Agriculture budget cut by Shs170b

Government seeks to cut the Financial Year 2024/25 budget for Agro-Industrialisation (AGI) programme by 9.4 percent, from Shs1.81 trillion to Shs1.64 trillion.

According to the National Budget Framework Paper for FY2024/25 – FY2028/29 which Finance minister in-charge of General Duties, Mr Henry Musasizi, presented to Parliament on December 12, government is not only reducing its development expenditure from the current Shs413.5b to Shs379b but also minimise external financing from the current Shs1.007t to Shs831.3b.
The proposed budget cuts directly affect three of the 17 ministries, departments and agencies (MDAs) that are implementing this sector. They are Agriculture ministry, Local Government ministry and National Agricultural Advisory Services.

Other MDAs include Trade ministry, East African Community Affairs ministry, Dairy Development Authority, National Agricultural Research Organisation, Uganda National Bureau of Standards, National Planning Authority, Kampala Capital City Authority, Cotton Development Organisation, Uganda Coffee Development Authority, and the local governments, will have theirs unchanged.

The Ministry of Water and Environment, National Animal Genetic Resource Centre and Data Bank, National Environment Management Authority, and Uganda Free Zones Authority will have theirs increased under the same programme.
The Finance ministry spokesperson, Mr Jim Mugunga, said the proposed cuts should not be seen as a move to cripple one of the critical programmes of the economy because the government is simply trying to reduce external funding in its budget.

“This is not the only sector that has suffered budget cuts. When you look at other sectors, the agro-industrialisation budget is still far ahead. Government is generally trying to use the available resources to fund its budget instead of relying largely on external financing,” he said.
Other programmes that will suffer budget cuts include mineral development, manufacturing, private sector development, sustainable energy development, and sustainable urbanisation and housing.

Others are digital transformation, human capital development, innovation, technology development and transfer, public sector transformation. Governance and security, regional balanced development and development plan implementation.
Programmes such as legislation, oversight and representation, administration of justice, community mobilisation and mindset change, and tourism development will have had their budgets maintained while development plan implementation, integrated transport infrastructure and services, natural resources, environment, climate change, land and water management, and sustainable petroleum development will have theirs increased.

All this, according to Mr Mugunga, is aimed at reducing the country’s reliance on borrowing to fund the budgets.
Statistics from the Finance ministry show that Uganda’s public debt stood at Shs88.9t by the end of June. Of this, Shs479t is external while Shs33t is internally borrowed.

While addressing economists during the high-level policy dialogue on the budget in Kampala on Monday June 19, the Finance ministry Permanent Secretary, Mr Ramathan Ggoobi, said government repurposed the current budget to tame unnecessary expenditure, cut supplementary budgets, and reduce borrowing, especially domestic, among others, to boost economic recovery.

Experts have on several occasions faulted the government on borrowing without investing wisely, which has made the debt to swell.
“The cost of servicing this debt continues to heavily burden the government’s fiscal capacity. Despite a projected increase in domestic revenue for FY 2024/25, the available resources for allocation have decreased due to high debt servicing costs. As a result, the government’s resources for development have been significantly reduced,” Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group, told journalists last week.
Meanwhile, AGI is facing the budget cut, barely a year since her budget was increased from Shs1.449t in the previous financial year, to the current.
It is through this programme that the government plans to transform the agricultural sector as one of the goals of the 2021/25 National Development Programme III.
Government is optimistic that the programme will lead to an increase in the total export value of processed agricultural commodities from $935m (about Shs3.5t) in 2020 to $2.7b (about Shs10t), reduce the total value of imported cereals and cereal preparations from $931m (about Shs3.4t) to $500m (about Shs1.8t), and increase the agricultural sector growth rate from 3.8 to 6.0 percent.

It will also increase the number of jobs created in agro-industry along the value chain by 100,000, reduce the percentage of households depending on subsistence agriculture as a main source of livelihood from 68.9 to 55 percent, and increase the proportion of households that are food secure from 60 percent to 90 percent.

In the Financial Year 2024/25, government through the AGI, intends to among others, procure and distribute sets of farm machinery for value addition, assorted farm post-harvest handling equipment, support dairy commercial farmers, rehabilitate  milk centres, and procure and install coolers to dairy cooperatives, among others.
Mr Mugunga asserted that the government would like to fund all the priorities but is constrained by resources.

“The resource envelope is not sufficient to fund all the priorities to the level that we want as per now. We are optimistic that when we settle our issues with the World Bank, which we are already doing, we will bring more people on board to pay more taxes that we shall have our budgets funded,” he said.
Mr Musasizi, while presenting the National Budget Framework Paper, said the budget will be financed through improved revenue collection and controlled borrowing to reduce debt servicing costs while supporting faster socio-economic transformation, among others.