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CEOs take on the new budget

Karuma Hydropower dam is one of the big projects receiving substantial sums of money from the government ahead of its launch in December 2019

They see opportunities for business, economy in FY2019/2020

Kampala, Uganda | JULIUS BUSINGE | Conversations on the recently read new budget are gaining momentum amongst key players like chief executive officers of corporate firms.

The executives, from key sectors of banking, manufacturing, industry, information technology, agriculture, trade are believed to hold informative views on the opportunities that the budget has for them and their clients and for the general economy and its people.

The budget, with a resource envelope of Shs40.4trillion – compared to one of Shs32.4trillion for the ending financial year–will continue to run under the theme of industrialisation for job creation and shared prosperity.

Under this theme, the government continues to focus most of its budget expenditure on development projects and key sectors that drive Uganda’s private sector-led economy.

The Independent spoke to several executives from corporate companies to be able to do this informative analysis.

Anthony Kituuka, the chief executive officer for Equity Bank said that increased funding in big sectors of energy, agriculture, works and transport signals banks to prepare and offer financial services to these sectors.

Kituuka said the dividends are not only for banks but for all the people benefiting both directly and indirectly in this process. Particularly on agriculture, he said that Equity bank has special interests in investing in value chain financing – linking farmers to export markets.

He said that the bank plans to open new branches to serve in the areas of Masaka, Kasese and Soroti to be able to facilitate players in the economy to access funding for their trade, especially engaging in value addition.

“We believe that industrialisation helps to improve the economy’s performance,” Kituuka said. “As Equity we follow the money,” he added. “We will invest more in big impact areas to improve lives and livelihoods,” he added.

Kituuka’s views appear to reflect Finance Minister Matia Kasaija’s new budget plans. Kasaija plans to spend more on agriculture Shs1trillion up from around Shs800bn allocated for this ending financial year (2018/19), then Shs6.4tn to works and transport involving roads, power dams and related infrastructure like transmission lines and the national airline.

The energy sector with an allocation of Shs3trillion too has opportunities for banks to lend to the players involved. Banks also will have an opportunity of earning from government’s revenue mobilisation by participating in treasury bills and bonds market – where the government raises money to fund budget activities.

Joseph Nkandu, the executive director of the National Union of Coffee Agribusiness and farm enterprises (NUCAFE), said the budget theme and plans are good for farmers and the economy in general.

He said that beyond the government allocating money to supply agriculture inputs like coffee seedlings to farmers, more innovations by spending agencies should be geared towards financing processing infrastructure to organised groups of farmers to improve their productivity, incomes.

He said that most farmers cannot afford such infrastructure because the cost of credit in the market is high and yet they (farmers) engage in a sector that is critical for growing the economy longer than other sectors.

“When they do that, more jobs will be created directly and indirectly,” he said.  NUCAFE has a total of 1.5million coffee farmers organised under 200 farmers associations and cooperatives across all the regions of Uganda.

Gideon Badagawa, the executive director of the largest private sector umbrella body – Private Sector Foundation (Uganda) said the theme of the budget is good and that there are opportunities for the private sector to exploit especially when it comes to supplying inputs to key development projects.

He also said that going by the theme, the more money allocated to the agriculture sector should be geared towards value chain financing to support agro-processors that have capacity to create opportunities for other players in the economy.

He, however, said that he is not comfortable with the continued government move to borrow locally which directly compete with the private sector that is in dire need of credit to expand business.

He said they will continue to engage government on this to ensure that private sector players win.

According to the budget speech, access to affordable finance is an important catalyst for the growth of viable private sector enterprises.

It adds that affordable long term finance from development financing, pensions, and capital markets sources, facilitate Private Sector investment.

“Commercial bank lending rates remain high,” he said, “This calls for government interventions,” he added. In this regard, Kasaija said that the Uganda Development Bank (UDB) will be further capitalized with Shs103.5billion for the new Financial Year for this purpose.

In addition, to support private companies raise equity capital, Kasaija said, the Capital Markets Authority will establish a center to facilitate access to long term domestic and foreign capital on the stock exchange. He added that the necessary legal and regulatory framework for the operation of Private Equity funds will be designed to attract more investment into Uganda’s private sector.

Santosh Gumte, the managing director for paint maker, Kansai Plascon Uganda Limited said any construction activities that the budget will support like roads, power transmission lines, dams where paint as an input is required, they are ready to supply.

Gumte added that they see the new budget as one supporting development and are ready to participate in its implementation.

“…as implementation happens many people will be impacted…they will build homes, commercial property which will all provide opportunities for us to supply with paint,” he said.

Uganda Breweries Limited Managing Director Mark Ocitti welcomed government focus on spending on agriculture infrastructure like irrigation schemes to increase output especially in dry areas of Uganda.

Ocitti said that the government has a budget that promotes its objectives. He however, said it should look into the concerns of the private sector.

“Most importantly I would like to see a regime that favors farmers that we work with,” he said.

He added that more budgeting for agriculture is important but also more policy in terms of what the government is doing in terms of agricultural value addition and how it is working with them who are already in this field is important.

Kasaija said that throughout the implementation of the new budget, the government will promote an attractive business environment to potential investors, including the provision of a business-friendly tax environment, and eliminating distortions to private sector investment decisions.

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