and Government accountability on the desirable Debt Outcomes, for Debt to remain relevant in the lives of the final intended recipients.
Rate of debt acquisition and outcomes;
Beyond the crises in 1980s and 1990s, additional concerns by Uganda debt Network (UDN) relate to the speed at which the debt is rising, absorption capacities, poorly/ non-performing loans, corruption/ transparency and sustainability issues amongst Government systems and institutions not only in Uganda and EAC but also Sub Saharan Africa (SSA). This is, particularly, in respect to Grants, Domestic debt, Loans and Government Guarantees.
While borrowing is not the problem per se, what do we say of the Ugandan case, for instance, where external borrowing increased by 82% between FY 2014/15 and FY 2013/14? Over a longer horizon, total external debt for Uganda was said to be USD 6.27 billion end of February 2015, compared to about USD 0.99 billion in 2006. This represents an increase of 500% over a period of 9 years. In June 2006, the total outstanding debt was USD 2.3 billion given the additional amount of domestic treasury securities of USD 1.0 billion and domestic non-security arrears of USD 0.3 billion. As of December 2015 according to Ministry of Finance Planning and Economic development (MoFPED), domestic debt estimates stand at $2.92bn with external debt at $4.88bn. The estimated total public debt as of December 2016 is estimated to be at $7.8bn. In the FY 2016/17, Government plans to pay UGX 2,014bn to the local market interest from domestic borrowing up from UGX 1,656.2bn that was planned for the FY 2015/16. Even then, in the FY 2013/14 the planned non-bank financing was over shot by UGX 675bn to be at UGX 1,715bn. Public Debt is projected to increase to $8.3bn by end of June 2016. Moreover new debt proposals have come forth in the FY 2016/17.
External and Domestic Debt Estimates as of December 2015 ($). Estimated Total Public Debt as of December 2015 ($ Billion)
There are generally impressive policies through respective Debt Sustainability Frameworks. Even so, it’s up to Ugandans and African citizens at large to keep their Governments on tenterhooks to account for every outcome of Debt acquired. So far EAC and selected African countries have registered fairly stable macroeconomic frameworks for prudent debt management, poverty reduction, economic growth and development.
By Esther Mufumba
Published: 3rd Feb 2016
The Government of Uganda through the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) embraced the Single Spine Agriculture Extension system in September 2015 with intentions of addressing public outcry from farmers on the state of Agricultural Extension Services in the country as well as fusing extension services into the line ministry.
The system facilitates farmers, their organizations and other market actors to knowledge, information and technology; interactions with their partners in research, education, agribusiness and relevant institutions assisting them to develop their own technical, organizational and managerial skills and practices.
Creation of the Single spine extension system emerged after NAADS was restructured into a lean secretariat to handle strategic interventions and promotion to value addition technologies as opposed to extension services.
In Uganda, Agriculture is recognized as core for the economic growth and poverty reduction since the sector largely employs 60% of the poor and marginalized. Farmers gladly celebrated to learn of a coordinating center for all Agriculture extension services in the country. MAAIF established a Directorate of Agriculture Extension Service whose priority is to provide extension services especially to small holder farmers. However, this Directorate does not have enough capacity with the limited number of staff recruited to offer services to farmers.
The BFP 2016/17 has no clear wage bill for operation of Agriculture Extension system implying that those recruited at the Local Government level will be redundant and will remain in the sitting mode like their predecessors. Currently, extension services have failed to reach majority of the farmers with statistical estimates at 14% and most recently reduced to 7% which is remarkably low for a country whose population is largely agrarian. As a commitment to implement Single Spine Extension system, MAAIF is undertaking a critical process of developing the National Agriculture Extension Policy & Strategy that will provide strategic guidance, Principles and objectives of the Agriculture Extension System aimed at transforming the Agriculture sector.
• Uganda can only realize Single spine Agriculture Extension system if MAAIF concentrates on working towards increasing production and productivity especially through inclusive extension services and developing a results oriented culture.
• The Directorate of Agriculture Extension Services should be fully staffed for effective implementation of their mandate.