Budget cuts raise questions over govt's priorities

Government’s priorities for the next financial year’s budget, barely five months away, have elicited mixed reactions since some of the major economic sectors will suffer budget cuts, Prosper Magazine has established.  

Despite increased level of food insecurity and rise in food prices driven by low agricultural production, the agriculture sector budget, has not only remained underfunded but slashed further, according to the 2023/24 Financial Year (FY) National Budget Framework Paper (NBFP), a strategy document linking the government’s overall policies as identified in the National Development Plan to the annual budget.  

“While we appreciate budget allocations of Shs1.4 trillion to the agro-industrialisation programme for FY 2023/24, we are concerned by the proposed budget cuts to the entities within the programme that are critical to facilitate food production and productivity,” reads an assessment of the NBFP by the Civil Society Organisations under their umbrella, the Civil Society Budget Advocacy Group (CSBAG).

 According to the NBFP which has since been tabled by the Minister of Finance to Parliament, the Uganda National Bureau of Standards (UNBS) budget is projected to reduce from Shs1.110 trillion in FY 2022/23 to Shs940 million in FY 2023/24, begging a question of how the already underfunded standards body will accomplish its mandates, including supporting Micro, Small and Medium Enterprises (MSME) competitiveness both within and beyond the country’s border.  

Also, the storage, agro processing and value addition subprogramme’s budget is expected to reduce from Shs62.120 billion in FY2022/23 to Shs25.812 billion in FY 2023/24 at a time when the government claims to prioritise import substitution and value addition agenda.

The executive arm of government budget projection for FY 2023/24 (NBFP) comes at a time when the country is faced with challenges like the high inflation currently at 10.2 per cent -- above the target of 5 per cent that the country’s policy and economic managers want to maintain.

As of last week, average prices per kilogram of food stuffs like maize flour rose from Shs1,955 to Shs3,421, dry beans rose from Shs2,719 to Shs3,805 and mukene (silver fish) from Shs11,474 to Shs13,339, according to market research.

Before we forget, the increasing public debt is projected to reach 53 per cent of the Gross Domestic Product by June 2023 if it hasn’t already, although according the Secretary to the Treasury, Mr Ramathan Ggoobi, the worry should be geared towards individual debts which is actually out of control and more problematic than public debt.

Despite all that, government’s commitment to clear the outstanding domestic arrears is a good gesture that has been appreciated across quarters. By December 2022, the government released Shs743.54 billion which is higher (by Shs81.59 billion) than the approved FY2022/23 budget of Shs661.95 billion. This according to sector players and analysts goes a long way in boosting the country’s private sector growth.  

The good, the bad and the ugly
The Human Capital Development programme is projected to take the lion’s share of the next national budget, amounting to slightly more than Shs9trillion –an equivalent of 18 percent of the entire budget.

So far there is unanimous consensus, with the CSBAG executive director, Mr Julius Mukunda taking a lead in commending the government for being bold and prudent in this regard.  
 
Governance and Security programme follows with slightly more than Shs6.8 trillion, translating into nearly 14 per cent of the next budget followed by Integrated Transport Infrastructure and Services programme taking a projected allocation of over Shs4.6 trillion , accounting to about 9 per cent of the resource envelope. 

Then comes Agro-Industrialisation which will receive Shs1.4 trillion which is just about 3 percent of the national cake.

The programme projected to receive the least allocations include Innovation, Technology Development and Transfer at Shs177.5 billion, about 0.36 per cent of the budget, followed by Mineral Development at Shs38.5 billion, just about 0.08 per cent and Community Mobilisation and Mindset Change settling with Shs21.9 billion translating to 0.04 percent of the budget. The irony is, all these are considered critical by policy makers yet in reality it continues to be deprived of the much needed resources to enable it to blossom. 

But, the education sector is not spared either. Already glaring gaps in low prioritisation of the lower secondary school curriculum is evident in NBFP. To implement this curriculum whose focus is to enhance learners’ skills and competence more resources need to be channeled in the education sector.

