Private sector should gain in the next Budget

From Covid-19 to double digit inflation coupled with external factors such as Ebola and the geopolitical conflict in Eastern Europe (Russia-Ukraine war) which brought about imported inflation, subdued global growth, Uganda’s economy has been in turmoil.

This three-some tragedy has led to slower economic growth and overall development in Uganda.

To avert slowdown in economic growth, the Finance Ministry says the overall objective of the FY 2023/24 Budget Strategy is to restore the economy back to the medium-term growth path of 6-7 percent per annum and improve the economy’s competitiveness.

The Finance Ministry says in the Budget Framework Paper for Financial Year 2023/24 in the medium-term, increasing the wealth of households and eliminating poverty, particularly using the Parish Development Model and small and medium enterprises economic recovery programmes is key for socioeconomic transformation. In addition, diversifying the economy and Uganda’s exports are key to achieving the planned economic growth trajectory.

According to the plans, the Private Sector is posed to be one of the key sectors whose issues will be addressed and funded in the National Budget for the financial year 2023-24 if Parliament approves the Budget Framework Paper.

In the coming budget, the Finance Ministry is proposing to increase the Private Sector Development budget allocation to Shs1.798 trillion in the Financial Year 2023/24, up from Shs1.653.9 trillion in this financial year budget.

The Permanent Secretary/Secretary, Mr Ramathan Ggoobi said in the Budget Framework Paper that this Private Sector Development Programme Budget Framework Paper consolidates gains from implementing private sector development action plan private sector development action plan for the previous two years of the NDP Three.

Mr Ggoobi said the government’s medium term goals under the programmes are outlined in its NDP Three objectives namely “to increase competitiveness of the sector to drive sustainable inclusive growth.”

Mr Ggoobi outlined that the focus of implementation is building and strengthening the resilience of enterprises to withstand the persistent shocks that economies have experienced.

He said Member agencies working with the private sector are responsible for exploring non-conventional means of expanding market opportunities and building the capacity of local business to take advantage despite the shocks. 

Mr Ggoobi explained that the private sector development  therefore provides the practical approach to prioritising and sequencing key interventions that are crucial delivering the programme objectives; for allocating resources to these priorities for FY2023/24 and projections for FY 2024/25.

The PSD BPF derives from the budget framework papers of the votes contributing to PSD Programme and it is aligned to the PSD Programme implementation Action Plans.

“Through series of Programme Working Group consultation, member institutions agreed on a number of priorities to guide their individual votes Budget Framework Paper, which have been considered in this BPF preparation process. Therefore completeness, ownership and accuracy have been key principles in the development of this BPF,” he said.   

Mr Ggoobi said the execution of PSD BPF will build on existing systems and structures and efforts and strengthen practical interactions with the private sector entities through programme working group and technical working groups.

He said efforts towards aligning the NDP Three and the Programme Budgeting have enabled the BFP for 2023/24 to be prepared on the system and this ensures the alignment of the budget to the NDP Three.

“We are convinced that unlocking of the private sector will only be achieved through continuous engagement with the private sector players at all level and stages of implementing the private sector development action plan, which we have used to guide the development of this year’s budget framework paper,” he wrote.      

Manufacturing
The Finance Ministry stresses that to support manufacturing and industrialisation programmes, the government shall fast-track implementation of the industrialisation policy through increased investment and growth of the manufacturing sector as a vehicle to increase local production and job creation for better or quality employment opportunities.

“Equally, local industries will be supported to acquire appropriate technologies and product certification as well as access to cheap and affordable electricity. Government will also support efforts to set up a buffer stock for textile manufacturers,” the Ministry of Finance said in the BFP.

Regional integration
Expansion of the EAC bloc to include the Democratic Republic of Congo in March 2022 has opened greater cross-border investment opportunities for Uganda.

With the Africa Continental Free Trade Area (AfCFTA) now operational, it is expected to boost private sector potentials for promoting regional growth and competitiveness with other economic blocs such as the South African Development Cooperation (SADC), Economic Organisation for West African States (ECOWAS) and the Maghreb region for North Africa.

