Finance ministry stops entry of projects without feasibility studies 

Mr Laban Mbulamuko. Photo / File 

What you need to know:

  • The move seeks to improve public investment management and stop cost overrun as well as strengthen institutions in terms of building capacity across the entire project cycle and construct assets efficiently at minimum costs.

The Ministry of Finance has said there will be no more entry of development projects in public investment plans that have no feasibility studies. 

The move, which seeks to improve public investment management and stop cost overrun, will also strengthen institutions in terms of building capacity of institutions across the entire project cycle, construct assets efficiently and at minimum costs. 

While responding to questions during the launch of the updated national parameters and commodity specific conversion factors in Kampala, yesterday, Mr Laban Mbulamuko, the Ministry of Finance director budget, said no projects will be entered in the Public Investment Plan without feasibility studies. 

“All the new development projects must have feasibility to inform the social economic and opportunity cost of the project to be undertaken,” he said, noting that development projects must also be accompanied with appraisals and work plans, and detailed designs. 

The above, he said, will be key in provisioning for needs such as catering for human capital development needs, avoiding wastage of money and being conscious of investment in the social sense and economically beneficial investments. 

Mr Mbulamuko also noted that the Budget Circular for 2023/24 had tied expenditure for capital development of all the government institutions to Shs8 trillion. 

Mr Hannington Ashaba, the Finance Ministry commissioner projects analysis and public investment department, said investment in public projects must be guided to ensure value for money, noting that they guide investment decision making by using a uniform set of prices against the whole range of intervention. 

These, he said, include economic opportunity cost of capital, foreign exchange premium, non-tradeable outlays, and economic opportunity cost of labour, social value of time, economic value of natural and environmental resources. 

Mr Ashaba also noted that the economic opportunity cost of capital enables different cost and benefit flows to be converted into a single net present value, so that they can be compared in economic terms. 

“Government is often looking at investments that have costs and benefits accruing over a long period of time. Therefore, when the economic discount rate is correctly defined, a positive net present value indicates that the project increases the economic welfare of citizens,” he said. 

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