2018/19 NATIONAL BUDGET
President Yoweri Museveni has now presided over 32 national budgets, usually presented for him by the minister of finance.
The only other chief executive to rule Uganda for over a decade was Milton Obote, who in his second regime used to present his budget himself. Since 1986, President Museveni has had eight ministers of Finance who present his budget.
On January 29 1986, revolutionary leader Yoweri Museveni took the oath of office of President of the Republic of Uganda and soon after, announced his first cabinet. The first 12 ministers were all members of the National Resistance Movement, except one, DP’s economist, Professor Ponsiano Mulema, who took the Finance docket. Mulema presented Museveni’s first budget worth 777 billion old shillings, worth 6 billion after the subsequent currency reform in 1987.
It was also Mulema’s last budget for things were changing rather fast. The budget implements the economic policies of the government and the NRM’s revolutionary policies that even included trading with other countries using barter trade did not last long. What can be pointed out from that budget in light of today’s budgets is that it relied on domestic borrowing by only one percent.
In September 1986, Mulema was replaced by Crispus Kiyonga, an NRM medical doctor. Kiyonga oversaw the accelerated revival of the IMF/World Bank - inspired economic reforms that had started during the early 1980s, but had not been progressing well due to the insecurity and the civil war which was going on.
In May 1987, the Uganda currency was reformed, having two zeros and thirty percent struck off all values in cash and deposits, and the cents abolished. The only unit of account henceforth remained the shilling. The new currency, nicknamed the Museveni dollar, then exchanged for sh60 to one United States dollar.
Kiyonga presented the first budget under the new currency regime. The new government’s rallying call was on increase of exports as the shilling started deteriorating almost as soon as it was launched due to an unfavourable trade balance.
Kiyonga managed five budgets upto and including the one of 1991-1992. Besides the drive towards export diversification, the most radical economic changes took place under his watch. These included the start of privatization that saw the selling off of over a hundred state-owned companies that were accused of draining the treasury, and of course retrenchment of thousands of government workers.
In 1992, the Finance docket was handed to Jehoash Mayanja Nkangi, a conservative politician who served as the last Katikkiro of Buganda before the abolition of kingdoms in 1966.
Although he was mostly known as a lawyer, the conservative Nkangi was also an economist. His tenure is remembered as the most rosy in NRM’s time. It started off with the liberalization of foreign exchange that made the Uganda shilling fully convertible and its value determined by the market forces. The economy was growing and it seemed there was enough business for everybody.
During Nkangi’s era which lasted up to 1998, Emmanuel Tumusiime took full charge at Treasury, and he took on the macro economic stability with unprecedented zeal.
A landmark development in 1992 was the merging of the ministries of Planning and of Finance, thus enabling the budget to be unified. Prior to the merger, the Ministry of Finance had responsibility for the current budget and the Ministry of Planning and Economic Development had responsibility for the capital budget. President Museveni used to describe Nkangi as a former conservative who turned revolutionary.
Nkangi’s era coincided with the Mobile Phones revolution and the emergence of private FM radio stations in Uganda. But of greatest significance, it was during this time that Museveni launched the Universal Primary Education that saw primary school enrolment jump from 1.8 million pupils to six million immediately and started growing towards ten million over the years. Education started taking a lion’s share in the budget.
Mayanja Nkangi was retired in 1998 and replaced by Gerald Sendaula, an accountant and farmer who had served as minister of energy and a minister in finance and economic planning. Sendaula remained in charge until 2004 and it was during his time that Uganda benefitted from the debt forgiveness that saw its foreign external debt almost wiped out from over five billion dollars to less than a billion.
During the Sendaula era, Tumusiime left the Treasury where he had reformed the country’s fiscal policy and moved to the Central Bank to the helm of the monetary system.
From 2005 t0 2009, Museveni entrusted the finance docket to an old comrade and fellow ideologue Dr Ezra Suruma. The Economics professor had also been deputy governor Bank of Uganda, and also the last chairman/managing director of Uganda Commercial Bank before it was privatized.
As Finance minister, all the budgets Suruma presented were optimistic, drawn in the context of the country’s expected oil fortunes after confirmation of commercial quantity reserves. He left office before the oil came out of the ground.
Mrs Syda Namirembe Bbumba became finance minister in 2009 and left in early 2011 after preparing only two budgets. She is not known for any strong credentials, but her late brother Ahmed Seguya was the first commander of the guerilla National Resistance Army who died during the struggle. When President Museveni tok power, Seguya was given an honourable burial.
Syda Bbumba will be remembered for a massive supplementary budget passed before the 2011 elections that caused havoc in the economy. Years later, Syda Bbumba shocked the nation when she said she had signed an oil production agreement that could have cost the country $157m, - without even reading the papers she was signing.
In 2001, President Museveni appointed the highly articulate development banker Maria Kiwanuka, to head the finance ministry. She managed the national budget until 2015. Her era was pre-occupied with restoration of fiscal discipline that has slipped during her predecessors’ time. It was also during her era that more loans were contracted from China that ever before, reducing the proportion of the traditional multilateral lender for who she once worked, the World Bank.
In 2015, Matia Kasaija took over as Finance minister. He had been a minister in the ministry for several years and as pragmatist, he had even advocated for the standardisation of kickbacks.
During his tenure, both the external and internal debts have escalated. The GDP accounts were, however, adjusted, which reduced the debt to GDP ration, allowing for further borrowing.
Although the debt contracted during Kasaija’s era has been mainly for infrastructure development, the World Bank maintains its return on investment per dollar is less than a dollar, way below the recommended return of four dollars per dollar of investment.
The massive domestic borrowing from commercial banks through bonds and treasury bills has also been blamed for crowding out the private sector, as the commercial bankers just buy government stock and make a profit, without taking the risk of lending to the private sector.
The current 2017/18 Budget was passed amidist protest by some members of the Budget Committee due to the debt portion that surpassed the legal limit.
From a Budget of six billion shillings during his first year, President Museveni is now running a budget of 32 trillion shillings 32 years later, which is 5,200 times more. Even after discounting inflation, it is clear that the growth has indeed been tremendous.