Issues set to define 2023
What you need to know:
- The most salient issue in Uganda remains its economic status.
- The economic malaise that has faced the country ever since Covid-19 took centre stage will continue to dominate in 2023.
The deliberation surrounding the ability of African countries to repay their enormous debts and also continue on the journey of socioeconomic transformation is unlikely to end soon and is primed to be the main issue in 2023.
Ghana set the tone at the back end of 2022 when it deferred payments on most of its external debt, effectively defaulting as the West African country struggled to plug its hollow balance of payments deficit.
The debts that Ghana said it was not ready to service, included Eurobonds, commercial loans, and most bilateral loans, a decision the Nana Akufo-Addo administration rationalised as an “interim emergency measure.”
Ghana isn’t by all accounts a lone ranger. Uganda’s public debt is swelling with the Bank of Uganda (BoU) revealing in November that by September the country’s debt had hit Shs80 trillion. It looks set to swell further with the budget framework for the coming financial year released by the Finance ministry indicating that Uganda intends to borrow domestically and externally to finance the budget.
The Finance ministry insists that Uganda can sustain this rate of borrowing both in the short and long-term. Uganda is, however, no longer a donor darling in Africa, and to compound matters, most of the Western countries that have been funding the vast bulk of the social services such as healthcare are prioritising stopping Russia’s war in Ukraine.
It’s not clear how the Ugandan government will fund the budget since the local revenues they have anticipated have not been forthcoming. The economic malaise that has faced the country ever since Covid-19 took centre stage will continue to dominate in 2023.
The end of 2022 gave an indication of Uganda’s economic forecast when in December the government failed to pay salaries for a number of civil servants across the country. In November, the government warned chief administrative officers of districts to use the money they have in their reserves frugally as the December salaries were not coming.
With huge public administration costs, the National Resistance Movement (NRM) government is struggling to mobilise resources either internally or externally through donations and loans. It remains to be seen if it would introduce new taxes in 2023. In this financial year, those plans were shelved on the account that the public was still smarting from the Covid-19 pandemic.
Recently, Mr Ramathan Ggoobi—the secretary to the Treasury and Permanent Secretary (PSST) of the Finance ministry—said he had no plans of introducing or increasing existing ones during the coming 2023/2024 Financial Year.
Mr Ggoobi said the decision is intended to support the private sector to sail through a difficult economic environment, pigeon-holed by high inflation and passive demand.
But in a December newsletter titled ‘Taxation of entertainment events’, the taxman made clear that persons engaged in public entertainment such as musicians, events managers, promoters, bar owners, inter-alia, are required to have Tax Identification Numbers (TIN) to enable the government to collect taxes.
The entertainment industry was hit hard by pandemic curbs and it’s not yet a year since it was given the greenlight to operate unencumbered. This flies in the face of the assurances Mr Ggoobi offered, reasoning that “increasing taxes in most cases falls on the same people who are already paying. The PSST, however, said the government will “expand the tax base by enrolling more taxpayers and expanding things to be included in the tax system,” he said.
With Uganda’s economy riddled with debts, the government is hedging its bets on the so-called black gold in mid-western Uganda. There have previously been deadlines for exporting Uganda’s crude oil that have not been met. State actors such as Ms Ruth Nankabirwa—the Energy minister— are supremely confident that by April 2025 Uganda’s crude oil will be ready.
In order for Uganda to export its crude oil, there is a need to put in place a pipeline that will transport the oil from the Lake Albert oil fields to the Tanga port in Tanzania. Uganda’s hopes have been buoyed by TotalEnergies and its partner China National Offshore Oil Corporation (Cnooc) who reached a Final Investment Decision to develop Uganda’s oilfields and also construct the oil pipeline.
The oil pipeline has come under fire from environmentalists who say it runs through a national park and it’s going to cause displacement of hundreds of Ugandans while also destroying the ecosystem.
These charges are vehemently denied by the government which is now confident that the construction of the pipeline will go ahead as planned.
For the NRM government, a lot of economic and political calculations are hinged on this oil. In early 2023, oil companies plan to start drilling oil wells. By the end of the year, sector insiders say they plan to have fully compensated the people who will be displaced by the oil pipeline. Still, in 2023, the government will be waiting for the Final Investment Decision from Italian and American investors on the proposed refinery project which will be worth $4 billion.
Critics say there was never doubt that Mr Museveni would stand in 2026. This doesn’t mean an eye is not going to be kept on his son—Gen Muhoozi Kainerugaba—who throughout 2022 made clear his intention to have a crack at the presidency.
