Inside the proposed 2023/24 National Budget

What the CSOs want on matters debt, public expenditure, women, food & tourism

Kampala, Uganda | JULIUS BUSINGE | Civil Society Organisations under their umbrella body, the Civil Society Budget Advocacy Group (CSBAG) are urging the government to design a budget that is responsive to public debt, public expenditure, climate change, women entrepreneurship and related development activities.

This, according to the group, would directly feed into the government’s overall agenda of accelerating economic recovery and socioeconomic transformation.

The body’s call comes at a time the legislative arm of government is closely scrutinizing the Ministry of Finance’s National Budget Framework Paper (NBFP) for FY2023/24, which was tabled in Parliament in December 2022.

Speaking at a press conference on Jan.15 in Kampala, the CSOs led by CSBAG’s Patrick Rubangakene and SEATINI’s Jane Nalunga, said, next year’s budget should focus on development expenditure to support further growth of the economy that has been hit by COVID-19, rising inflation and public debt and to some extent the depreciating Uganda shilling against the major currencies like the US Dollar.

According to the NBFP, the total FY2023/24 resource envelope is projected to increase from Shs48.1trillion in FY2022/23 to Shs49.9trillion in FY2023/24. The discretionary resource envelope is projected to decrease by Shs2.5tn due to an increase in the interest payments to Shs6.1tn, of which Shs5.2tn is for domestic interest payments and Shs907billion is for foreign interest payments and commitment fees.

Domestic financing for the FY2023/24 budget is expected to increase by Shs3.2tn from Shs25.5tn in FY2022/23 to Shs28.8tn covering 58% of the budget. External financing is projected at Shs10.5tn (21 percent).

Winners and Losers

The human capital development programme – that covers key sectors of education, health and more – is projected to take the largest share amounting to Shs9tn (approx.18.0%), followed by governance and security programme at Shs6.8tn (13.7%), integrated transport infrastructure & services programme is projected to be allocated Shs4.6tn (9.3%), agro industrialization will receive Shs1.4tn (3%).

Programmes projected to receive the least allocations include innovation, technology development & transfer Shs177billion (0.36%), mineral development Shs38.5billion (0.08%), and community mobilisation & mindset change Shs21.999 billion (0.04%).

CSO concerns

On high public expenditures, CSOs say, the recurrent costs of running government operations including wages, salaries, interest payments and commitment fees, continue to be higher than development expenditure, limiting the resources available for service delivery.

This is worsened by the delayed execution of the 2018 plan to rationalize government agencies, commissions and authorities as one of the measures for reducing expenditure.

“Parliament should request from Ministry of Public Service the FY 2023/24 strategies to fast track the rationalization of MDAs to eliminate redundancies in the medium-term, reduce the cost of running government and improve efficiency,” the group said in a joint statement.

The group also called upon the government to cap on borrowing non concessional loans and ensure prudent debt utilization. They added that only financial and economically viable public investment projects should be approved for financing.

As of June 2021, the share of public debt stock to the Gross Domestic Product (GDP) had increased from 46.90% (US$ 19.54 billion) to 48.4% (US$ 20.99 billion) in June 2022. This is partly driven by Uganda’s appetite to borrow on non-concessional terms which ultimately increases the cost of borrowing and high cost of debt servicing and reduces discretionary spending.

They also want a women responsive budget. “Women have great potential to deliver Uganda’s economic recovery strategy. However, lack of access to financing, inadequate gender specific tax policies, limited business management and IT integration in women led businesses are some of the areas that government ought to invest in aggressively if we are to support Uganda women entrepreneurship and close the existing gender gaps in economic empowerment.”

The body also raised concerns on climate change, support to vulnerable groups, health sector, food, disasters and more.

They suggested that Parliament should task the responsible minister to produce the Certificate of Climate Change responsiveness as stipulated in the National Climate Change law, 2021 and ensure that various government agencies and departments work plans and budgets are climate change responsive before final approval of the NBFP.

They also said, the ministry of health should ensure that the procurement for medical equipment matches with recruitment of requisite staff.

On the issue of supporting vulnerable groups, the group said. “We note with great concern that community mobilization and mindset change program budget is set to reduce by 80%. This implies that the program will not be in position to fund critical grants for vulnerable groups like the elderly, youth, and persons with disabilities, street children and women.”

In addition, the program’s contribution to the Parish Development Model will be crippled as community development officers are set to be left with no funds to oversee the above-mentioned socio-economic empowerment programs or support in response and management of cases related to gender based violence, social protection, and labor disputes.

“We call upon government to reconsider the budget cuts with focus on provision of service delivery to the vulnerable groups as we target economic recovery,” the group said.

The CSO body also wants a budget that supports food security to prevent hunger and to curtail an upward inflation trend. They suggested that direct strategic investments to water for production, agricultural extension services, post-harvest handling, improving standards and access to affordable credit by small holder farmers be prioritized by the new budget.

They also called for the finalization of the National Irrigation Master Plan, and the National Agriculture Extension Strategy in addition to supporting interventions geared towards securing land ownership rights for women who play a key role in Uganda’s agricultural productivity food production.

On the education question, CSOs said, Parliament can direct reallocation of funding within the education sub program to secure adequate financing for teacher training and securing the necessary equipment to support the smooth implementation of the lower secondary.

In addition, the body said, the National Planning Authority should take lead in the monitoring and reporting on compliance government agencies and departments in mainstreaming disaster risk management interventions both at national and local government level.

Relatedly, CSOs said, tourism must be supported in line with the National Development Plan III projection for the sector to earn over US$1.772 billion (Shs6.5trillion) in FY 2023/24.

“Government needs to strategically invest in areas like aggressive promotion and marketing Uganda, skilling human resource along the tourism value chain as well as conservation of wildlife and cultural heritage resources, which will harness the revenue potential of Uganda’s tourism program,” Rubangakene said.

Credit to government

In their statement, CSOs commended government on the measures taken to revamp the economy that have resulted in growth of private sector credit by 0.4% between November and December 2022 and trade balance improvements.

In FY2023/24, real economic growth is projected at 6 percent, driven by an anticipated increase in productivity within the agriculture and manufacturing sectors. Annual headline inflation is projected to reduce to 5% in the medium term.

By December 2022, the ministry of finance had released 52.7% of the budget for FY2022/23 and Uganda Revenue Authority had collected a surplus of Shs37.43 billion – presenting a promising fiscal performance for FY2022/23.

The group further commended government commitment to clear outstanding domestic arrears. By December 2022, government had released Shs743.54 billion which is higher than the approved FY2022/23 budget of Shs661.95 billion. This goes a long way to boost Uganda’s private sector growth, according to Rubangakene.

The other credit to government was noted on the progressive public finance management reforms undertaken including, automation of government services like e-government procurement portal, audit recommendation tracker, and citizen feedback platform under the Office of the Auditor General; issuance of a new chart of accounts and upgrade and roll out of the Integrated Financial Management and Information System. The budget consultation process continues with the key stakeholders sharing their views with the hope that an inclusive and fair budget will be read in June.

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