Analysts hail, decry Bbumba’s Luwero budget

Jun 11, 2009

Finance minister Syda Bbumba yesterday read her maiden budget. The New Vision hosted a team of analysts to discuss it and Conan Businge, Anthony Bugembe and David Mugabe bring you what they said...

Finance minister Syda Bbumba yesterday read her maiden budget. The New Vision hosted a team of analysts to discuss it and Conan Businge, Anthony Bugembe and David Mugabe bring you what they said...

Duncan Kayondo, senior five econimics student at King’s College Budo
I am happy about the budget. The Government will spend more resources on USE. It will benefit many students, in addition to improving the quality of schooling.

There will also be no increases on duty and VAT, which is very good because it will stimulate the economy.

The economy is projected to grow by 6%, which is okay; although this growth is lower than the average growth in the last five years.

Zubair Musoke, finance manager of The New Vision
The projected economic growth of 7% is one issue for discussion and to me it is still worrying that agriculture grew by 2.6% and manufacturing by 3.8%. These are the key underlying sectors as far as the economic development of the country is concerned.

It is going to be a very big challenge for the country to achieve this year’s projected economic growth given that these two sectors have in the past year (2007/08) recorded low levels.
It is good that the budget is going to be financed 67% from domestic revenue. This is a good development. Every year we see the gap narrowing.

The other issue is on capital markets. I expected some incentives in the capital markets. I wish we could also see some incentives in terms of transparency and good governance and ease of revenue collection for URA.

On the tax proposals, there is concern over Value Added Taxes on houses. They always say 5% VAT on taxes, but they do not say anything about industrial and office buildings. The real drivers of the economy are these people who buy factory, office and business premises. The minister has not targeted the real drivers of the economy.

John Sempebwa, Director of Trade at the Private Sector Foundation
The best thing is this budget is based on clear logic. This country has been debating for a long time how to reach prosperity. Do you reach prosperity like Adam Smith (self-installed leading expositor of economic thought) said, through a business climate which is conducive? Or do you get there through handouts and social welfare in hospitals?

As the budget theme states, the route to prosperity is through a conducive business climate. It is the first of its kind. So, from the start, the thinking behind this budget is correct.

Secondly, the role of the National Planning Authority (NPA) has been emphasised, meaning heads and brains are working and planning for national development. The NPA has never been mentioned in budget speeches. But now you can see that the Government has a group of people speaking differently from the Ministry of Finance.

Three, Uganda’s new ‘coffee’, which is tourism, has been allocated sh2b just for promotion.

People think all over the world that the President of Uganda is still Idi Amin. If you look at what papers write, there is death, corruption, HIV/AIDS. That discourages tourists from coming to this country, yet it is the biggest industry in the world. Members of Parliament should know that though Brazil is the leading world coffee producer, dancing brings it more money.

I am seeing an agro-revolution starting in Uganda. People will say: “Put more to agriculture”, but this credit facility is a blessing and I hope it works. The figures are right. There has been a decline in industry, and the budget has put it right.

Uganda still has a problem on the issues of standardisation in the agricultural sector. The farmers do not know to what standard they should produce their goods.

On the negative, this time the SME’s funds were not mentioned.
The best gift government should have given Ugandans is a reduction in public expenditure, but this has not been done.

Old computers should not have been banned. How many Ugandans can pay over sh1m for a new laptop? This needs to be revisited.

Dr. Samuel Sejjaka, Associate Professor at Makerere University Business School
I found the theme of the budget quite a mouthful, on a lighter note.

Overall the budget priorities are correct. But, I would have agriculture first, energy second, environment, transport and then human resource development (in that order). For me security is a given. It is a basic we must have. That is not negotiable and cannot be one of your priorities.

Overall, it is a dream budget for investors and it is full of incentives for people who want to invest in this economy. My disappointment in this Budget is that what it purports is different from what will be done.

Agriculture has been allocated sh310b. Now, this money out of the total budget of sh7 trillion gives you 5.3% for agriculture. And since this budget says a lot about agriculture, to allocate it only 5.3% is very disappointing. There should have been a change in allocations. So, there was so much lip service, instead of actual allocations. Agriculture is the backbone of this economy.

The public expenditure allocation is also problematic. There are more districts and I have even lost count. Out of the total budget, 23% is going to local government administration. That is not a very intuitive allocation of our resources.

The minister is between a rock and a hard place. Given a limited resource envelope, how best does she allocate the money between these competing needs?

There is a lot of money that is to be spent on local government, and less on those critical areas that would have taken our economy out of poverty.

There was no direct talk about poverty in the budget, yet it is still a very crucial issue. There is need to continue addressing poverty seriously at a policy level.

Imelda Namagga, programme officer budget advocacy initiative at the Uganda Debt Network
I found this budget quite interesting, but I am somehow disappointed. I expected the Government to widen the tax base, but that has not been the case. Government is retaining the same proposals that were made last year.

