Use budget as cardinal tool to foster Uganda’s 10-fold growth dream

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OPINION

By Tonny Odokonyero

It is exciting that the sh72.38 trillion budget (FY 2025/26) that was unveiled last week by the Minister of Finance, Planning and Economic Development is the first fiscal instrument (aka national budget policy) that will kick-start a highly anticipated fourth National Development Plan for Uganda (NDPIV).

Because it is the foundational budget for NDPIV, the expectations are high that it would contain and rationalise bold steps that directly address the thrilling economic ambition of a 10-fold growth of the economy. Subsequent budgets (FY 2026/27 – 2029/30) should ideally build on this one to accelerate the growth aspiration.

The development path that Uganda will take in the next five years which also sets the pace for 15 years ahead has been patently prescribed in the direction that NDPIV is taking, with the bold target of achieving a double-digit growth over the NDPIV period (2025/26 – 2029/30), and subsequently contribute to a 10-fold growth of the economy over the 15 years leading up to 2040. Attaining the 10-fold growth strategy goal requires that investments in the economy drive economic growth to double-digit, to at least 10.1% from 6.1% per annum. Resultantly, the double-digit growth is expected to stimulate expansion of the economy from the current $61.3b (FY 2024/2025 – equivalent to sh226.3 trillion) to $500b.

Yes, “money has come” through this foundational fiscal instrument, but is there value for money in line with the 10-fold growth target?

Will the money provide services of the right quality and quantity to spur this growth? Does the money reflect the needs and priority of economic agents that make GDP for the economy, and will it effectively address the same during implementation so that the much-needed growth can be generated?

For example, for the private sector, which is an engine of growth contributing circa 80% of GDP, how does it ward off the growth of private sector actors, including indigenous businesses, from being stifled? – are there provisions for fair tax incentives, affordable cost of financing, and a conducive utility cost regime,e among other hurdles in the business environment?

These are salient policy questions to ponder, to help keep a check on the design and execution of the national budget(s) during the NDPIV period, because these issues remain biting the private sector and stifling its growth. It is paramount to keep sight of what the development aspiration entails, for the fiscal instrument to provide the right footing for the NDPIV growth dream.

Nonetheless, to give credit where it is due, in many aspects, the fiscal instrument is aligned to the programme-based approach to development, as the current NDP path requires.

For example, generally all 18 NDPIV programmes are provided for. It supports direct private sector credit, including PDM – a sh1.059 trillion capitalisation, EMYOOGA, and others – e.g., women enterprise support funds. It also provides for the Agricultural Credit Facility (sh50b), and a sh1 trillion additional capitalisation of Uganda Development Bank (UDB).

The capitalisation of UDB is crucial for promoting private sector investments to drive private-sector-led growth of the economy.

The Bank supports private sector projects with the potential to deliver high socio-economic value through job creation and output production, among other development outcomes.

However, the adequacy of the provisions, depending on the level of priority of the programmes, is one thing that could be scrutinised in detail.

Otherwise, the quality, as well as the diligence and extent of implementation of the fiscal instrument’s provisions for NDP programmes, is what will make or break the national development dream.

More than ever before, the budget should be made more intentional in placing emphasis on effective provision of essential services, fostering long-term economic growth, and improving income distribution. Resources should be carefully allocated to the high-impact growth areas that can propel the growth of the economy in double-digit terms, targeting productive activities – e.g., in agriculture and agro-industrialisation, impactful value addition, including resource-based industrialisation, and Science, Technology and Innovation among other growth areas prescribed for propelling double-digit growth.

It is only proper for the national budget to be strategically designed and utilised to create a conducive environment for economic agents, especially those in the private sector, to thrive and create employment and generate the needed growth, improve household income, and generally create the enabling environment for achieving sustainable socio-economic transformation.

The fiscal instrument offers several opportunities in this regard. First is the opportunity to strategically allocate resources to priority areas and targeted investments to address development needs and accelerate progress.

For example, by investing in the high-impact growth areas, significant multiplier effects that stimulate economic activity and create jobs can be realised. Specific instruments such as tax and investment in infrastructure for an improved business environment can be employed to promote and encourage economic participation and private sector development.

To spur double-digit growth and foster the 10-fold growth dream, it is prudent to rethink the national budget and how to approach it in the next 5-15 years. This requires being more deliberate in using the budget, not just as a normal annual ritual and business as usual, but as a critical instrument for accelerating socio-economic development by directing resources towards strategic interventions that keep sight of the 10-fold growth target, especially the high-impact growth areas.

At both design and execution levels, policy makers and practitioners must step up their game, as the 10-fold growth is an audacious target that requires a significant commitment of resources and unconventional strategies and efforts. The economy has never achieved the anticipated magic bullet of double-digit growth in virtually all years over the past two decades or more - it is thus an uphill task. Pursuing it needs to be approached with a mindset of pushing boundaries and stepping outside of the comfort zone for the greater good.

The writer is a research economist affiliated to UDB and the University of Pretoria