“However, the main challenges that remain unaddressed include the Monetary Union of the EAC bloc and non-tariff barriers such as Customs and administrative entry procedures, technical barriers to trade, sanitary and phyto-sanitary measures, charges on imports, transport, clearing and forwarding. This will be one of the prime areas of discussion with other Finance Ministers of the EAC in April 2023,” he explained.

The Ministry of Finance is proposing the allocation of Shs268.400 billion to the Ministry of Trade, Industry and Cooperative.
The permanent secretary, Ms Geraldine Ssali said this manufacturing Budget Framework Paper of FY2023/24 is responsive to the third National Development, Sustainable Development Goals, undertaken during the programme review.

“The Programme Budget Framework Paper for Financial Year 2023/24 pays attention to harnessing the existing synergies within the programme,” she stated in the budget framework paper.

Ms Ssali said the manufacturing programme aims at reviewing and formulating trade related policies to refocus on supporting exports, sensitise farmers and producers on trade procedures and standards with emphasis on exporting and supporting refurbishment of storage facilities.
 
The others are: improve quality and standards concerns by expanding the services of the Uganda National Bureau of Standards, establishment of border export zones at key strategic border points to increase cross border trade, enhance value addition and industrialisation promotion of cooperative movement by mobilising collective resources through cooperative and strengthen supervisory and management of cooperatives through district commercial extension services among others.

In FY 2021/22, the industry sector expanded by 5.1 precent from 3.5 percent the previous fiscal year, due to robust growth in the manufacturing subsector. This was mostly due to increasing activity in meat processing and preservation, grain milling, and pharmaceuticals. Construction, mining, and quarrying sub- sectors also contributed to industrial sector growth.

Tourism
The Ministry of Finance, Planning is proposing to allocate Shs89.296 billion to the Ministry of Tourism Wildlife and Antiquities.

This is to sustain further growth of the tourism industry by rolling out the global destination brand as well as domestic marketing promotions for Uganda to increase competitiveness, attractiveness and identity as the “Pearl of Africa”.

Enhance digital destination marketing through social media marketing, mobile marketing, online public relations, content marketing, virtual reality, video and affiliate marketing collaboration with the tourism and travel trade partners should be enhanced.
Positioning Uganda as a global and regional centre for Meetings, Incentives, Conference and Exhibitions (MICE).

Digital transformation
In support of digital transformation, broadband connectivity will be extended to the parish level and last mile connectivity to expand access to affordable high-speed Internet through the National Backbone Infrastructure.

 In addition, local ICT products will be developed and commercialised in addition to establishing and supporting regional ICT incubation hubs. Communities and SMEs will also be trained to enhance digital literacy.

The Permanent Secretary in the Ministry of ICT and National Guidance, Dr Zawedde said in the Budget Framework Paper: “This BFP captures activities on Programme contributions to the Third National Development Plan (NDP 3), Medium Term Policy Objectives and key priority intervention areas for FY 2022/23.

Dr Zawedde said it is anchored on the medium-term growth and development objectives of the Third National Development Plan which aims at consolidating the cumulative development gains in NDP One and NDP two.

Adding that in line with the outcome of the Midterm Review of the Third National Development Plan, the Budget Framework Paper for FY 2023/24 has been prepared to provide strategic budget interventions to implement the reprioritized Programme Implementing Action Plans (PIAPs).

 “The Budget Strategy has considered the policy interventions required to sustain recovery from the socioeconomic setback caused by Covid-19 and other natural disasters as well as harness the opportunities that come along,” she said.

Dr Zawedde explained that this BFP articulates the Programme’s contribution to the National Development Plan III Objectives the Medium-Term Sector Policy Objectives Programme challenges the performance for first half quarter FY 2022/23 summary of performance for FY 2021/22 outcome indicators and projections for the medium term and Planned Outputs for FY 2023/24.

She said the Programme aims at promoting ICT innovation and adoption of the Fourth Industrial Revolution Technologies, including Artificial Intelligence, Internet of Things and robotics.
“These will create efficiency and effectiveness in production of goods and services. This can further be actualised through reduction of costs of doing business; increased Government revenue generation; and creation of employment opportunities in the sector,” she wrote. 

She further stated that during FY 2023/24, the main thrust will be on promoting ICT research, innovation, and adoption of the Fourth Industrial Revolution Technologies, including Artificial Intelligence, Internet of Things and Robotics, enhancing ICT skills and vocational development.