KAMPALA – Dr. Elly Karuhanga, Chairman Board, Private Sector Foundation Uganda – PSFU has commended the government for considering 74% of their national budget proposals, but says they should have been fully considered since they were all merit.
“Suppose the government decided to take 100% of our proposals, what mistake will it be? Suppose in the implementation they invite us, where would the problem be, nothing.”
PSFU was analysing the impact of UGX. 48.1 trillion national budget for the Financial Year 2022/2023 which was read on June 14.
The post-budget dialogue under the theme “full monetization of the Ugandan economy through commercial agriculture, industrialization, market access and digital transformation” was held at Kampala Serena Hotel on Friday.
Mr. Karuhanga says that the government should know that PSFU has reached an excellent capacity to deliver and perform.
“I want to advise the government that before they go to make a budget, they should read the book title “Why nations fail”. How do you create power and poverty because poverty and prosperity are created by policy.”
According to him, since February 1, 2022, when the final investment decision was signed, contracts of 6 billion dollars have been signed from oil and gas with international governments. He said that at least 20% of that is expected to be given to local companies.
The experts wondered if the budget addresses the nation’s development agenda to the next level.
“If yes, then let us identify so that PSFU can garner support and partner with those projects with the Government,” said Mr. Rajesh Chaplot, Chair Policy Advocacy Committee at PSFU.
He says that for any nation’s development, the treasury needs to raise funds, something that the budget should answer appropriately.
“…instead of milking the cow, the Ministry of Finance should increase the Tax revenue base. We need to see if the Budget answers it.”
Mr. Rajesh also wondered if the budget takes care for reducing leakages or wastage of Budgetary revenues, saying that “this is a very wide area, but I may still like to touch one proposition, which we have been talking with PPDA and Ministry of Finance for long.”
He urged that the budget should ensure that there are proper guidelines that cheapest international finances are only promoted and also the strings attached with those finances should not be detrimental to the nation.
“Many times the cost of finance may look more than the papers but the conditions attached with the international loan can make it very costly,” he said.
He noted that the budget needs to take care of Cavid-19 affected businesses, unemployed youth women, people residing in villages workers in the unorganized sectors and such others.
Role of PSFU in the budget process
Mr. Rajesh noted that the budget process starts with PSFU collecting budget proposals from its members in the Private Sector, which are then compiled and presented to the Ministry of Finance.
He says the PSFU team then ensures to meet with Ministry of Finance officials where, all propositions are explained and argued with Ministry of Finance officials.
“When draft amendments bill is received, PSFU again studies them and again invite views of Private sector to form a stand for presenting to finance Committee of the parliament.”
Ms. Damali Ssali, Chief Programs Officer at PSFU said that the half-day dialogue was intended at identifying the areas where the PSFU made the recommendations to the government on interventions that should be addressing the budget.
She revealed that they had requested that on infrastructure development, government works on water transport to ease the movement of goods which was considered.
“We also requested local content for agencies and the budget addresses that. We had also requested relief for the tourism sector.”
“Our analysis today was have those recommendations been addressed or not and to what extent is the work the government is going to do in this budget going to help the private sector,” she said.
However, she said the government should have been wise and engaged them on the Parish Development Model since they can easily turn markets for farmers’ produce into a reality.
“We wanted the government to engage the private sector because after production what happens? After these parishes producing their maize, where does it go, is there someone to buy it? The private sector is able to think through the market.”
Ms. Pheona Nabbasa Wall, President, Uganda Law Society said that even if the budget is increased to whatever extent but when corruption is still rampant in the country, it will not make any positive impact.
“We have been losing sh20 trillion from 2016 to corruption. We have a budget of about shs48 trillion and we are set to lose shs20 trillion this year if nothing is done to address the issue of corruption.”
Ms. Nabbasa also sighted the inconsistencies in the budget itself, saying that it does not match with the budget priorities.
“The budget lists the priorities as enforcement of security, rule of law and fighting corruption but when you look at how much was allocated if you remove security, it’s less than 1% of the budget.”
She noted that the least funded sectors including; tourism, digital transformation, mindset change “which would actually deal with corruption”, mineral development, innovation, and technology transformation would rather have been prioritised if the country is to grow.
“What does this say in an economy where we have been forced by Covid-19 to do a lot of automation, it shows that we are not moving with the times, we are not embracing the technology.”
Speaking at the event, Michael Atingi-Ego, the Deputy Governor of the Bank of Uganda said that the FY2022/23 Budget is well-aligned to the theme of the dialogue as emphasised in the chapter on Government’s priorities for FY 2022/23 (Chapter 6) which highlights the NDP III Programme priorities for FY2022/23 and the medium term under five (5) Objectives (Clusters), i.e. strengthen the role of the State in guiding and facilitating development, consolidate and increase the stock and quality of productive infrastructure, enhance value addition in key growth opportunities, enhance the productivity and social well-being of the population, and strengthen the private sector capacity to drive growth and create jobs.
Represented by Mr. Jimmy Apaa Okello – Director Economic Research at Bank of Uganda, Atingi-Ego said that the Agricultural Credit Facility (ACF) cumulative loan book stood at Shs660.50 billion as of December 31st, 2021, extended to 1,525 eligible projects with financing for farmers in this category going to four main enterprises cattle restocking for dairy and beef production, poultry farming, agricultural inputs, and farm infrastructure as well as grain trade.
“The innovation of Block allocation under the ACF unlocked access to credit for micro and smallholder farmers who would otherwise be excluded from securing credit for lack of collateral to the tune of UShs 6.33 billion to 550 rural farmers by December 31st, 2021.”
“We will be working towards increasing the resources available within the ACF for funding of the agro-processing portfolio to increase capacity and jobs that will come with this increased capacity,” he said.
Mr. Atingi-Ego said that they are emphasizing the Sustainable Development of Petroleum Resources Programme, whose goal is to ensure that the oil and gas industry can contribute across all development Indicators, either by enhancing its positive contributions or by avoiding or mitigating negative impacts to ensure that “no one is left behind” by efficiently managing the Petroleum Investment Fund (PIF) and ensuring macroeconomic stability and formulating appropriate policy response.
He said that another key point is enhancing the productivity and social wellbeing of the population.
“The Productivity and Social Wellbeing Cluster is hinged on four Programmes. i.e. Human Capital Development: Community Mobilization and Mindset Change Innovation, Technology Development & Transfer, and Regional Development and highlights commitments to increase the productivity of the population for increased competitiveness and better quality of life.”
He also noted that BOU initiatives in the SP 2022/25 will directly support the human capital.
“Development Programme whose aim is to ensure the availability of appropriate and adequate human capital to facilitate increase in production, productivity, and technological growth, through our outreach programs on financial literacy. We expect these outreach programs to support Government’s anchor programmes under the Social Services Pillar of the Parish Development Model (PDM). We are in touch with the financial sector to see how they can support the PDM and how we can together promote financial inclusion.”
The Central bank boss said that they are also promoting innovation in the financial space through our open-door initiatives with FinTechs including provision of a safe environment that supports the different types of innovations without the burden of regulations in what we call the regulatory sandboxes.
“We believe that initiatives like these will pay off and set a strong foundation for technology development and Transfer in the financial sector.”