The Uganda Revenue Authority (URA) is expected to increase its collections by four trillion shillings to 29.7 trillion shillings in domestic revenues for the financial year 2023/24 compared to the projections for this financial year. The Minister of Finance, Planning, and Economic Development, Matia Kasaija, says that he expects the economy to do better with an improvement in private sector activities.
Speaking at the National Budget Conference to start off the budgeting process for the next financial year, Kasaija reiterated that this year’s performance has been affected by shocks they had not foreseen, especially the sharp rise in global inflation that has affected local commodity prices. He, however, assures the public that the resource envelope for the next financial year will not have significant changes from that of the current year, with the expectation of no new taxes.
In the financial year ending June 2022, URA collected 21.6 trillion shillings out of the targeted 22.3 trillion shillings. More than half of the 704 billion shilling shortfall was attributed to government tax arrears.
Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group, hailed the government’s decision not to introduce new taxes this current year, adding that the suspension should continue for at least three years. Mukunda says that this will give the private sector and households more reasons to get back on their feet after the economic shocks.
The effects of the economic shock meant that the economy grew by 4.6 percent last year and could expand by 6.5 percent this year, according to the government forecasts, slower than earlier projections. Kasaija also says that they will increase financing for human capital development like education and health programmes as priority areas in the next year while limiting the growth in debt.
This is expected to arise from domestic revenue increases or reductions in allocations to other programs. USAID Head of Mission, Richard Nelson, hailed the government for its recent commitment to cautious spending in the wake of the economic hardships the country is facing.
He, however, said that on top of the planned increase in health and education spending, the next budget should increase social protection financing, especially by expanding the grants for the elderly by lowering the qualification requirements and covering all those within the bracket.
On top of human capital, Kasaija named social protection, agricultural productivity, and transport infrastructure with a focus on maintenance and promotion of trade and exports as the areas of focus next year. The government plans to support industrialization with the existing industrial parks being operationalized, while rural electrification will continue to cover the remaining districts and sub-counties.
“In health, the strategy emphasis will shift from the curative health care system to preventive health care,” he said, while in the education sector, “focus will be on increasing the relevance of learning and knowledge building to the needs of society and the economy.”
The local governments, however, are not happy with the government’s lengthy procurement process, which has reportedly slowed down developments supervised by districts. Richard Rwabuhinga, the chairperson of the Uganda Local Governments Association-ULGA, said, for example, that the government gives the local governments debt-funded projects and they put everything required in order.
However, by the time a contractor is hired and sent to the site, the budget process is ending and the money is returned to the consolidated fund. Rwabuhinga, also Kabarole District LC V Chairperson, said that local governments have unfairly been accused of having low absorption capacity because it is the central government that delays the progress of projects, giving examples of seed schools and health centers.
Kasaija agreed that there is a problem, adding that he will table it before the cabinet so that a policy is made that gives local governments the power to get contractors for local government projects. He said it would even be easier for the government to demand full accountability for failed projects.
Rwabuhinga also accused the government of selective application of the laws when enforcing environmental protection laws. According to him, most violators of the environment are usually people either with financial resources or connections with the government, which somehow protects them from the law.
He asked the central government to do something about the police and to give district environment officers more money so they could do their jobs.
Rwabuhinga also urged the government to enhance the rate at which the Parish Development Model (PDM) is being implemented to ensure some regions are not left behind. He apologised for the money that has so far been reported lost by local government officials but hoped that the government would be able to bring the culprits to book.
On the PDM, Charles Ocici, the Executive Director of Enterprise Uganda, urged the government to take “mindset change” seriously and not only at the grassroots, but also at the national level. He said that if not done, the money for the PDM is likely to go the way of the money for previous wealth creation like Emyooga.
On his part, Zaake Kibedi, Uganda’s Ambassador to the United Arab Emirates, urged the government to implement the various policies proposed to improve the externalisation of labor. He said that even though workers in the Middle East are becoming more important to Uganda’s economy, the government hasn’t given the missions in those countries much power to help the external labour industry.
Kibedi says that the funding that was given to the missions there when there were fewer than 30,000 Ugandans is the same as today, with more than 100,000 people.
Prime Minister Robbinah Nabbanja agreed that funding for expanding consular services in the Middle East needs to go up.