Uganda National Budget Process Handled Carelessly - Civil Society

The civil society in Uganda has branded the next national budget ineffective in answering the country's pressing needs as listed by the ministry of Finance, Planning and Economic Development. 

The minister of Finance is due to present the Shs 72 trillion budget on Thursday this week. The budget was revised upwards at the last minute from the earlier estimate of Shs 58 trillion. It also represents the biggest annual increase from the FY 2023/24 Shs 52 trillion budget, with the the largest increment coming from allocations to repayment of the national debt.

However, civil society organisations, including Civil Society Budget Advocacy Group (CSBAG), tax and trade rights NGO, SEATINI Uganda, health rights group, CEHURD, Food Rights Alliance, Oxfam Uganda and Initiative for Social and Economic Rights (ISER), fear for missed priorities and increasing debt burden. However, there is also concern that the budgeting process is not being given the seriousness it deserves. 

"Particularly, the limited time given to the legislators to scrutinise and debate the addition of Shs 14 trillion presented through corrigenda. Ugandans need to be worried about the rising abuse patterns of the budget-making process witnessed this year, particularly through the 2024/2025 corrigenda," said a joint statement.

According to civil society, some of the items in the corrigenda do not meet the criteria of "error" and "omission", adding that the soaring public debt, the narrowing fiscal space, reducing external financing, and the downgrading of Uganda's economy by rating agencies, are factors that will negatively impact the implementation of the budget.

The 2024/2025 budget theme is: "full monetisation of the Ugandan economy through commercial agriculture, industrialisation, expanding and broadening services, digital transformation, and market access". This, according to Jane Nalunga, the executive director at SEATINI Uganda, should have meant increasing allocation to agriculture development. However, the Shs 1.6 trillion given is too little to have any impact, according to Nalunga.

"When you look at the amount given to agro-industrialisation, it is very little. Last year it was Shs 1.8 trillion. Shs 1.6 is just pocket money for some people," Nalunga said.

Her other concern was the continued underfunding of the ministry of Trade, dropping to Shs 113 billion from Shs 170 billion in the current budget. Nalunga said trade could uplift the country out of poverty but it was being neglected, leading to a lack of access to markets. She also wondered how, with the little money for agriculture, coffee development, and trade, the country would meet the requirements that the European Union has set for Uganda's coffee exports by next year.

Uganda Coffee Development Authority was allocated just Shs 14 billion. Agnes Kirabo, chief executive officer at Food Rights Alliance also stressed the need to invest in market infrastructure to enable food to move from the farmers to the markets.

"Once the internal trade is not working, with the ministry receiving only Shs 113 billion, food that is being produced in one part of the country, it means that the needy part of the country is not going to receive the food," Kirabo said.

The danger of nonfunctional markets internally is that the farmers are surely dependent on what they have produced, she added.

"Look at this financial year. The maize farmers could not meet their basic needs because the prices collapsed to Shs 300, yet the consumers were not getting the flour. The farmers neglected the maize and it got infested with aflatoxins, before somehow finding its way into schools!"

Kirabo hailed the planned procurement of more tractors but expressed fear about whether they would be delivered as planned. She also called on the ministry of Agriculture to account for the performance of the tractors that were deployed previously before procuring new ones.

On her part, Fatia Kiyange, CEHURD executive director, welcomes investments in some targeted health sector areas like maternal health but says the budget missed important issues, like the widely debated National Health Insurance Scheme. She also wondered why the government reduced allocations to Butabika hospital well knowing the increasing challenge of mental health in the country.

"Issues of mental health and allocation of infrastructure on centres such as cancer institutes raises a big question on whether government is committed to providing Ugandans with a health care scheme,'' she said.

The activists urged the government to look at other sources of finance and also prioritise spending to reduce its appetite for debt. The government was also criticised for its incentive to investors especially tax waivers and holidays, which denied it the much-needed revenues.

"Whenever we do budget advocacy, the government says there's no money. For example, we have never looked at how much we lose in tax exemptions yet the government is quick to borrow," said Angela Nabwowe, director at ISER.

"The challenge of borrowing to implement and pay debts is that we are going to shortchange the vital sectors of the economy like education, agriculture, health and other sectors," she said.

Julius Mukunda, chief executive at CSBAG specifically noted the low absorption capacity of government projects, sustained borrowing, and fiscal indiscipline as the main hindrances to the performance of the budget. He welcomed the government's level of budget transparency but said this is undermined by accountability issues as well as fiscal indiscipline during budgetary implementation, especially to the frequent supplementary requests, which he says are abetting the country's indebtedness.

Stressing the lack of accountability, Mukunda gave examples of what he called risky ventures like Lubowa hospital, Atyak Sugar, and DEI Pharmaceuticals, all of which have already taken money in trillions of shillings, but without tangible returns. Mukunda was also concerned at the failure of the government to use the money it had borrowed, despite the challenges prevailing.

"At the end of December 2023, we could only spend 84 per cent of the available resources that were allocated to sectors, meaning planned activities were not done. The second is the Shs 14.4 trillion of undisbursed loans. As we even go to procure more loans, the consequence is Shs 111 billion in commitment fees, a fine we paid for not using the loans," said Mukunda.

About Shs 32.3 trillion is expected to be domestic revenue and Shs 1.3 trillion budget support, meaning that more than 50 per cent of the budget will be funded by debt. Sophie Nampewo, coordinator of finance for development at Oxfam wondered where development was going to come from next year, considering that there are only Shs 38 trillion available.

"A big portion of this budget is not ours. We are paying interest on debt. We have only Shs 38 trillion available for service delivery. Government should look into its appetite to borrow and spend so that we create a lucrative environment for businesses and investors to thrive" she said.