BUDGET: Experts react

AS part of Budget Day coverage, New Vision assembled a panel of experts to discuss the budget estimates for 2013/2014. Below are the experts’ views.

Francis Kamulegeya (Senior partner PriceWaterHouseCoopers)

The national budget 2013/14 is a continuation of the previous national budget and this is very commendable. It is vital that government sets out a long term plan, with short term deliverables. In the past there was a tendency to start and stop with several short term policy actions in response to demand by parliament or the president.

This budget is in line with the Vision 2040 and the National Development Plan. It is very gratifying to see the decision to expand the tax base. I think the suspension of donor aid was good, Kenya now collects 5 times more revenue after aid was suspended in the 90’s.

Tax exemptions cause tax losses without bringing down prices of goods and services as is intended. The sh200 levy on kerosene was lifted in the 2010/11 financial year to bring the price of kerosene to sh2,600 from sh2,800 but that never happened. Similarly, water bills for residential and commercial consumers did not change when the tax on water was removed last year.

Areas after the Pioneer Mall, the taxi parks and generally downtown Kampala are always bustling with activity, but not everyone is paying taxes. It is vital to get commercially active Ugandans, landlords, and the informal sector to contribute to tax collections by making sure that they are tax registered as we wean ourselves off donor aid.   

Hajji Jamil Ssebalu (Namasuba College of Commerce)

I am 100% glad that the country is starting to become self-sufficient and independent from donors. That is good.  I am happy NAADs will be streamlined because a country without a strong agriculture sector has no hope. The money budgeted for agriculture is big and can have huge impact. But the most important thing is to disseminate information of the agriculture loans to farmers in rural areas so that they can access the funds to increase their productivity.

I am also happy that government is putting money into the education sector by increasing teachers’ salaries and paying attention to vocational training. This will improve the human resource.

What I have not seen in the budget is the issue of monitoring income of foreigners. This country has the biggest number of foreigners but they are not monitored by URA and government.

I know some of the foreigners who come here to Uganda as refugees but end up making a lot of money from businesses not monitored at all. I would like to see government put more effort to monitor and tax these people and widen the tax base.

Henry Rugamba (Umeme Head of Communication)

Our concern now is the number of power projects prioritized and the speed of realization and actualization because the demand of power is growing and will soon outstrip supply. Now we have about 550,000 customers waiting for connection and if the projects are not fast tracked we may end up going back to load-shedding.

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Umeme made internal decision to introduce prepaid metres. We need to see support from the regulator to ensure that our investment will be supported by government. We have installed about 17,000 prepaid metres since we started this pilot project in Kitintale and we expect that by the close of this year we shall have installed 40,000 prepaid metres.

This will reduce illegal connection, help us raise revenues and this is beneficial to government. A lot of power transmitted to us is lost through illegal connection. We hope that this will reduce with introduction of prepaid metres. I am happy about the innovative approach of road construction to tourism areas. This will improve tourism industry.

Mohamed Kibirige Mayanja (Policy Analyst for JEEMA)

The budget is consistent with the National Development Plan (NDP). This year’s budget continues from last year’s budget. Inflation has been controlled. We know that prices escalated last year but are now controlled.

However, I am surprised the youth venture fund has not been mentioned yet for last two years a lot of money was put into the fund. It looks like government has abandoned it. It is a mistake. I totally don’t agree that the donor cuts of the budget are a blessing for this country.

The budget cuts were because of corruption and the country is going to be worse-off. We are suffering because of corruption and the donor aid cuts that would have supported development projects. Donor Partners have been key for the common man and they have helped control corruption. Government does not listen to the common man and with the donors gone I expect to see corruption increase.

That is the biggest loss, the biggest price this country is going to pay. It is time people understand the high cost of corruption. The introduction of prepaid metres is going to make electricity unaffordable. It is better to think of loans for solar. Government should give subsidies for solar power rather than spend much in connecting to rural areas. 

Gervase Ndyanabo (Vision Group Company Secretary)

I am happy we are seeing continuity of the previous budgets in line with the National Development Plan. I have liked the boldness of government in widening the tax base even in areas that would have negative political consequences. About the promise on corruption, I want see more practical measures in fighting corruption.

One of agencies not talked about is the internal auditing mechanism in government offices which if strengthened and professionalized would greatly bring down corruption. The greatest news in this budget is that with Uganda being able to fund her budget by 80%, we are becoming more self-reliant.