While some political analysts have gone as far as to claim that there is a war in the First Family, others have interpreted some of Gen Muhoozi’s tweets as attacks on Museveni’s son-in-law—Mr Odrek Rwabwogo. He too is rumoured to be interested in the presidency.
In 2022, Gen Muhoozi reached out to the public by organising a plethora of birthday parties and it remains to be seen what he will do to remain relevant in 2023. His Twitter handle will most likely remain his most potent weapon as he seeks to put out a vision he claims is different from that espoused by his father’s ruling NRM party.
Lower middle-income status
By mid-2023, Mr Museveni would have served halfway through his sixth term yet his obsession with dragging Uganda from a principally low-income society to a competitive low-middle-income country has not been achieved.
Mr Museveni was so desperate for low middle-income status that he initially rejected World Bank figures which classify the country as still a low-income nation. World Bank maintained that Uganda’s per capita gross national income stood at $840 per annum, according to its data for the period ended 2020/2021. But Museveni was having none of it.
“The economy is growing. The other day, I had some arguments about whether we have gone to middle-income or not,” he said last year, adding, “I do not know where the World Bank is getting their data from. But our data about our country is that we are now at GDP (Gross Domestic Product) per capita of $1,046 and that is already in the middle income.”
He added: “We need to stay there for three more years or go up to be declared officially. We have got some money and the things to do are many. That is why prioritisation becomes important.”
Although Mr Museveni had started the debate by declaring Uganda a low middle-income country, he later conceded to the World Bank and he claimed that he “didn’t say we have already become.”
“I said we are entering,” he clarified.
As economic figures are revised, the lower middle-income debate will likely resurrect in 2023, with Museveni looking for some political mileage as his term winds down. Those within the government claim that it will be possible to clinch the lower middle-income status because of the Final Investment Decision made by the oil companies.
All eyes will be on how Uganda’s biggest Opposition party—the National Unity Platform (NUP)—tackles changes in Parliament. Halfway through the term and the coveted Leader of Opposition (LoP) seat whose current occupant is Mr Matthias Mpuuga (Nyendo-Mukungwe) will have to be replaced.
The onus will be on the Opposition leader—Mr Robert Kyagulanyi Ssentamu, alias Bobi Wine—to choose either to continue casting his lot with Mr Mpuuga or change tack. As the LoP, Mr Mpuuga has been accused by a section of NUP supporters of hobnobbing with the House Speaker Anita Among. This has left a bad taste and Mr Mpuuga recently gave vent to his frustrations.
“I have never campaigned to become the Leader of Opposition. I am just part of NUP leadership that is seeking a change of the regime. Anyone who wishes to become the Leader of the Opposition and who thinks can perform better than me will get that opportunity,” Mr Mpuuga said, adding: “Those who think their duty at Parliament is to fight Mpuuga, you are the enemy of change. I am one person alone and one day I will not be a MP and maybe not even the LoP, but I will always perform.”
Checks and balances
In 1999, Parliament censured Mr Sam Kuteesa over corruption in which his company Global Airlink got a contract to take care of ground handling services at the Entebbe International Airport. Mr Museveni, however, reappointed Mr Kuteesa as Investment minister in 2001. Later, the President gave Mr Kuteesa a bigger portfolio as Uganda’s top diplomat (Foreign Affairs minister).
A year before, Parliament had censured Mr Jim Muhwezi as a junior Primary Education minister following corruption allegations. Mr Museveni would go on to appoint Mr Muhwezi in several dockets such as health, information, and now security.
The clash between Speaker Among and Ms Persis Namuganza—the junior Housing minister—has well and truly spilled over into 2023. Deputy Speaker of Parliament Thomas Tayebwa has already notified Mr Museveni of the pending censure.
Ms Namuganza is accused of undermining the work of Parliament by going on different social and media platforms to criticise the works of the House’s Ad Hoc Committee, which faulted her for manipulating the allocation of plots on the Nakawa-Naguru land.
On her part, Ms Namuganza claims she is being haunted because her husband refused to give Ms Among and his partner Moses Magogo, the Budiope East MP, a marriage certificate.
The battlelines have been drawn with Parliament and the Executive. Already, Mr Museveni indicated on December 29 that he will disregard a House decision to terminate a controversial coffee deal.
“Whoever wants a fight, we shall sort it out,” the President said.
The six-month window the House gave the government to report back to it has lapsed. Mr Museveni made his thoughts clear. 2023 will give us a picture of how the House intends to check the Executive’s overreach.