President sidesteps cost of living, promises growth

President Museveni yesterday talked up the prospects for Uganda’s economy and again rejected calls for subsidies on fuel – an intervention struggling traders and some manufacturers feel would go a long way in easing the cost of doing business.

 His State-of-the-Nation (SONA) speech at Kololo Independence Grounds, which was boycotted by Opposition MPs, was couched in optimistic terms, rosy growth figures and a bold declaration that Uganda’s economy will hit the $55 billion mark in 12 months.

 “The economic growth for this year is projected at 5.5 percent in real terms compared to 4.7 percent last financial year 2021/22. Over the next five years, the economy is projected to grow at an average of 6.5-7 percent per year. But these are growth rates of the Ministry of Finance but me I believe we can grow much faster,” Mr Museveni said.

 The President, however, sidestepped any reference to the rising cost of living ordinary Ugandans are struggling with today.

  Similarly, some in the audience at Kololo came away disappointed that the President did not go into any detail about entrenched corruption in government which costs the country over Shs9 trillion each year

 Mr Museveni said the resilience demonstrated by Uganda’s economy is down to more investment in manufacturing; poverty alleviation initiatives like the Parish Development Model, Emyooga etc; support to small and medium enterprises; increased activity in the oil and gas sector, and growth in regional trade.

 “Therefore, by the end of financial year 2023/24, Uganda’s GDP is projected to grow up to Shs.207.22 trillion (equivalent to $55.17 billion, translating to $156.76 billion in Purchasing Power Parity terms. This in turn is projected to grow our GDP per capita to $1,186, up from $1,096 …,” he said.

 The President said inflation has been brought under control.

 “Therefore, we have defeated the rapid increase in prices of both consumer and production prices. However, food prices remain high due to climate change effects that caused prolonged drought in many parts of the country. This will be history because of the ongoing government investment in small scale solar-powered irrigation to address water shortages,” he said.

No to fuel subsidy

Mr Museveni yesterday once again reiterated his opposition to subsidies for fuel, saying “this is because these kinds of measures are not sustainable and they instead introduce distortions in the economy”.

Subsidies could lead to smuggling and shortages when some rich business people resort to hoarding to cause artificial shortages in order to benefit from higher prices.

 “Some countries gave subsidies or controlled prices of some essential commodities such as fuel, bread, wheat, etc. We do not believe in subsidising consumption such as subsidising petrol for people to drive to night clubs,” he said.

 Prior to the speech, a number of Ugandans had hoped the President would offer some relief on fuel which at Shs5,000 for a litre of petrol is almost double pre-Covid rates. 

Mr Patrick Oboi Amuriat, party president at the opposition Forum for Democratic Change, had echoed public concerns in interviews on Tuesday that expensive fuel has made everything because of its implication for transport costs.

 “We propose the implementation of a regulated price of fuel and enactment of legislation that prohibits selling of fuel above the government-regulated price. Mr Amuriat said.

 But Mr John Bosco Ikojo, chairperson of Parliament’s committee of national economy, agreed with the President’s position.

 “You saw what happened in Kenya when they introduced subsidy on fuel? It distorted the economy and they immediately removed it,” Mr Ikojo said yesterday.

 Adding: “Yes, the high fuel cost has a direct impact on standard of living because … where the prices are high, the general cost of living rises.

 However, in this case, the best way would be to cut taxes on the fuel instead of offering subsidies,” he said.

 The only possible subsidy could be considered, Mr Museveni said, is an intervention on the prices for agricultural inputs.

 “We are studying this. Our policy, as government, is to allow demand and supply forces to determine prices and incentivise production. However, on the issue of fertilisers we shall either get a solution to stop the West from interfering with the prices of the fertilisers or we subsidise,” he said.

Security concerns

The President assured the nation that measures to ensure security, despite the “isolated incidents” of killings by soldiers and policemen, have been put in place.

“I wish to assure Ugandans and investors that Uganda is a secure and peaceful country. The recent isolated incidents of misuse of firearms and killing of innocent people, is being handled with immediate response,” he said.

 He also said government has enhanced its capabilities in Karamoja sub-region to combat cattle theft.