The other interesting aspect was in the education sector. The Government is trying to focus on improving inspection, providing instructional materials and other things. Something surprising is that there is nothing allocated to education management and inspection. My question is — how is this going to be possible if there is nothing allocated to these areas?

Latrine construction was highlighted as one of the issues which need urgent attention. Calculating the amount left for teachers’ houses, one will find that there are only five houses per district. But teachers’ housing is a very big problem that needs more attention.

Also the UPE budget has not improved. It is constant. It is only USE that has got more money. Worse still, the numbers of teachers that have been approved on the payroll have reduced, in comparison to other years. This means the indicators in this sector are going to drop.

Paul Busharizi, Business Editor of The New Vision
I am happy to see that the budget continues to commit money to the energy sector. As of last year, there was sh416b in the energy fund. Now they have added sh85b. So it is good on two fronts; we are using our own resources to meet our own needs and the commitment towards energy development.

I also like the idea that the excise duty on locally produced beer was lowered. It is good that goods produced with our own inputs can be supported.

I noticed also that they extended the tax relief to people who are in hotel, school and hospital development for another year. But one year is not sufficient to raise investor confidence.

One thing we need in this country is a national strategy, which is badly lacking. By the time you decide to prioritise agriculture or tourism, you should have a broad view. Lack of a national strategy is what is messing us up!

Issa Sekito, Chairman of Kampala City Traders Association
This budget has disapproved and pre-empted the President’s State-of-the-Nation Address. He told us that we (Uganda) are growing, but figures have proved we are not.

In fact, this budget is a ‘hard task’. The budget is tasking the Uganda Revenue Authority (URA) with an impossible mission. The minister and the Government have failed to increase the tax base and are asking URA to perform miracles and get money. This is impossible!

Last year, the domestic supply to the GDP was 70% to 30% of the external sources. This year, it has been 67% (local revenue) to 33% and we are sourcing from countries which are hit by the financial crisis. This implies that all the projections we have are on paper. The money is not available.

My biggest surprise was to see the polythene bags being banned under the East African Community. I have been across East Africa; but the polythene bags are still being used. In Uganda, we are making a political statement, which is not practical.

The 120% excise duty which was imposed on polythene bags has not been applied. No company has paid it! This is a statement to please the public.

We have 34 factories manufacturing plastic materials, and they are not being closed. The best way to deal with polythene bags is managing them (polythene bags).

I am a farmer and I am still seeing a very unfair budget. You please farmers with words, but give them nothing. The only hope lies in credit facilities. But, will it be practical?

The budget is just telling us to tighten our belts.

Barbara Kaija, deputy editor-in-chief of The New Vision
This year, of the pupils who qualified for secondary school’s education, the available schools could only take about 320,000. Half of them, about 150,000, were not absorbed in either the government or private schools.

This budget has partly addressed the issue by creating a favourable environment for people who want to invest in schools. VAT has been removed and for one year they will not have to pay import duty on construction materials. This allows for more investment in schools and for the existing schools to do more developments and be able to absorb more students. Whatever we say, the Government will never be able to build enough schools, so it is better to create a conducive environment for investment in schools.

The Government has also provided for over 6,200 classrooms in over 500 schools, but that is still very little. That is about five classrooms for each of the 500 schools. If this environment created is supported by good policies it should help to provide for more space in schools.

I was thrilled by the pronouncements on the environment. The polythene bags have been banned. I know business people may not be happy about this, but I am worried about our environment. We can go the Rwanda way, because in Rwanda they have been successful in implementing the kavera ban.

I am happy about the ban on old computers, refrigerators and freezers because Ugandans are being taken for a ride. Developing countries are turning us into dumping grounds. We need to be strong and say NO.

The pronouncement on filming and TV equipment is also good. The fact that the imported equipment will not be taxed will help the entertainment industry grow, especially the Ekina-Uganda (Uganda films). Nigeria and India have made so much revenue by developing their filming industry.

In Uganda, this will facilitate the development of the media and entertainment industries and provide employment, especially for the youth.

Prof. Edward Kakonge, chairperson of the Uganda Debt Network
It is an interesting budget but the resources are not yet there. This money has to be raised and then allocated. I welcome the proposals although I am not happy because the agriculture allocation has been declining over the years.

This year, the allocation is lower than what it was last year. Agriculture is a very important avenue if it is exploited to absorb a lot of unemployed people and to stimulate the economy.

It is a shame that in this country, fertile as it is; you find some people starving when in some other areas people are throwing away food. This is a government problem, because there should be provisions to meet these needs. This is our routine. Every year, we have some areas in Uganda which have inadequate resources.

I am happy with the allocation to health, but I am not happy that research is given such a low amount of money. Yet, research is an important component in tackling the heath problem.

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