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.
By Peninah Mbabazi
Published: 28th Jan 2016
The Standard Gauge Railway (SGR) project is so far one of the expensive ventures the East African Community (EAC) is undertaking. The SGR, therefore, can be a gateway for EAC to the rest of the world, in regard to global trade, investment opportunities and pro-poor development. The SGR for Uganda’s case is a blessing, for it will bring down trade journeys to only two days, from the current eight between Mombasa (Kenya) and Kampala (Uganda). The aggregate cut on cost of goods and services will also benefit the low income earners across EAC and this is welcome.
The construction of the Uganda Railway in 1896, was the first biggest construction project that the British government undertook in sub-Saharan Africa during the colonial days. The Uganda Railway, commonly known as the lunatic express, was established with an idea of having a railway from the coastline, towards more effective control over River Nile’s source in Uganda. And trade opportunities thereof. The "Lunatic Express" was completed in 1901 and the line linked the interiors of Uganda and Kenya with the Indian Ocean at Mombasa in Kenya.
To the extent that the current SGR project goes beyond the intentions of “Lunatic Express”, to mutually interlink EAC, is a move that should be supported by well-intentioned stakeholder. By the SGR linking Mombasa (Kenya) and other major EAC cities in Uganda, Rwanda, Tanzania and Juba brings to life the Northern Corridor which is the transport artery for EAC.
As such, the SGR will yield maximum benefits once the other critical projects under energy (e.g. hydro dams and wind power), roads and maritime, are completed in time. And designated cost. EAC Governments must, therefore, commit to full and on time implementation of such undertakings as the Lamu Port -South Sudan Ethiopia Transport Corridor (LAPSSET) project to enhance EAC integration. The LAPSSET, for instance, draws critical transport infrastructure and investment opportunities for accelerated Gross Domestic Product (GDP) growth. These can spur new technologies in agricultural production, manufacturing, services and attendant employment.
Not only does the SGR present its own obvious achievements but also consolidates other opportunities in the wider EAC projects. This can only happen to the extent that the SGR and attendant projects are implemented in a manner that fully ascribes to transparency, accountability, caution on debt sustainability parameters and reducing inequality across EAC. Through pro-people policy orientation, the incomes thereof can benefit majority citizens in rural economies across EAC, Sudan and Ethiopia.