Experts have urged Government of Uganda to stop blaming its economic challenges such as rising debt on the war in Ukraine and other global challenges.
Instead, they have said the government should prioritise good governance by ensuring budget transparency.
Speaking during the Economic Summit organised by NTV and Ministry of Finance at Serena Conference Centre in Kampala on Thursday, 01 December 2022, Dr Sarah Bireete, the Executive Director of Centre for Constitutional Governance, an NGO, said while it is true that Uganda, just like other countries is facing economic challenges, it should strive to inject funds into productivity and ensure good governance.
“Uganda’s challenges go beyond Covid-19, the war in Ukraine and other global uncertainties. Before all these global developments, how was our economy governed? The issue of good governance matters most in economic development,” Dr Bireete said.
“Countries that have managed to keep more stable are those that have prudent macroeconomic management, strong governance and strong institutions,” she added.
Mr Stephen Kaboyo, the Managing Director of Alpha Capital, said the way the country is managing debt is critical.
“Uganda’s fiscal prospects are fragile. Debt is not a bad thing but how you manage it is key. Interest rates must be low. Central banks around the world have taken stance to deal with inflation and this means high interest rates,” Kaboyo said.
“It’s also important to unpack what exactly constitutes Uganda’s debt. Govt should be as transparent as possible. Right now there’s a lot of mistrust driven by lack of transparency,” he added.
Dr Bireete also emphasised that most of the money borrowed is not spent appropriately.
“The danger with debt is that if we don’t increase productivity and strategize cutting down public administration, many of the loans are likely to mature in 3-5 years and are likely to deplete our reserves,” she said.
“There are reports that Government has failed to recover Shs129b from Youth Livelihood fund. This is the same approach that is using for the Parish Development model. Can money alone solve structural challenges of the people? How about youths bulge?” she wondered.
Kaboyo also said government’s past borrowing for infrastructure development was misguided.
“We need to for instance understand were we came from. Five years ago, government took on too much infrastructure development. We should have prioritised. I don’t think it (debt) will get better, I think it will get worse. Our revenues are always less than our expenditure,” he said.
Humphrey Nzeyi, the Board chairperson of Private Sector Foundation Uganda, urged the government to create a friendly, low-cost environment for local businesses to thrive.
Nzeyi said the private sector needs quality electricity to power rural agro-processing. He added that transport is a cost that needs to be dealt with and easier access to development financing.
Musoke Thadeus Nagenda, the Chairman KACITA, also re-echoed the need for the government to lower the cost of doing business.
“Instead of bringing mangoes to Nakasero Market, can we see juice being taken to Britannia Industries? We can meet the supply as long we have the necessary enabling factors,” he said.
“The railway is one of the areas that the government intends to address, and hopefully, it will be soon because it is one of the cheapest means of transport,” he added.
In his remarks, the Permanent Secretary and Secretary to Treasury Ramathan Ggoobi has said that Uganda’s economy is in a stable state even when it is faced with a number of global, regional and domestic shocks.
“Uganda’s economy has always been resilient and continues on its recovery path.This is not by good luck, it’s on account of good economic management,” he said.
Ggoobi said export receipts have increased, with coffee receipts increasing from Shs2 trillion in FY 2020/21 to 3.2 trillion in FY 2021/22. He also noted that FDI has rebounded to USD 1.22 billion for FY ending June 2022 compared to USD 920 million in the 12 months earlier.
He said short to medium term interventions to strengthen economic resilience and mitigate global and domestic shocks include: Fiscal consolidation, improving domestic revenue mobilisation, coordination of fiscal and monetary policies, improving expenditure efficiency and sustainable debt.
“On debt sustainability, I want tell you that our target is to keep it to the GDP ratio within a threshold of 50%.Currently at 46%, debt service cost has risen, causing concerns. We are mindful and we have a plan to manage it – transparency,” he said.
“We’re rationing government money consuming agencies and parastatals. That has gone to parliament. We’re looking at how to make government efficient. No project will enter the budget without proper appraisal – how it will help the economy and Ugandans,” he added.
The summit was held under the theme “Strategies for stabilizing Uganda’s economy to realize sustainable inclusive growth amidst global turbulence”.
