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Govt sets eyes on a $500b economy

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Finance minister Matia Kasaija carries a symbolic briefcase containing the National Budget at Kololo Ceremonial Grounds on Thursday. PHOTO | DAVID LUBOWA

The country’s economic output per person improved from $1,081 (Shs4m) in Financial Year (FY) 2022/2023 to $1,146 (Shs4.3m) in FY2023/2024, the latest statistics from the Treasury show.

This was behind, the Finance minister revealed on Thursday, “a robust” growth of the size of the economy from $48.8 billion (Shs184.3 trillion) to $53.3 billion (Shs202 trillion).

“The Budget for FY2024/2025 is the fifth and, therefore, the last to implement the Third National Development Plan (NDP III). It will also set the foundation for implementing the government’s strategy for expanding the size of our GDP from about $50 billion (Shs185.7 trillion) in FY2022/2023 to $500 billion by the year 2040,” Minister Matia Kasaija said as he presented a Shs72.1 trillion Budget to the House on Thursday.

The government has indicated that it intends to pull off the quantum leap by piggybacking on agro-industrialisation, tourism development, mineral development such as oil and gas, as well as science, technology and innovation.

“These are the anchor sectors that are going to propel Uganda to a $500 billion economy in the next one-and-a-half decades,” Minister Kasaija said.

The revelation has met a less enthusiastic audience, with experts who spoke to Nation Media Group-Uganda (NMG-U) questioning the wisdom of the Finance ministry’s directing hand. Government’s plans to hedge its bets on the oil and gas sector have especially been called into question.

Mr Allan Ssenyondwa, the policy and advocacy director at Uganda Manufacturers’ Association, pointed out on NTV Uganda that the diversification away from dirty fuels during the 16 years Uganda hopes to engineer a tenfold growth of its economy should not elude the government. He particularly cited the growth in popularity of electric cars. Statistics from the Paris-based International Energy Agency show that the only way is up insofar as sales of battery electric vehicles and plug-in hybrid electric vehicles are concerned.

The government, however, is keen to make the oil and gas sector the centrepiece of its post-pandemic recovery. Minister Kasaija disclosed that the sector is already employing as many as 13,607 Ugandans.

“In addition, the companies investing in the oil and gas sector are contracting locally,” the Finance minister revealed in his Budget Day speech, adding, “Since 2021, contracts worth $1.796 billion have been awarded to Ugandan companies, out of the total contract investment of $7.162 billion.”

The sector will consequently receive Shs920.86 billion, with the vast bulk of the amount set to be earmarked for, said Minister Kasaija, “development of the East African Crude Oil Pipeline (Eacop) hub in Tanga” and “equity contribution for the Refinery Project” to mention but two.

Mr Ssenyondwa warned that the government is “putting its eggs in one basket” even as the countries with the hugest appetite for oil such as the United States and China wean themselves off it.

Defying the odds

Buoyed by a bump in tourism receipts from $1.07 billion in 2022 to $1.28 billion in 2023, the government has made clear that it does not harbour any plans of setting its foot off that gas pedal.

Minister Kasaija said the government intends to “increase…tourism activities supported by investment in tourism infrastructure, branding and marketing, and effective implementation of the Meetings, Incentives, Conferences and Events (MICE) Programme.”

A symbol of the tourism sector’s resilience is the marginal increment it mustered in 2023 despite the West peppering it with travel advisories. The advisories, ostensibly pegged to security concerns, came hot on the heels of the enactment of an anti-gay law. It remains to be seen whether the West will continue to be relentless in targeting the sector in a bid to force President Museveni’s hand.

In 2019, Uganda registered its peak number of international tourists (1.52 million). Last year, the country came close to matching that figure after mustering 1.274 million tourists. This represented a 56 percent improvement on the 814,085 arrivals registered in 2022.

The government is hoping the completion of the pier and related infrastructure at the Source of the Nile; a revamp of the weather-beaten Uganda Museum; and construction of 8,000 metres of climbing ladders and boardwalks on the Rwenzori Mountain ranges will further bolster the sector.

“Apart from the Shs287.6 billion that I have directly provided to the tourism sector, an additional Shs1.629 trillion has been provided for several critical interventions associated with tourism, including support to Uganda Wildlife Authority, construction of tourism roads, road rehabilitation and upgrade under Kampala Capital City Authority, support to Afcon ‘27 and completion of key stadia, strengthening security, law and order in our tourism destinations, and extension of the Internet to tourism destinations, among others,” Mr Kasaija said, adding that Shs55 billion will be extended to Uganda’s Missions Abroad “to support the Uganda Tourism Board (UTB) to market Uganda to potential tourists, market our exports and attract more investors.”

Mixed fortunes

The picture in the agriculture sector is, however, anything but rosy. Ms Jane Nalunga, the executive director of the Southern and Eastern Africa Trade, Information and Negotiations Institute (Seatini) illuminated a string of “contradictions” on a growth strategy anchored on agro-industrialisation.

For one, she says “very little money” is always ring-fenced for the same. In FY 2024/25, it will have to make do with a Shs1 trillion purse.

While the Seatini boss says this can barely move the needle, Minister Kasaija told the House on Thursday that the “government is committed to commercialising agriculture to enhance production and productivity and improve the competitiveness of agricultural products in both regional and international markets.”

The government intends to use a three-pronged approach that includes pushing “coverage of large-scale farmer mechanisation to 40 percent from 32 percent” and establishing “an afla-safe facility at Namulonge to help in the management of aflatoxins in cereals and nuts.” There are also plans to erect “a local anti-tick vaccine manufacturing facility” at Namulonge.

This dovetails with the move to bolster science, technology and innovation. Minister Kasaija revealed that this will be by way of creating a “pathogen economy” typified by “developing vaccines, therapeutics, diagnostics and other healthcare tools for our public health security and import substitution.”

While the Finance minister was happy to report that there has been “tremendous progress” on that front, this capital-intensive sector has proved a hard nut to crack.

The 21 registered manufacturing companies in Uganda per the National Drug Authority (NDA) collectively produce 173 pharmaceutical products. Minister Kasaija said success stories are not hard to come by as critics would want many to believe.

He took great delight in Makerere University scientists who developed a PCR diagnostics kit that has so far been used for conducting more than two million Covid-19 tests. This kit effectively halved the cost of Covid-19 testing, the minister revealed, adding that it has saved the government more than $37 million (Shs140 billion).