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CSBAG calls for UGX100Bn recapitalization of UDC

Officials from CSBAG appeared before Parliament’s Committee on Trade to present the CSO position on Private Sector Development and Manufacturing Programs in response to the NBFP FY2022/23.

Kampala, Uganda | THE INDEPENDENT | The Civil Society Budget Advocacy Group (CSBAG) has proposed a provision of 100 Billion Shillings to capitalize the Uganda Development Corporation (UDC).

UDC is an investment institution established as a government entity with the mandate to facilitate the industrial and economic development of Uganda.

CSBAG says that the 100 billion shillings budgetary provision in the coming financial year 2022/2023, will help strengthen the role of the government in unlocking investment in strategic economic sectors.

Patrick Rubangakene, the Budget Policy Specialist at CSBAG made the recommendation to parliament’s Committee on Tourism, Trade and Industry on Wednesday. Committees of Parliament have since Monday been receiving proposals from different government Ministries, Departments, and Agencies (MDAs), and private entities on the 43 Trillion Shillings National Budget Framework Paper (NBFP) for the coming financial year.

Rubangakene emphasized that UDC, which is the investment and development arm of the government with a mandate to promote and facilitate industrial and economic development in Uganda, needs to be adequately capitalized.

“For example, UDC has invested in several companies namely, Soroti Fruit Factory, Kigezi Highland Tea factory, Atiak Sugar Factory and intends to establish zonal agro-processing facilities of key priority commodities such as tea, coffee, and fruits in line with the National Export Development Strategy. However, an analysis of the NBFP, shows that UDC requires 100 billion for recapitalization which is not available,” he said.

Rubangakene said that the Covid-19 pandemic has a devastating impact on the economy, hence a need to redirect budgetary resources towards wealth and job creation, industrialization, export promotion, and other areas with high returns on investment. He noted that these will play a key role in the speedy recovery of the economy.

Mwine Mpaka, the Tourism, Trade, and Industry Committee chairperson acknowledged that UDC needs money but questioned whether there is value for money. Rita Atukwasa, the Mbarara City Woman MP also raised similar sentiments about UDC.

Rubangakene acknowledged that funds provided to UDC in the past have not been handled well but appealed to MPs to carry out investigations into the funds provided to the entity and not completely deny financing.

However, Mpaka disagreed with this submission of Rubagakene.

CSBAG also recommended that the Ministry of Finance expedites the process of developing a clear guide to tax exemptions and other investor incentives.

The group cites the 2019/2020 Office of the Auditor-General report which notes that there is no clear policy guideline for the issuance, management, and monitoring of the various tax benefits and incentives issued by the government to different beneficiaries.

“For example, whereas on one hand government offered a 10 year tax holiday to companies in the steel sector to promote the growth of the sector, on the other hand, the same government offered waivers for import duty on steel products to other companies,” said Rubangakene.

He told MPs that the absence of a clear mechanism and framework exposes the scheme to mismanagement and abuse, with no mechanism to assess the impact of the tax benefits, with some of the offers expiring without follow-up.

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URN

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