The 2023 financial year budget stands at a whopping 52 trillion from 48.1 trillion from the previous year, and it will be financed by domestic revenues, loans, grants, domestic borrowing, interest payments, local government revenue, and external project support. How does the ordinary man or our representatives in the August house skip through this jargon and make sense of these figures, and most importantly, how does insurance fit into this context? Here are a few points you need to keep close to home.
Of the 52 trillion, Shs 26.6 billion is allocated to debt refinancing, which is 49% of the resource envelope. This implies that we are borrowing more to set up the massive developments and projects we see across the country, such as the East African Crude Oil Pipeline. Therefore, there is a need to be profitable to settle the debt and then some more. These projects need longevity and operational ability without hiccups, and insurance is critical here. Insurance covers business interruption and increased cost of working and these policies are a worthwhile buy that save contractors in the long run.
Wages and Salaries were allocated about Shs 7,000 billion this year. This massive contribution to human capital development speaks to investment ideology for the people of this nation. As important as this is, the non-monetary compensation such as retirement packages, medical and workers’ compensation should balance out the other side of the scale.
Emphasis on every Ugandan company having the statutory Workers’ compensation cover to protect against workplace injuries is an employment motivator and ensures that occupational health and safety standards are followed. As we wait for the National Health Insurance Scheme to take effect, individuals can rest assured that Individual and Corporate medical insurance schemes can avail them of the appropriate medical care. Last but not least, security for the future once one leaves the workforce can only be attained through unit trusts that are not taxable as well as life assurance policies.
Development Expenditure was allocated about 12% of the total budget. The improvement in infrastructure, such as hospital facilities, water supply systems, the comprehensive transportation system and the network planned for Greater Kampala, will undoubtedly contribute to the growth of Uganda. It is, however, imperative that such developments stand the taste of time.
When we hear of bridges collapsing due to heavy rains, buildings burning to the ground and other instances, we need to prevent the repeat of such cases and their ripple effects. The cushion to such calamities is that every development has the appropriate insurance covers such as fire and special perils, and equipment policies. This will reduce expenditure on supplementary budgets and government bailouts as well as control the disposal of recently acquired assets that is a thorn in our governments pocket.
As ambitious as this budget is, we still have a huge tax deficit, approximately Shs 94.8 billion, in the first half of 2022. This implies more than local revenue is needed to improve such sectors. Therefore, we need buffers to maintain what we already have, and insurance supports that cause.
On a positive note, the country has witnessed a significant recovery in the tourism sector. A Shs 6 Bn surplus was recorded after reopening the economy in the hospitality industry. This might explain why the Ministry of Tourism, Wildlife and Antiquities has received an additional Shs33.3 billion for the construction of staff accommodation, equipment for surveillance, electric fence maintenance and other necessities. The most important question for any hospitality entrepreneur should be how to protect my establishment, guests, and their property. Policies such as public and product liability to avoid the litigious character of guests and innovations for protecting domestic tourists must be at the top of their wish list.
Similarly, the real estate sector had a surplus of Shs 1.36 billion. Unfortunately, any accidental damages to the property are borne by the landlord. Think of a scenario where any damage to the property would be transferred to the insurer and resolved in record time. This would be ideal, and policies offering such solutions are available in the market.
Inflation is a subject that cannot be avoided. With more money in circulation due to initiatives such as Emyogga and Parish Development Model, more spending and micro enterprises have sprouted up nationwide. Insurance must support these endeavours by providing appropriate and affordable coverage. Micro-insurance policies with minimal insurance fees, all the while still offering complete protection to this previously neglected group, are the direction to go.
Lastly, exports and imports have increased, and revenues improved compared to previous years. The country’s best earning here is through the Marine and Goods in Transit insurance covers. As these are taxable covers, our tax body saw an opportunity to increase the tax basket and contribute to the Buy Uganda Build Uganda (BUBU) policy. Buying these covers locally is now mandatory and with improved distribution, these covers can be purchased either online or next door at your local logistics firm.
Africa has some of the top investment destinations in the world and Uganda’s future is blooming brightly. As we soar to new heights, safeguarding our progress becomes paramount and insurance is the shield for individuals, corporations, and governments alike. Have the right insurance partner, and together, we shall bask in the rays of success.
The writer, Virginia Nampeera, is a Business Development Officer at Liberty General Insurance Uganda Limited