Monday June 19 2017

Financial year 2017/18 Budget is another feel good presentation

Finance minister Matia Kasaija shows a

Finance minister Matia Kasaija shows a briefcase containing the National Budget at Kampala Serena recently. FILE PHOTO 

By Martin M Lwanga

On June, 8, I was invited by Daily Monitor newspaper to be part of a panel involving academics, civil society activist, traders and development consultants to discuss Uganda’s 2017/18 Budget. Overall my assessment was that this was another feel good Budget. But why?

Although Uganda is primarily an agricultural country (near three quarters of our people are employed in Agriculture directly or indirectly) she received an even lower allocation of 3.8 per cent compared to 2016/17 at 4 per cent! The minister blew a lot of air about our increased focus on Agriculture (citing needed attention to irrigation, seeds and extension workers) then incredibly allocated her less money. In my book:
Things Fall Apart in Uganda: How to build a Middle Income Nation; I strongly argued that we should promote Uganda as a tourist country centered on four themes: Sun, People, Wildlife and Culture. We are a friendly country, with an exotic culture, explosive game and the best weather in the world.

Yet tourism (lumped with trade and industry) received a miserable 0.5 per cent allocation! While my friend the writer David Sseppuya has brilliantly made a case for industrialisation in his last book: Industrialization and Prosperity in Africa, by pleading we focus on high value end industries (borrowing a leaf from the Asian Tigers), something that would also enable us tame our adverse balance of payments due to importing more expensive goods while we export low value-based commodities, there was no tangible and impressive allocation for the sector. But curiously, more money (2 per cent) was allocated to the Legislature. Ugandans should brace themselves for an avalanche of merry-making trips abroad by our legislators!

The sector that took the lions share was infrastructure development (21 per cent), which I agree with, especially if we focus on building roads, railways, bridges, inland ports and airports in the region. This will ease and accelerate access to markets and spur productivity. But releasing such piles of money to one sector without giving enough attention to fighting endemic corruption (remember the Katosi road saga) is just pouring our wealth down the drain. We build roads that falter in a year’s time because of cuts here and there from the elite who manage those contacts.

Next to infrastructure was allocation to debt service payments (12 per cent); a worrying trend given the easiness Uganda is accessing these sophisticated loans from expensive international markets, whose value is questionable. Because Uganda has to spend a lot of money now in interest service payments and also borrow heavily domestically to fund her Budget, it in effect means less money available for private sector credit. Traders and local manufacturers are now heavily weighed down with unsustainable interest rates hovering above 20 per cent.

All which makes it even more questionable where the tax body is to raise money from to meet her tax revenue target at Shs 15 trillion.

Meanwhile, there was hardly any talk of lowering public administration costs, forget that we have the most oversized government in the region known for public servants cruising around in our favourites SUV four-wheels. We did not hear much about rebuilding the health infrastructure yet we spend billions to fly well connected elites out for overseas treatment. Sparse cancer machines are over used and patients are left to die on cold floors for lack of motivated healthcare workers.

Overall, I think Uganda is on a wrong development trajectory and the middle class dream of attaining a $1,000 per capita income by 2020 is yet another mirage. Serous and focused nations around us like Rwanda are growing at 6 per cent while here we pat our backs for fetching a 3 per cent growth.

We are happy, as the jovial minister laughed and teased before his combat-dressed boss that some countries in Africa didn’t even do that well! We love citing excuses such as harsh global conditions and climate change. Meanwhile, neighbours Tanzania and Kenya, have galloped with budgets that now dwarf Uganda though in terms of natural resources we are apparently more endowed.

As we lag behind, we are not talking of transformative education by focusing on vocational education to address the overwhelming youth unemployment. Oil has become the magic bullet that will free us of poverty though we should be aware that in Nigeria, oil killed agriculture, which they are regretting much too late. Oil spurs resource conflicts and must come with a need to build strong and transparent institutions.

Yet we are undermining public institutions by promoting personality cults. To stem the oil curse, we need to learn from nations like the United Arab Emirates in the Middle East that used oil to diversify their rural economies as tourist and duty-free import ports.

Science and Technology received the least allocation oblivious of the fact that at the heart of industrial revolution and increased productivity, is technology. Is it any wonder, therefore, that Ugandans are said to be the least productive people in the region!

Ideologically, Uganda is in a confused state. If we are a private sector-led economy, is this the Budget to stimulate the private sector! Downtown Kampala is now a bead of closed retail outlets. Local manufacturers can’t compete because of poorly managed borders that allow in a flood of inexpensive counterfeit goods from aggressive China on the market.

But if we have made around the clock shift back to a State-led economy (we are now talking of starting car plants, military-led wealth creation outfits and reviving national airlines), are we able with such rampant mismanagement of public resources best revealed from everyday scandals of land frauds. Little wonder Uganda’s economy remains in the blue.

Dr Lwanga is the Dean of the Faculty of Business
& Administration at Uganda Christian University,
Mukono. Twitter:@MLwang1