What are economic prospects for the New Financial Year?

Thursday August 06 2020

In financial terms, New Year has various meanings. The most common one is the start of the 12 month calendar running 12 months to December 31.

Then the government’s financial year that has just started a few weeks ago although the finances are still being re-treaded to make them meet their obligations.

Payroll is now the biggest single obligation although sectors like Works, Education and Defence account for a significant part of the Budget.

In the last two quarters, a lot of economic activities stalled as employers kept workers at home. In some sectors like education, the effect was pronounced as, for example, private school teachers have not had pay and more employers are announcing that payroll cuts are still on.

There are questions whether government can meet payroll. A new Parliament will have 100 more MPs. For other sectors like the Judiciary, enhanced pay is a constitutional obligation.
Outside the metro region, economic activity is slow.

Farmers now transport their produce to other rural markets. For example, matooke farmers stuck with growing inventory and terrible prices are making trips like Mbarara-Kalangala to catch a glimpse of sales they can’t get at home.

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Matooke and rice/posho are complementary foods. Matooke has moderated the cost of dry food for families. Supplies like pasteurised milk have dropped in price mostly supplied in the Kampala area.

The weather has disrupted transport on Lake Victoria, marine safety is a big issue in January and July.

Surveillance of fish stocks, fishing gear and boats are unpopular and stocks had dipped because in these months. Schools have been mostly closed since March and are now unlikely to open this year.

A phased reopening of businesses downtown hasn’t yielded the much expected all clear and as expected, fatalities have been reported due to the Coronavirus.

Countries such as South Africa with better facilities reopened the schools with disastrous consequences. The United Kingdom has gone on full alert after reopening its borders to limit travellers by quarantine from popular holiday destinations such as Spain.

But countries in advanced stages of developing vaccines are likely to relieve poorer countries and the fact that there are multiple players such as Russia, means price gouging will be less of an issue. Uganda benefits.

Tourists are likely to return. The corona episode did not collapse the country’s image. The Nile passes through seven countries on its way to the [Mediterranean] Sea - Rwanda, Uganda, South Sudan, Ethiopia, Sudan and Egypt.

Uganda is the only one of the seven with wildlife in the Nile corridor on the Murchison Falls Game Park and multiple hydro tourism sites. Kenya is drier and Serengeti is facing some of the same issues.

An acquaintance was driving to Kampala and passed through the game park and decided to stop and some elephants were lounging taking in the sun. The rhino experiment to replenish them seems to be doing well.

Umeme is one of the few non-Chinese firms in charge of a major sector, and load- shedding is now reported on twitter. Even where the country goes dark, twitter will report that there is a national blackout and no one will lose their job.

The sector has cashflow issues, but power today is well more reliable than when the sector was first privatised in 2006. Cranky generators delivered very expensive electricity and a number of medical ailments, hearing loss, respiratory ailments, etc.

A number of tier II cities have been created as part of the urban municipal project giving politicians a bonanza to create for themselves new jobs.

Gulu, Masaka and Mbale seem to have put in a lot of work although Masaka left Nyendo behind.
In 2021, a rise in poverty is reported but this is a short-term problem.

Mr Ssemogerere is an Attorney-At-Law and an Advocate.

kssemoge@gmail.com

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