Uganda National Budget and cost-cutting measures

NATIONAL BUDGET

By Edward Balaba

KAMPALA - The Uganda National Budgets over the years are replete with revenue generating measures by Government.

However, they rarely contain cost-cutting measures aimed at reducing Government expenditures.

The 2018/2019 National Budget that was read on Thursday, June 14, 2018 has proposed some

measures that may reduce the administrative expenses incurred by the Government of Uganda.

In the Budget Speech, the Minister acknowledges that the ‘'creation of new administrative units such as new Agencies, Public Universities, Local Government Structures including sub- counties and Town Councils continue to strain meagre  public resources.

The Minister proceeded to recommend that ‘Government will review this policy with a view of halting creation of new administrative units to allow funding to priority programs in infrastructure development and service delivery.

The Minister has also committed to the general public that ‘'government agencies will be rationalised to avoid duplication and overlap of mandates to increase effectiveness''.

Clearly, if these two related commitments can be implemented by the government, they will help to reduce on the bloated administrative expenditures of government. For example, according to the new budget, the proposed wage bill for the Districts and Municipal Councils is two trillion Uganda shillings! Any revenues saved from these initiatives could then be allocated to more productive sectors of the economy.

Currently, Uganda has 121 district administrative units, an increase from 79 districts in the year 2008 and 34 districts in the year 1991.

In September 2015, the Ugandan Parliament created 23 new districts, to be progressively rolled out in four years.

In the year 2016, the districts of Kagadi, Kakumiro, Omoro, Rubanda were to be created.  In the year 2017, the districts of Namisindwa, Pakwach, Butebo, Rukiga, Kyotera, Banyangabu would be created.

In the year 2018, the districts of Nabilatuk, Bugweri, Kasanda, Kwania, Kapelebyong, Kinuube would be created. In the year 2019, the districts of Obongi, Kazo, Rwampara, Kitagwende, Madi-Okollo, Karenga and Lusot would be created.

The on-going creation of new administrative units has largely been driven by agitation for improved ‘proximity to services' by the populace and their local leaders as well the willingness to meet such demands by our national leaders for political gain.  It is debatable whether the creation of more administrative units has in deed translated in to improved service delivery for the people of Uganda.

However, what is certain is that these new administrative units have come with extra administrative costs arising from additional personnel and structures needed to operationalise the administrative units.

The same can be said of the government agencies that serve almost similar mandates hence causing duplication of services or regulation by the Agencies.

Take an example of the Works and Road Sector where the substantive Ministry of Works (Directorate of Engineering and Works), the Uganda Road Fund, the Uganda National Roads Authority are all charged with the road affairs in Uganda. 

The duplicity in function and mandate also exists in many other sectors like Health, Agriculture, etc. The administrative expenditure has been climbing in complete disregard of the meagre public resources available to government.

Moreover, this expenditure is not an investment in to productive sectors that directly drive economic growth but rather towards routine consumption sectors.

It is important to note that the commitments from the Minister of Finance to review these policies that have occasioned high administrative costs are of no relevance until they are fully implemented.

For the greater good of the economy, government should act fast to reverse the policies that have encouraged the hike in administrative costs over the years.

The reduction in the number of administrative units and government agencies that have continued to strain the meagre public resources is also recommended.

The writer is a legal and tax consultant with Ernst & Young. The views expressed are not those of Ernst & Young as a firm.