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Middle income status is out of sight, says NPA boss

Dr Patrick Birungi, the deputy Executive Director NPA, delivering a paper (PHOTO -BADRU AFUNADULA)

ENTEBBE – The Chairperson of the Uganda Planning Authority (UPA), Kisamba Mugerwa has admitted that Uganda’s Vision 2020 (Middle Income Status) is in doubt, confirming public fears.

In his speech at the ongoing 6th CPA Economic Forum at Imperial Resort Beach, Entebbe, Dr. Mugerwa admitted that despite government’s efforts towards consolidating growth and social transformation, progress so far has been slow compared to the required milestones.

“The country’s growth momentum has slowed over the first two years, averaging only 4.4 percent growth. This is quite low compared to the required NDPII period average growth of above 6.4 percent. Other key NDP II growth targets that have recorded less than satisfactory performance include: domestic revenue as percentage of GDP, which stood at 14% in FY 2017/18, as opposed to the target of 15.8%; Exports to GDP was 12.0% against the target of 14%; and private sector credit was NDP II 8% against 15% target,” he revealed.

“The low economic growth performance for the last two years of NDPII implementation puts the country at the risk of not being able to achieve the NDP II targets by 2020.”

The underlying premise for NDP II was that strengthening the fundamentals – roads, ICT, water for production, power and human capital development would harness the available opportunities; Agriculture, Tourism and Minerals, Oil and Gas.

“However, in most cases the target results have not been realized.”

He attributed this to among other things ineffective financing of development priorities.

“This manifests in different ways such as misalignment between the intent of the budget and the actual budget allocations. Poor budget discipline – leading to frequent supplementary expenditures and off budget financing. Public borrowing that is not aligned to NDP Priorities. And high interest payments are crowding out budget allocations to key sectors and priority infrastructure projects that are key in driving growth and improving competitiveness of the economy.”

He further added that many programmes delayed to start and those that started could not be effectively implemented due to challenges such as costly compensations for land acquisition, procurement delays and poor sequencing of development programmes and projects.

The weak private sector has limited the ability to harness opportunities including those rendered through regional economic communities.

Despite the enabling business environment and investment climate, the private sector has not responded swiftly. Further, the private sector credit growth is still low to drive the NDPII target.

“The private sector credit growth at 7.5 percent is much lower than the NDPII target of 15.4 percent. As such, it is constraining Uganda’s growth potential and efforts for Middle income target. Sufficient expansion of private sector credit is critical to support private investment and consumption which arekey to accelerated economic growth. Delays to realize oil and gas revenues. By the time of drafting NDP II, it was anticipated that commercial exploitation (production and development) of Oil and Gas would commence at least by FY 2018/19 and non-realisation of this revenue meant that some priority programmes could not be executed.”

In addition, high population growth and increasing dependence burden eroding the benefits of increased economic growth. Despite increase in GDP figures, GDP per capita has not grown that much due to an equally fast growing population at 3% per annum.

Ending his speech, he advised that Uganda’s growth and development targets set forth in Vision 2040 and NDP II are achievable but require an accelerated intervention approach.

Organised by the Institute of Certified Accountants in Uganda (ICPAU) the 6th Economic Forum kicked off Wednesday and is to end Friday.

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