Uganda’s proposed Shs45.6bn budget concerns

Public debt

The country’s public debt stock is on the rise and was reported at Shs63.35trillion as of October 2020. External debt constitutes 67% (Shs42.7trillion) while domestic debt constitutes 33% (Shs20.59trillion).

Government is projected to spend 10.86% (Shs4.9trillion), on interest and, the ratio of debt service to domestic revenue is projected to increase beyond the 20% threshold set for debt sustainability in FY2021/22 and the medium term.

CSBAG says, there is need for government to reduce its spending and exhibit prudent management of public loans to enhance return on investments.

Meanwhile, expenditure projections for FY2021/22 is highly consumptive. In FY2021/22, recurrent expenditure will account for Shs18.5trillion (54.5%) while development expenditure will account for Shs15.4trillion (45.5%).

This is despite the fact that domestic revenue is expected to reduce, which will affect service delivery efforts to the citizens.

Mukunda said government should practice frugality as in the current financial year by continuing to reduce non-priority expenditures as practiced in and support specific interventions that may lead to economic recovery and livelihoods.

The governance and security programme is to take the largest share of the budget amounting to Shs7.7trillion (16.9%) followed by Human Capital Development Shs7tn (15.43%), integrated transport infrastructure and services programme Shs5.9trillion (13.07%), and agro industrialisation Shs1.5tn (3.31%).

On the other hand, the programmes with the least allocations in FY2021/22 will include; digital transformation Shs101.77bn (0.22%), mineral development Shs80.57billion (0.18%), manufacturing Shs52.76billion (0.12%) and community mobilisation and mind set change Shs35.35billion (0.08%).

Overall, the 18 NDPIII programs will take up 64.7% of the total budget and 35.3% will cover other statutory obligations.

“We are concerned that the NBFP is not responding strongly to the effects of COVID – 19 as it does not indicate ways of revamping the economy, promoting digital transformation especially in promoting e-learning, and providing a stimulus package to areas like agriculture and trade,” Mukunda said.

COVID-19 has proved that digital trade is critical in revolutionising trade and services in Uganda and the EAC region.

Although local governments are at the forefront of providing services directly to citizens, 87.4% of the FY 2021/22 budget is projected to remain at the central government (Shs25.8tn) and only 8% (3.7tn) will go to local governments.

This is a reduction by Shs413.94 billion in comparison with FY2020/21, which is inadequate and is likely to stifle service delivery and actualisation of planned interventions, according to CSBAG.

Failure to decentralise the budget to match the decentralisation policy expectations will continue to exacerbate regional inequalities and equities.

Other concerns

Poor public investment management exposed by delays in project implementation has not only cost Uganda low returns but has also led to wastage of public resources.

According to the World Bank report (2016), for every dollar invested in Uganda’s capital infrastructure only US$0.7 have been generated. Relatedly, the delayed adoption of the Electronic Government Procurement (e-GP) which is a key procurement reform aimed at revolutionising government operations and consequently improve efficiency in the procurement function has led to continuous procurement malpractices and delays in public projects.

CSOs are now calling upon the ministry of finance to expedite the finalisation of the National PIM policy and the national public investment, and monitoring and evaluation manual. Secondly, they say, PPDA needs to fast-track the full rollout of the implementation of the e-procurement strategy in all government entities to improve efficiency and transparency.

The group also wants government to fully comply with operationalisation of the Contingencies Fund to respond to natural disasters.

They also want the quick passing and implementation of the National Health Insurance Scheme Bill to respond to health emergencies like COVID-19 and others.

The group also wants government to enforce directive on planning and budgeting to gender issues. There is also need to ascent to the Local Content Bill 2019 to unlock investments and private sector growth.

Parliament should ensure the budget FY2021/22 is people centered and aimed at addressing the critical concerns of ordinary citizens.

Just like the CSBAG team say, Lawrence Bategeka, an economist and outgoing Member of Parliament for Hoima Municipality says all policy measures being designed for the coming budget must be implemented prudently.

He also said the new budget should aim at stimulating demand across sectors which entails carefully handling private sector firms through fair taxation and related rebates.

“Carefully spending by all players including government (the biggest player) should be targeted towards productive sectors like agriculture, industrial production,” Bategeka told The Independent.

He added that there is need to cut down on wasteful expenditures, check on corruption with serious commitments so that the little money that is there, goes to impact on social services, fight poverty and cause social economic transformation.

He also said government should reduce borrowing internally and instead go for external resources so as not to compete with private sector borrowers for credit.

Bategeka also wants the government to cut on public administration costs by reducing the number of ministers.

Agnes Kirabo, the executive director for Food Rights Alliance, a local NGO, said proper coordination among government agencies and fulfilling promises the new government has made will see the budget implementation succeed and people benefiting.

Kirabo also wants a budget designed to create more jobs to fight poverty among the population.

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