Zubair Musoke (Vision Group Chief Finance Officer)

I am happy about increased domestic funding to our national budget. Widening our tax base is a good thing. Many people in the informal sector have not been contributing to the country’s tax revenue. I am also happy that have good balance of payments.

But I think we shall continue to have tough times as much of the money will be generated from domestic borrowing. The finance minister did not elaborate of the East African Community taxes which will affect our local manufacturers because when you increase taxes on raw materials, the cost of production becomes higher.

Barbra Kaija (New Vision Editor in Chief)

I think it is a very tight budget especially for the people not used to being taxed because it spreads to areas which had not been reached before. But the great achievement is that as Uganda we can now afford to fund 80% of our budget. This implies our economy is growing and it is something that we need to celebrate as a country.  

It is also good that the minister has also been very aggressive to issue of corruption which is negatively affecting service delivery. The government commitment to strengthen the accountability sector is therefore commendable.   

Paul Busharizi (New Vision Contributing Editor)

I am excited that government will raise money by borrowing from the public and fund the budget by 80%. Although some argue that government has been forced to fund the budget by due to the withdrawal of donor support, sometimes we have to learn the hard way.  

But it is not also true that donors have taken away the money. They have instead just changed the strategy by resorting to project based funding. 

Phiona Wall (Airtel Uganda Communications Manager)

I have found a few contradictions, in telecom we are trying to increase affordability and things like mobile money transfer revolutionized money transaction so when you increase tax, there is a contradiction. The other is that promotional activities have to do with CSR, when you start taxing, we start questioning the motive and the impact.

Personally I expected something similar in water like in power. By taxing water to get revenue, we are also ensuring that the common man doesn’t get access.  Also subsidies or incentives for local content, what are we doing to facilitate this.

Mike Blackburn (MTN Chief Financial Officer)

Given that government has to find new sources of revenue, we support it (taxing international calls) as one of the few available options which can be passed onto to foreigners. On the downside, it has to be carefully balanced to make sure the world does not find it hard to do business with Uganda.

540 million minutes of calls land into Uganda and on these the levy will be made. On taxing mobile money, this is not a good place to tax because its importance in formalizing the informal sector should not be discouraged. 

Patrick Ayota (NSSF Chief Financial Officer)

There was simplicity in the budget, we need to do this debate on a quarterly basis and see what has been done. There is a lot on accountability but how about realignment, the RDCs, the processes, PPDA adds 30% of the cost of doing business.

The whole budget has focused on the supply side. Our problem in the country is not on the supply side, NAADS gives farmers hybrid seeds and they plant when maize is at sh600 a kilo then they harvest when it is at sh200. What are we doing on the supply side?

If say we gave 30% to silos, 30% to buying the maize on a forward contract because two months later, the maize season is gone. We have not been very creative on how we develop the demand side of our economy. 

Herman Kasekende (MD Standard Chartered Bank)

While there is still a lot of debate about whether the reduction of donor funding is a blessing or a curse, there are many things I liked about the national budget. For instance, the digitalization of business registration, and e-government. I liked that the finance minister is stopping tax holidays, they are just a distortion to the economy what we need is better infrastructure and an enabling environment.

Improving the tourism sector is also very vital for the economy. Additional funding for infrastructure improvement is beneficial to the economy; I think it all comes down to implementation. It was nice that additional funding has been earmarked for governance structures such as the IGG, it is very vital that accountability improves. I also think that there is a lot of duplication of roles in government institutions.

For instance while we have NAADS in the agricultural sector, there are several institutions within the ministry of agriculture that are doing similar roles. A similar scenario exists in the president’s office, the health ministry and the transport and roads ministries – there should be more streamlining of these functions of government agencies to stop wastage of resources. I expected to hear more about the bills on Islamic banking to reduce the cost of business.

Value addition to small scale agriculture is very vital to the economy and it is important that additional money is allocated there. This will ensure that the oil and gas sector does not crowd out vital economic sectors and kill the agriculture sector. The local content provisions in the oil and gas laws should be extended to other sectors as well. Widening of the tax base is laudable.

The surplus energy generated at Bugajali hydro power station will soon be exhausted as the year ends, there may be need to reinstate subsidies for thermal power generators.  

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