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2009/10 budget we expect from Bbumba

By Patrick Kagenda

Finance Minister Syda Bumba will read her maiden budget speech to the nation on June 11, 2009. With an economy hit hard by the global financial meltdown, a depreciating shilling, low exports, spiraling unemployment and biting poverty, the minister will need to pull off a delicate balance of incentives and reprieves not just to jumpstart the economy, but also to get the public and businesses on board. The Independent’s Patrick Kagenda spoke to a cross-section of stakeholders on their expectations of this budget.

Issa Ssekitto – spokesperson of Kampala City Traders Association (KACITA)

KACITA, together with Private Sector Foundation Unit (PSFU), and Uganda Manufacturers Association (UMA) met the minister of Finance to express our expectations of the budget. Our wishes were that more money be provided for infrastructural development and that there is need to control the escalating dollar against the shilling by way of short-term intervention on the dollar rate for revenue purposes. The other issue is that we expect the ministry to reduce public expenditure. It is irresponsibility to continue with supplementary budgets for new districts, which are a waste of resources. It should market the productive sectors of the nation than political marketing, which brings nothing in the national treasury. This can only be done if the minister is considerate of the views from the public and regards it as stakeholders. If I were in her shoes I would broaden the tax base by charging small taxes but ensure compliance. However the Ministry of Finance has challenges ranging from a small income due to failure to sustain domestic input, politicisation of the budget by introducing political programmes, and failure of services rendered by government to be visible on the ground.

Dr Maggie Kigozi” executive director of Uganda Investment Authority

We expect the budget to continue funding infrastructure, especially the roads and energy sector since these will create more jobs. We also expect to see more funding to vocational colleges to build skills, which are lacking. Uganda has a highly educated people but lacks skills.In addition, we also wish for a reduction on corporation tax from the current 30% to a much lower figure as taxes are now harmonised in the region. Value added tax (VAT) should be removed from lorries and buses, as is the case in Tanzania and Kenya. The biggest challenge though, is reduced revenue collection by the URA. The other challenge is the reduction in donor funding.

But we are optimistic that Uganda will continue doing well with its exports in spite of people cutting down on their spending. We have new markets in India, Arabia and on the African continent. Remittances are another challenge to the government because they were a big boost. Local consumption will reduce as a result of a decline in remittances, which will also impact on the local industries and further hurting VAT collections.

Gideon Badagawa” executive director, Uganda Manufacturers Association

We expect the government to focus resources that create wealth and jobs. Unless there is more money in the pockets of the taxpayers, government won’t have revenue. First of all remittances are down, and the export process is not doing well. We have had a growing public administrative cost that needs cutting down. There is a need to carry out tax cuts to encourage investment and consumption. The threshold on PAYE should be raised from Shs 130,000 to Shs 250,000 and VAT should be reduced from 18% to 16% like it is in Kenya. The other expectation is seeing an improvement in the infrastructure around industrial areas and there should be no policy reversals.

The challenge, of course is the small tax base. Government expenditure should be supported by the local revenue. However the formal sector is still too small and as such all forms of businesses should be taxed.

Alice Alaso” secretary general of Forum for Democratic Change

The budget will not help the private sector. URA will definitely raise taxation, especially on fuel and there won’t be increased remuneration for the workers in this country.We are likely to see more money going to State House and the roads sector although we don’t see how the Shs 1.1 trillion that was given to the roads sector was used.

We would have liked to see a clear attempt to rejuvenate the economy because currently poverty levels are very high in the countryside where people are going hungry and children are no longer going to school. We would also have liked to see interventions in the private sector, agriculture education and health than a lot of money going to Defense and State House. We would also have liked to see a cut down on the public expenditure.

Peter Kimbowa” managing director, International Finance Empowerment (IFE)

The ongoing operations in every sector are under very depressed margins. However, this economic slow down presents an opportunity for Uganda. We know what to do to spur growth to recover from the economic slowdown. We also know what to do to reduce poverty.

What we need to do is to come together once more and see what can be done; Uganda is a partnership between the private sector and the government. It’s time for us to cause explosive creativity within our system, we need to look beyond the nontraditional capital markets. The traditional capital markets where we have been dwelling our funds and so on have challenges right now.We need to start harnessing possible opportunities within the nontraditional markets especially for issuing bonds. Uganda as a country has to increase on its international rating so that we can attract investment to qualify for issuing bonds.

If I were in the minister of Finance, I would focus on the informal sector, which is the real job creator. There has to be credit available in order to enable our enterprises” both young and old” to move through this crisis and move beyond it. Our only rescue is building entrepreneurship and building markets.

Gerald Ssendaula” ex- minister of Finance, now chair of the Private Sector Foundation Unit (PSFU)

As private sector, we expect very little changes if at all. We would have liked to see less harsh decisions on taxation. Government should not introduce new taxes, as this will hurt the economy more. Instead, the minister should push for efficiency in collection of the existing taxes.

Government should leave more money in the people’s pockets in order to spend. The PAYE threshold should be increased from Shs 130,000 to Shs 250,000. We are also saying we will welcome all radical proposals like workers who have been saving with NSSF for over 5 years to be allowed to draw 20% of their savings so as to sail through these hard times. The other expectation is that government should reduce costs on its administrative spending. There are a number of challenges in being a minister of Finance at this time when elections are less than two years away. There is a lot of politics at this time and remember there are election promises to be fulfilled. What is needed now is a demonstrated sacrifice where MPs and ministers are willing to let something go away for the good of the nation.

 

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