Uganda’s Budget, A Glimmer of Hope

Having had a chance to read through the Budget speech by the Minister of Finance, I have to say that as a patriotic Ugandan, it is a God send. For years I have been one of the silent complainants about our continuous never ending begging sprees that see us parading begging bowls before various Developed nations. What hurts most is when the very nations we are begging start making us dance to their tunes with total disregard of our needs as a nation and society of people with our own values.

Starting off with the Theme “Maintaining the Momentum: Infrastructure Investment for Growth and Socio-Economic Transformation” it is very clear that the investment in Infrastructure that has been kicked off in the recent past is not about to become history. Uganda is in need of a thorough revamp, upgrade or added investment in infrastructure like Transport (Roads, Railways, Air), Electricity (Generation and Distribution), Communication (Broadband, National Backbone, hardware systems), Water (Processing and Distribution), Agriculture (Irrigation Schemes, Processing) among others.

Due to the negligence over the past 20 – 40 years in addressing infrastructure needs in tandem with the growing population and economy, the country is now at that point where everything needs urgent attention. Unfortunately, its even complicated by the fact that for any meaningful economic growth, most of this hitherto ignored infrastructure cannot achieve results in isolation.

You for example cannot talk of constructing new roads when they have nothing to transport once done. The areas these roads are opening up should be stimulated into increased production for effective benefit of the masses and nation as a whole. A good example is the roads being built in the oil rich Bunyoro region as a result of the Oil exploration going on there.

The budget’s strategy is built on four key inter-linked interventions that are summarised as;

  1. Improving the business climate by undertaking key economic infrastructure investments.
  2. Leveraging Government assistance in Agriculture, Agribusiness, Agro-processing, Tourism, Industry and Services like ICT.
  3. Improving Human Resource productivity by enhancing provision of quality education, health and water services
  4. Strengthening Institutional Governance, Accountability and Transparency.

In brief, the Government would like to stimulate the private sector to grow in the sectors that Uganda has a core competence in by investing in key infrastructure, ensuring good health of the working population and addressing corruption. What more would one ask for?

On the Science and Innovation front, the Government plans to enhance support to industrial research institutions in order to develop and commercialise technology innovations. Uganda needs this in the same measure that we need good roads. Asa country, we have fallen victim and shall continue to fall victim of imported technology that is not suitable for our environment. No attempts at modification are even made and after being flooded with all this dumped technology, nothing gets off the ground and we are back to square one. Lately there has been a drive at a number of local Universities to foster innovation among the students. This has led to initiatives like the Food Technology Business Incubation Center at Makerere University, Tooke under the Presidential Initiative on Banana Industrial Development (PIBID), IT Innovation hubs like Outbox e.t.c. I am optimistic that in the next ten years, we shall have decent home grown innovations that can compete favourably on the world stage and emulate what our Agriculture scientists have been doing at the National Agricultural Research Organisation (NARO) for years.

Finally there has been a turn around by Government after having led a lie all these years believing that the solution to our unemployment challenge is to attract foreign investors who will create thousands of jobs. Those investors are either rare or have taken the country for a ride for too long. Cases are rife of so called investors shipping in cheap labour from their homelands especially those of Asian origin thereby defeating the very purpose of the investment sweeteners they are benefiting from. In this budget, there is clear recognition of SMEs being critical towards creating jobs while at the same time mobilising the informal and rural economic activity. I sincerely hope this can be followed through.

On the ICT front, the push by Government to extend the reach of the fibre backbone i.e. National Transmission Backbone Infrastructure (NBI) as well as commercialise its operations is very commendable as it is definitely going to stimulate the growth of ICT services beyond the key urban areas. It will also enable the faster realisation of countrywide e-Government initiatives that are infrastructure dependent.

The Business Process Outsourcing (BPO) subsector has finally began getting the recognition it needs too. With over 4000 employees, it has been recognised as another growth area. My take here is that the Government shouldn’t leave the BPO operators to hang out dry and look for work from overseas only, charity begins at home and I believe that the Government should lead by example, outsource to these operators as soon as possible.