According to him, a total of 125 guns with 1,323 rounds of ammunition have been recovered since January, 2023, and an estimated 4,771 stolen livestock recovered.

 He also provided a quick update on progress by Ugandan forces who entered DR Congo last November to flush out Allied Democratic Forces rebels.

A total of 508 ADF combatants were put out of action; 50 captured alive, 90 abductees rescued and 20 defectors received while 109 SMGs, 5 PKM machine guns.

 On tourism

Mr Museveni said tourism is one sector that can transform Uganda’s economy if properly developed. He said since the lockdown was lifted, Uganda’s tourist numbers have surpassed the pre-Covid-19 figures with 814,508 tourists be reported by December 2022 earning the country $1,014 billion.

 He said to harness the potential, government will maintain security in the country and the tourism sites.

 Current figures from the tourism ministry indicate that the sector directly employs 1.55 million people in Uganda along the entire tourism value chain and contributes 6.7% of the country’s GDP;

 In 2022, Uganda’s national parks hosted 367,869 visitors surpassing the pre-Covid-19 number of 323,861 visitors recorded in 2019. Up to 63% of these were domestic tourists.

Infrastructure

Over the years, government has prioritised infrastructure development with the total national road network now standing at 21,020 km of roads, of which 6,229km (29.6%) is paved.

 Government will continue to implement 16 projects to upgrade over 892km of national roads to paved bituminous standards, while at the same time rehabilitating 300km, to restore their service life, the President said.   He also said government is expediting plans for the Standard Gauge Railway, with construction starting in the new financial year which opens next month on the Malaba-Tororo-Kampala leg.

 “Government, will prioritise infrastructure that supports industrialisation, production of oil and gas and promote tourism,” he said.

 He said while countries like South Africa already have thousands of megawatts of electricity, the total electricity generation capacity in Uganda is still only 1,346.6MW, which he said is a shame. The President set out an ambitious target to achieve generation of up to 52,000 MW of power within the next 17 years

 “Given the many manufacturing plants that are being established in Uganda, we shall need to both increase and diversify our energy sources, including nuclear energy, to supplement our other sources such as hydro, solar and thermal power,” the President said, adding: “nuclear energy is expected to add another 2,000 MW to the national grid by 2036. However, by 2040, we must ensure the generation of 52,000 MW from all sources”.

What MPs said...

Eddie Kwizera (Bukimbiri)

“I realised that President is not happy about the economic performance of the country and when lamenting on corruption in the decision-making offices. What worried me is that why should the President lament about corruption in the decision-making offices yet he knows these people. Why can’t he sack or replace them?

 Atkins Godfrey Katusabe (Bukonzo West)

“It [address] was good but not good enough. The President dwelt so much on the economics and gave little attention to security. Everything else can wait but not security… You talk about investment, economy, that is fine, but these without security is meaningless.”

Sylvia Nayebale (Gomba)

“I am impressed by the government’s initiative and good intentions on priority areas of agriculture, education, electricity, infrastructure and health. In the agriculture sector, the President said we should look more into value addition, so, I expected him to have addressed the issue of fake pesticides, fake acaricides, but nonetheless, it was a good address.

Florence Asiimwe (Masindi).

 “I like the emphasis he put on the Anti-Gay Act that he recently signed. He went into nitty-gritty details of even what the doctors say about homosexuality, which information I found very educative and informative. That aside, I felt he should also have talked more about the corruption in this country because a lot of money is continuously being lost to this vice.

Elijah Okupa (Kasilo).

“I expected him to elaborately address the Somalia issue. I thought this should have come out clearly so as to make us understand what is happening there, as well as mention what plans are in the pipeline to help the affected families. I wished he also spoke more on corruption of [Ministers] Lugoolobi, Kitutu and Nandutu who should be out of office as investigations continue on the iron sheetssaga.

Charles Ayume (Koboko).

“I would have loved it if he had spent more time unpacking health… On the issue of medical interns and arrears, if we don’t give these guys the requisite attention, then, we will get a bad product. So, it is in our interest we get good doctors who are able to follow the ethics but also deliver quality services. The strikes have been rampant in the last financial year. The medical fraternity, I am sure, would have had wanted to hear a pronouncement on [this issue].

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