By Peninah Mbabazi
Published: 15th June 2016
The theme of Uganda’s FY2016/17 budget that was read by Uganda’s Finance Minister Matia Kasaija on June 8th 2016 is ‘Enhanced Productivity for Job Creation’. Going by absolute figures, three priority sectors for the total budget of UGX 26.36 Trillion (approximately USD 7.86 billion) are infrastructure development (8.7%), Energy and Mineral Development (11.7%) and Education 12%. Government will spend UGX 3.78 Trillion on Works and Transport, UGX 2.423 Trillion on Energy and Mineral Development and UGX 2.2 Trillion on Education respectively. The Budget will be largely financed through tax measures. The Government’s revenue from both taxes and non-tax revenue has been projected to be UGX 11.1 Trillion.
In accordance with East African Community (EAC) protocol, ministers of other EAC Member countries who read theirs on the same date, also read highlight great emphasis on infrastructure development Kenya’s Finance Minister Henry Rotich, presented a Kshs. 2.3trn ($22.8bn) Budget focusing on infrastructure with infrastructural projects aimed at roads and railways as well as agriculture including agro processing to spur the country’s growth. Tanzania’s Finance Minister, Philip Mpango, presented a Tzs 29.54 Trillion ($13.51 Billion) budget which will be focusing on upgrading the central railway to standard gauge and port improvement. Rwanda’s Finance Minister, Claver Gatete, presented a 1.95Trn Francs ($2.6bn) Budget focusing on maintaining growth of 7%. 62% of Rwanda’s budget will be funded locally with the external sources funding at 38% which decreases donor funding by increasing domestic resources.
The FY2016/17National Budget Agricultural sec-tor allocation has increased from UGX 480bn last year to UGX 824bn this Financial Year. This in-crease goes to show that the Government of Uganda has started paying attention to a sector that was lagging behind. It is important to note that the Agricultural sector employs a large number of Ugandans and has the potential to employ more thus catering for the unemployed youth once funded adequately.
In Uganda’s specific projects under the proposed budget include Karuma and Isimba Hydro Power projects, the Standard Guage Railway, Kampala-Jinja Expressway and Entebbe Airport rehabilitation. This is at the backdrop of the recently released a UNRA Commission of Inquiry report that highlighted a loss of UGX 4 Trillion (worth 3647km of new roads) out of the UGX 9 Trillion that was allocated to UNRA since 2008. With Public Debt estimated to be UGX 29.984shs which is 30.5% of GDP is below 50% of the EAC convergence criteria but still Government hopes to fund the budget at 44.5% most of it from taxes with the remaining 55.5% to be attained from external and domestic borrowing. Most of the revenue to fund this budget will be got from increasing taxes on luxuries and essential products such as Cigarettes, ready-to-drink spirits, Petrol (gasoline), cane or beet form, Motor vehicle lubricants and confectionaries. As much as this is in a bid for Government to raise more revenue, there is still need to identify other vital revenue collection areas. This will enable a shift from the few compliant tax payers willing to struggle with the tax burden alone.
In view with the continuous trend of endemic delays in implementation of highly funded projects, cost overruns and corruption as major constraints to having proper transformation of the country socially and economically. At a time when Government is focusing on loans and borrowing, not much consideration is put into the cost of repayment being higher and continued concessional loans from China that are still not sustainable in the long run. Uganda already grapples with non-performing loans, borrowed funds which are idle and low absorption capacity of borrowed resources. It is obvious that we as a nation are yet to learn from our past mistakes. If the theme ‘Enhanced Productivity for Job Creation’ is to be a reality, the proposed budget should be a basis for all citizens to be vigilant and actively involved in monitoring finances allocated to different sectors for prudent accountability of their money.