‘National Budget loaded with wasteful expenditure’

How would you describe the 2017/18 Budget?
The FY 2017/18 Budget has no unique description. It has allocated resources as though Uganda’s economy is doing great. The Budget continued to prioritise infrastructure (roads - including rail and energy) yet what the economy needs now is a stimulus.
The Budget is sticking to the script even when the script is flawed. Indications of the flaws are in the continued choice to borrow and invest with no declared economic return, the choice to continue borrowing domestically (Treasury Bills) for long term investment, the choice to ignore strategic investment in water for production and national food silos, treating famine, crop and animal disease infestation and drought as an emergency.
These have been the descriptions of Uganda’s Budget for the past three financial years (FY) and no surprise the economy is projected for a downturn in FY 2016/17.

Compared to the previous Budget (2016/17), how different or similar is the 2017/18 Budget?
The budgets are similar in a number of ways; the budget strategies are the same, interest payments and debt refinancing still take the lion’s share (27.2 per cent in FY 2016/17 and now 30 per cent in FY 2017/18).
Budgets are all just below the Shs30 trillion mark but for service delivery they are both below Shs23 trillion.
The per capita allocation for both years is on average Shs560,000 but this is biased by infrastructure expenditure.
The recurrent Budgets, specifically the wage bill, is about 12 per cent of the total Budget in both FYs.
The sector allocations are not significantly different, save for Works and Transport whose budget increased by Shs839b and Land, Housing and Urban Development whose budget reduced by Shs115 billion. The other increases and reductions are within Shs100b.

What stands out for you in the 2017/18 Budget?
Nothing much is outstanding in the FY 2017/18 Budget. Nonetheless, the adoption of Programme Based Budgeting (PBB) to replace the current Output-Based Budgeting (OBB) can be highlighted as one of the issues that stand out. PBB benchmarks Government service delivery on programmes (different outputs make up a programme) compared to OBB which bases the assessment of Budget implementation on different planned outputs independently.
However, it is of concern to note that most Ministries, Departments and Agencies (MDAs) are still using OBB in their FY 2017/18 Budgets which will compromise intended benefits of PBB.

What is it that you don’t like about the forthcoming budget?
There is a lot of wasteful expenditure, for instance, on allowances, workshops and seminars, welfare and entertainment, special meals and drinks, travel abroad, donations and hire of venue (chairs, projectors, etc) which will take Shs1.4 trillion of the FY 2017/18 Budget which is 7 per cent of the available expenditure resources of about Shs20 trillion.
Expenditure on these items is higher than planned expenditure of Shs1.2 trillion on priority sectors of agriculture, tourism, trade and industry and social development. In fact, government priority sectors are not reflected in the funding allocated to such sectors; which undermines attainment of national development objectives.
Besides, reduction in the conditional transfers for urban equalisation grant from Shs126.5 billion in FY 2016/17 to a mere Shs600,000 in FY 2017/18 is unexplainable. With the creation of new municipalities and town councils in 2015, it expected that government should have cut funding in other non-priority sectors and maintained the grant in its form to facilitate development of such urban centres. With this trend, it is worrying to note that the government could be interested in creating political units rather than administrative units which can facilitate service delivery.
Lack of government commitment to clear the stock of ever-increasing domestic arrears is another issue of concern. Currently, the stock of domestic arrears stands at about Shs2.7 trillion yet only Shs300 billion has been provided in FY 2017/18 for payment of domestic arrears.
Non-payment of domestic arrears negatively affects domestic services besides increasing Government’s liability in terms of interest rates paid on such arrears. As such, government should have settled the issue of domestic arrears in FY 2017/18 to avoid their escalation.

Which sectors would you have preferred to have more investment in and why?
I would prefer more investment in the Agricultural Sector given the fact that it employs more than 70 per cent of the population. With the current food crisis and high food crop inflation relative to inflation of other categories of commodities, increased investment (to at least 5 per cent of the Budget from the current 3.1 per cent) would bolster people’s livelihood as well as avert a repeat of the current food crisis. Though, seedlings are channelled through Operation Wealth Creation Secretariat, the Secretariat is limited in terms of technical capacity to handle agricultural extension services.
With the outbreak of pests such as the army fall worm, I would have liked to see recruitment of extension workers to at least 78 per cent of the required staffing levels to address such issues instead of relying on an ad hoc mechanism.
Conversely, for Uganda to harness its development, it should take Agriculture as a priority not only in policy documents but annual Budget appropriations as well. I would also prefer more funding to the Social Development Sector. Particularly the Social Assistance Grant for Empowerment and Youth Livelihood Programme should have been targets in the face of decreasing living standards of the senior citizens and high rates of youth unemployment.

Briefly suggest key areas where more revenue could be tapped.
For starters, it ought to be noted that URA is not adequately collecting taxes even from the available revenue sources partly due to ineffective tax administration and institutional and structural arrangements, leaving Uganda with lowest tax to GDP ratio (13.4 per cent) in the region.
Instead of increasing the number of tax payers on board, the government continuously increases the tax rates of the existing tax base which compromises tax compliance. A case in point is the increase in excise duty and VAT on alcoholic drinks.
The informal sector is largely untapped as far as tax collection is concerned and as such tapping into this sector can greatly increase tax revenue. Halting of tax exemptions to companies which have been exempted from tax for a long period such as BIDCO could also increase revenue collection. Overall, improvement in tax revenue administration is key in generating more revenue.

Anything else you would want to say regarding the 2017/18 Budget?
There is failure of MDAs to adhere to gender and equity issues during the budgeting process. In fact 40 (which is about 30 per cent) MDAs did not qualify for the Certificate of Gender and Equity after assessment of their Ministerial Policy Statements by the Equal Opportunities Commission.
While most of those that did not qualify are Ugandan missions abroad (most of them scoring in the range of 6 – 36 per cent, this is a high percentage considering that it also includes critical sectors such as NEMA (18 per cent), Uganda Bureau of Statistics (25 per cent), Uganda Blood Transfusion Service (25 per cent) and Uganda AIDS Commission (34 per cent).
Poor performance in these identified critical sectors means there was less equitable planning during the FY 2017/18 Budget process. Compliance to NDP II is also wanting as the assessment by National Planning Authority reveals deterioration in government performance in FY 2016/17 (58.8 per cent) from 68.2 per cent in FY 2015/16.