Agriculture and Agribusiness have also received prominence in this budget. For a sector that employs 70% of Uganda’s labour force while contributing about 21% to the GDP, I must say that the technocrats in the Ministry of Finance have finally come down to earth. Interventions will be supported through focusing on provision of inputs, targeting the needy and graduates, focusing on enterprises that provide high returns to small holder farmers and encouraging value addition for those in large scale production.

The efforts to refurbish and construct new referral hospitals in Kampala and around the country is a welcome call towards addressing the dire situation faced by the Health sector. Until one travels to the country side and visits some of these health centers, you will never believe that God exists.

As a service provide to Government, I do appreciate the proposed accountability measures aimed at effectively and efficiently utilising public resources. These are;

  1. Strict enforcement of the Commitment Control System which bars any Accounting officer from over committing Government beyond the available resources. Accounting officers will be required to honour payments to contractors and service providers within 14 days from receipt of invoices (If you have spent 6 months and more without receiving a payment from Government for work already delivered, am sure you feel me on this).
  2. Decentralisation of the payroll management from the Ministry of Finance to the Accounting Officers is likely to deal with the ‘Ghost’ workers while interlinking the Integrated Personnel and Payroll System (IPPS) run by the Ministry of Public Service with the Integrated Financial Management System (IFMS) shall enhance efficiency of operation.
  3. Budget Transparency and Accountability. Did you know that there is a Budget information website that provides all budget related data? It provides performance of Government programmes by locality and serves as a platform for the public to provide feedback and report any information related to implementation of the national budget. This gives us an opportunity to debate with facts on issues of National Governance.

One will ask but how sincere is Government when they talk of promoting Agriculture and ICT while at the same time levying more taxes on the sectors? The budget proposal is to levy 18% VAT on;

  • Supply of New Computers, Desktop Printers, Computer parts and Accessories and Computer Software Licenses
  • Supply of feeds for Poultry and Livestock
  • Supply of Agriculture and Dairy Machinery
  • Supply of Salt
  • Supply of Cereals gown, milled or produced in Uganda
  • Supply of processed milk and milk products
  • Supply of machinery and tools for Agriculture
  • Supply of seeds, fertilizers, pesticides and hoes

If we put aside man’s inherent laxity towards paying tax, I must say that this move is counterproductive to what the Minister told the nation about promoting ICT, Agriculture and Agribusiness. The Agricultural producer is likely to experience an increase in costs of doing business and so we should expect a corresponding increase in product prices or less private sector led investment in the sector or both.

However, when you analyse this move from a holistic perspective, you realise that VAT is a tax that is transferable and thus doesn’t have to be swallowed up by the producer. Even when the consumer eventually pays higher prices for the product, Agriculture being what it is, no one can avoid food so the consumption is not likely to cease though it may slow down. What producers need to do is come up with new ways of availing their products in a manner that allows the consumer to continue with their current consumption patterns.

By raising tax money from this very sector, it will also help fortify the overarching theme of this budget. I mentioned earlier that the infrastructure development priorities can’t achieve their goals in isolation. So, because of the need to raise money locally having experienced a big drop in the donors supporting the national budget, its the time to sacrifice. Over 60% of Ugandans are in the category that can best be defined as ‘hard to tax’ with those in White Collar jobs bearing the brunt of taxation. In the short term, this leaves Government with Value Added Tax (VAT) as the soft spot for spreading the tax net further.

As we brace ourselves for a potential increase in service and product prices, I am a lot happier because more Ugandans are now going to be co-opted into the tax brackets hence reducing the burden on the few that have been bearing the brunt.

Secondly, with more Ugandans paying tax, this will increase civic responsibility in the lowest levels of society where people have been accustomed to making decisions without thinking them through. Case in point, many voters who tend to be in the informal economic sector do not care much about pursuing accountability issues from the Public Servants as they are under the impression that after all money comes from somewhere else. By paying taxes and feeling the pinch, they will abandon their laissez faire attitudes and exercise their civic duties.

Thirdly, corrupt Government officials will soon be faced with more than just mere jail terms. An angry tax paying population is unlikely to tolerate theft of its resources as opposed to the current status-quo where the adage “babba za bazungu” (They are stealing foreigners’ money) is common.

Bye Bye Dependence, Welcome Independence. Independence comes with Responsibility. Lets brace ourselves.

@wirejames

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