Experts react to Budget

By Samuel Sanya and Pius Arinawe

 VISION Group hosted different business sector leaders to a lunch at which they discussed and analysed the 2012/13 National Budget. 

The team was led by Stanbic MD Philip Odera, African Alliance MD Kenneth Kitariko, Senior economist of East African Development Bank Jared Osoro, Vision Group CFO Zubair Musoke and Kagaba of the Anti-Corruption Coalition Uganda reacted to the speech as it was being read. The team was also joined by economics student Sylvia Namugambe and teacher Margaret Kabuye

This is what they had to say.

It is really difficult to allocate scarce resources for competing demands. When you look at the projections for this year the positive thing is that we can achieve the objective of funding 75% of the national budget from domestic revenues and 25% from donors.

Raising domestic revenues is increasingly a challenge since these are hard times and economies in Europe and the US which are our traditional export partners are still struggling reflecting what the president said in the budget speech.

Allocating a big part of the budget to productive sectors and infrastructure take a long time to generate revenue and we have to be patient like the minister said.

There are many changes in the tax regime. There was an increase in the PAYE threshold and at the same time there is a 10% tax imposed on the highest income tax brackets.

Previously, the bands around the tax brackets were very narrow and I hope that they have been widened. It appears that the emphasis in adjusting the tax bracket has been placed on helping the lower cadres to avert strikes and squeezing higher cadres who can accommodate the tax pressure.

Henry Rugamba. Chief Communications Officer, UMEME

The shocker for me was the reinstatement of the 18% VAT on water.

Previously, the private sector was complaining about the high cost of utilities such as electricity being very expensive.

The government has worked hard to increase electricity supply with the construction of Bujagali Hydro Power Dam. Electricity blackouts have become a rarity.

We have to tighten our belts since business costs are likely to go up. Overall, I’m happy that they are going to support the energy sector

Cissy Kagaba. Executive Director, Anti-Corruption Coalition Uganda

Increased funding for Anti-corruption agencies is not a big issue but what matters most is that court decisions are implemented. May times, the government ignores these decisions. It is important that the government maintains strict budget discipline because many times we hear good budgets only for supplementary budgets to crop up.

Its is clear from the beginning of the budget speech that the high headline inflation was caused by a drought yet, there has been no mention about the issues that affect the environment and climate change.

I found it shocking for the finance minister to announce a cost sharing arrangement between economically active Ugandans and the government for National IDs yet the funds were already disbursed. I’m disappointed that the system has been abused.

In education, I hope to see an improvement in monitoring and supervision to increase the quality of education in the country.

Kenneth Kitariko. MD, Africa Alliance

This is a very ambitios budget and its success will depend on whether the Parliament will implement the various laws and bills that are to be tabled such as the Oil and Gas, infrastructure bill and many others.

I would have hoped to hear of how URA would increase its tax base through the informal sector because the finance minister needs a wider tax base

Ephantus W. Githinji. Finance Controller, AON

The finance minister has done an appraisal of the country and explained why the economy is not doing well.

I’m happy that the number of business licenses has been reduced and that she has realized that roads and infrastructure need to be revamped.

Retirement benefits and the pension sector reforms will change the economic landscape when implemented though she did not mention the actual date when the pension sector authority will be constituted.

Philip Odera. Managing Director, Stanbic Bank Uganda

There are three sectors that were of interest to me; transport, tourism and taxes. Focus on roads is long overdue. However, we all know that the railway network is the most cost effective means of transport and this was marginally talked about.

I am happy that maritime transport was mentioned but emphasis should have been on rehabilitation of freight related ships.

There was emphasis on roads to game parks which presupposes that tourism is majorly around safaris yet we see a growing number of urban tourism through hosting numerous international conferences.

Increase on withholding tax on treasury instruments may work as a disincentive for offshore investors.  I found it strange for taxes to be increased on locally manufactured spirits when I thought it would be imported spirits instead.

I did not see a clear connection how remittances from abroad can be channeled to opportunities locally so as to push the country forward.

Issa Sekitto. Spokesman, KACITA 

Some issues in the budget have been repeated over the past three budgets. They have always spoken about the importance of railway in improving business but there is need to analyse whether previous allocations have improved the railway transport.

I am happy that the PAYE threshold has been relieved. This will reduce the costs of doing business especially for startups.

The shocker of the day was the reinstatement of 18% VAT on water. This is unacceptable. Most areas cannot access clean water and yet water is life! As KACITA we reject the proposal and a petition shall be prepared for the members of parliament to do the same.

Uganda has a comparative advantage in agriculture and yet we have never had it as the priority area. The current budget emphasizes industrialization and manufacturing but I’m waiting for a budget that will allocate the same trillions of shillings that are being allocated to the energy sector to the agricultural sector.

If we are to collect the 75% of the total budget domestically when the economy is struggling, then we have to be very cautious.

Sylvia Namugambe. Economics student, King’s College Budo

We have talked about increasing salaries of primary school teachers and science teachers at secondary level this is unfair since all teachers are in the same economy and the teachers’ union is made up of both science and arts teachers.

I think the budget is too ambitious and it might be difficult to achieve everything in one year especially works on all the roads that were mentioned.

The budget did not give a clear solution to reducing imports and increasing exports. Reductions in PAYE threshold show that the government is financially considerate to its citizens.

Margaret Kabuye. Maths & Economics teacher, King's College Budo

I think the budget is generally good. Most of the tax hikes were on luxury goods which affect few people though the tax on water will affect everybody. The minister had good reason to do this so as to increase tax collections.

Its good that the PAYE threshold has been increased since the cost of living has been going up.

I am happy that the teachers’ salaries have been increased but that should have been done across the board. I am also happy that allocations to the ministry of education have gone up however the money should be used wisely to increase the quality of education.

The graduate fund is a good thing and now we have two funds for youth entrepreneurship which will lead to the creation of jobs. Fresh graduates will now be able to create jobs instead of looking for jobs.