Private sector asks govt to prioritise payment of domestic arrears  

Private Sector Foundation Uganda (PSFU) has asked government to prioritise payment of domestic arrears, eradication of non-trade barriers and promotion of agro-industrialisation in the 2023/24 budget implementation. 

Speaking in a post budget conference in Kampala PSFU chairman Humphrey Nzeyi, said government’s failure to pay domestic arrears has heavily contributed to the poor participation of Ugandan companies in government procurement and other contracts, noting that domestic arrears have increased by 62 percent from Shs4.65 trillion to Shs7.55 between 2021 and 2022. 

Government allocated only Shs205b for payment of domestic arrears during the 2023/24 financial year, which PSFU said is a drop in a sea of unpaid arrears. 

“This inability to pay has suffocated the private sector,” Mr Nzeyi said, noting that this in turn negatively impact competition with many companies rendered incapable to participate in public procurements due to cash flow challenges. 

Government has indicated willingness to pay supplies but continues to pile up debt indicating through domestic borrowing, which Mr Nzeyi argued, continues to crowd out private sector from credit sources.  

Government expects to finance the 2023/24 Shs52.7 trillion budget through domestic revenues projected at Shs29.7 trillion while domestic borrowing is expected to generate Shs3.2 trillion. 

Budget support will account for Shs2.8 trillion, while Shs8.3 trillion will be mobilised from external financing. Collection from local governments will account for Shs287b while domestic debt refinancing and other financing will account for Shs8.4 trillion and Shs229b, respectively.

Mr Nzeyi also noted that there was need for government to focus on agro-industrialisation, noting that while financing to agro-industrialisation has risen from 1.4 trillion to 1.7 trillion in the past two years, more resources to support infrastructural development for water and production. 

“Once water is brought closer to farmers (small, medium and large scale), they will be able to tap it and invest in irrigation systems for consistent production and productivity,” he said, noting that government should also invest in export promotions through removal of barriers of trade and concentrate on interventions that will drive down the cost of trade.  

Regional markets, which are the key export destinations for Uganda’s products continue to be impacted by non-trade barriers with a number of Ugandan goods, among them maize, milk, eggs and sugar denied access to countries such as Kenya, Tanzania and South Sudan.  

impact of blockades on milk   
 
Mr Nzeyi said the ban on Uganda’s milk from accessing Kenya affected prices of milk, which impacted more than 4.2 million households involved in the dairy sector. 

This, he noted, caused the loss of more than 40,000 direct job and more than 30,000 indirect jobs in the diary sector value chain.  

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