EU, World Bank impressed with Uganda’s economic performance

Ms Caroline Adriaensen, EU head of cooperation, said the country’s performance is an important indicator of strong economic policies and fiscal discipline.

“We agree with some of the risks and challenges identified, notably the need to increase domestic revenue mobilisation, the need to intensify the fight against corruption, and the need to limit domestic borrowing at high interest rates,” Ms Adriaensen said.

She added: “We welcome the strategic priorities identified for the next financial year: Investment in human capital, promotion of agro-industrialisation, tourism, mineral development, investment in rail and water transport, as well as the focus on environment and climate change.”

Ms Adriaensen said: “These priorities align with the priorities of the EU’s partnership with Uganda: our support to the private sector, trade, agribusiness and value chains such as coffee, cocoa and timber, and sustainable tourism.”

Ms Rachel Kaggwa Sebudde, an economist at WB, said the budget looks good in areas of human capital development, health, water, and sanitation are crucial for the development of the country just like proper use of the country’s minerals effectively is very crucial.

“It is not just using but effectively and for the development of the country, we also appreciate the investments in infrastructure is good for agricultural development,” she said.

She added: “Although there is development in human capital, more needs to be done since the population is growing very fast, which calls for more schools, jobs, and skills.”

Ms Sebudde said the government should increase efforts in domestic revenue mobilisation since it is lower than its peers in the EAC Community, and there should be an effort to expand the taxation net to reduce the stress on the already paid.

She also called for the government to embrace climate-smart agriculture so that Uganda can manage the changing weather patterns.

Uganda’s 2024/2025 budget will aim to tackle its debt while protecting it during a shaky economic recovery, as well as turning internally for revenue mobilisation.

Mr John Bosco Kalisa, the executive director of EABC said the good news for Africa is that we contracted debt for productive sectors; roads, Tanzania is building railways, and the debts in the EAC are not above the roof, they are manageable level because they are used for productive purposes.

“I think the cost of infrastructure is going down and still manageable, we have been in meetings with African development banks. Currently the region is moving from multi-lateral debts; borrowing from IMF and World Bank,” he said.

He added: “EAC is now looking at domestic resource mobilisation; Kenya’s President William Ruto recently said African loans are eight times higher than the normal borrowing, so the negotiations are going through AfDB.”

Mr Kalisa said EAC needs concessional loans where debts are cheaper, the discussions are going on well and the EAC countries are managing well. 

Mr Herbert Byaruhanga, the president of the Confederation of Uganda Tourism Association, said the fraternity welcomes the developments but asks the government to increase training, expand the foreign markets, and have Uganda tourism ambassadors abroad.

“About 80 percent of our work is marketing Uganda, visibility needs more money on top of skilling. This will guarantee job creation,” he said.

The government promised an increase in tourism activities supported by investment in tourism infrastructure, branding and marketing, and effective implementation of the Meetings, Incentives, Conferences and Events (MICE) Programme.

Mr David Walakira, the executive director, the Centre for Budget and Tax Policy (CBTP), said this is one of the budgets that have been transparent, telling Ugandans that statutory Shs34.756 trillion is what is available to spend.

He said there was more effective communication, but Ugandans should stop celebrating and understand that there is little to spend.

“The minister has done a good job; in terms of health, energy for instance preparatory activities for the 8,400MW nuclear power plant, that is good to learn,” Mr Walakira said.

He added that with an increase of tax projections, FY2024/2025 of Shs31.982 trillion is a bit high and will require a lot to be achieved and financial discipline should be emphasised.

“We need to do fiscal consolidation, which means Uganda should do what fits its budget,” he said.

Mr Walakira added that although the government continues to provide long-term affordable capital through Uganda Development Bank (UDB), the Parish Development Model, and the Agricultural Credit Facility and Emyooga, this is draining resources.

 “Giving direct cash is detrimental, it’s never sustainable, government should create an enabling environment like subsidising electricity to enable industrial growth, which will lead to employment,” he said.

Mr Robert Mbazira, senior manager at Ernest and Young, said it is ambitious but can be achievable but the challenge is how it is going to be funded.

 “When you look at the previous budget, the government anticipated to collect Shs29 trillion, what was not collected, and moving it to Shs32 trillion and the fact that we are moving out of Covid-19, I’m not certain we shall collect it,” he said.

He added: “Uganda should work within their means; for your information, there is budget support where the government is going to borrow to pay salaries, which means we are struggling to live within our means.”

Mr Mbazira said with corruption right from the allocation stage in Parliament, the collected money might fail to reach its intended purposes.

“We have seen that from the budget of Uganda Human Rights Commission, close to Shs11 billion was supposed to be paid to the arrested parliamentarians, this could be one case,” he said.

[email protected]