For example, in FY2023/24, the Ministry of Education and Sports plans a deficit of Shs14.3 billion to train 1,000 lower secondary school teachers and it has only targeted to retool only 150 secondary school teachers.

The Ministry also requires Shs24 billion to print slightly more than 6 million copies of instruction materials for the lower secondary curriculum (S1, S2) for both public and private schools. Failure to provide the required funding will negatively impact on the delivery and successful implementation of the new curriculum for all Lower Secondary Schools.

Further, the NBFP also reveals under-funding for the tourism sector, the country’s leading foreign exchange earner. Before Covid-19 pandemic struck, tourism was generating about $1.6 billion into the economy. According to the NBFP for FY 2023/24, the Tourism Development programme is the third least funded NDP III programme with a budget of Shs89 billion, lower than the FY2022/23 approved budget of Shs194,677 billion. 

To realise the NDPIII projection for tourism to earn over $ 1.772 billion (Shs6.5 trillion) in FY 2023/24, Mr Mukunda notes that government needs to strategically invest in areas like aggressive promotion and marketing Uganda, skilling human resource along the tourism value chain as well as conservation of wildlife and cultural heritage resources, which will harness the revenue potential of Uganda’s tourism sector.

Tourism budget cut
However, the budget cuts in the tourism sector was an error which Mr Ggoobi said will be corrected to reflect the right amount increase allocated to the sector.

According to trade negotiation expert, Ms Jane Nalunga, the NBFP FY2023/24 under manufacturing focuses on harmonising the already concluded negotiations but does not take into account the ongoing trade negotiations in which the government is involved such as the African Continental Free Trade Area third phase negotiations and World Trade Organisation  negotiations among others.

“This is critical in supporting a conducive policy environment for industrialisation and trade and also to ensure that we benefit from the negotiated markets. However, funding is inadequate for the government to negotiate independent positions that protect and promote our interests, positions, policy space and sovereignty,” Ms Nalunga said while presenting CSOs perspective on NBFP last week at CSBAG offices in Kampala.

Reality or fiction
In an interview with Mr Mukunda last week, with the budget of Community Mobilisation and Mindset Change programme projected to reduce by 70 per cent coupled with the ‘laughable’ allocation for extension services and research, successful implementation of the Parish Development Model (PDM) may suffer.

Overall, he noted that although the budget has increased with slightly over Shs1 trillion shillings, the discretionary spending has reduced by Shs2.5 trillion “because we need to pay debt”.  And this, he says, “has consequences.”

“You also realise that many Ministries, Departments and Agencies (MDAs) are unhappy with the budget cuts, yet the real issue is that we don’t have enough resources to go around for all the MDAs,” Mr Mukinda told Prosper Magazine.

He continued: “It is about time we stopped all the mega projects that are coming up and only concentrate on operation and maintenance of the existing infrastructure to see us through the difficult time.”

No new taxes
Importantly, Mr Mukunda doesn’t expect government to introduce new taxes because it will be a huge blow on recovery strides that are being registered so far.  

There are signals that the economy is slowly taking shape as evident in growth of private sector credit by 0.4 per cent  between November and December 2022, trade balance improvements and retaining the stability of the Uganda Shilling relatively against the dollar during the three months to November 2022 which appreciated by 1.6 percent.
  
According to Mr Mukunda, an astute policy and budget analyst, going by the projections anchored on National Budget Framework Paper, the next budget to a reasonable extent speaks to the situation currently on the ground, except for three areas including under-funding of tourism sector, something Mr Ggoobi said will be done. And starving the agriculture sector of much-needed resources on the pretext that the sector is complimented across the other economic sectors.

 In his support is the state minister for animal industry, Mr Bright Kanyontore Rwamirama.
Appearing before a parliamentary committee to defend the sector budget, he noted that the idea that resources/funding for the agriculture sector is spread across other economic sectors is perturbing and unhelpful as it doesn’t help the course of the agricultural sector development.

Then the element of climate change is not properly emphasised in the NBFP which lacks the certificate confirming that the FY 2023/24 budget is climate change responsive.