Uganda’s economy grew lower than projected in the 2013/14 National Budget, as exports to the global market slowed. This was further compounded by the war in South Sudan, which particularly affected Uganda’s manufacturing sector. Instead of the projected six percent, growth slipped to 5.7percent in 2013/14 financial year.
Dr Ezra Munyambonera, a Research Fellow at the Economic Policy and Research Centre (EPRC), said in an interview that the economic performance affected revenue collections, which in turn limited budget effectiveness.
Uganda’s 2013/14 Budget was at 13 trillion Uganda Shillings, with priority given to infrastructure like roads and the energy sector. Works and Transport received 2.5 trillion Shillings, Energy 1.6 tillion Shillings and Education 1.76 trillion Shillings.
According to Munyambonera, this strategy to focus on infrastructure will continue for the next five years. He also says that most infrastructure projects like roads are absorbing 60 percent of all funds provided.
However, Dan Alinange, head of Corporate Affairs at the Uganda National Roads Authority (UNRA), tells URN that by end of the financial year, they will have absorbed the entire funds they were given. UNRA received 1.9 trillion to spend on new roads and 245 billion for road maintenance. He says the entire 1.9 trillion has been absorbed, whereas they’ve used 80 percent of the maintenance funds.
Alinange noted that UNRA is likely to end the financial year with a debt of about 200 billion shillings for Development because of high performance by contractors.
Absorption challenges are not only limited to UNRA and Munyambonera notes that it’s for almost all the sectors in the economy, with the exception of agriculture. Agriculture employs more than 60 percent of the population but it only grew by 1.5 percent in 2013/14 financial year. Munyambonera says that for the agricultural sector to be effective there needs to be specific prioritization on what he describes as strategic enterprises.
President Museveni in his State of the Nation Address and on Heroes Day emphasized the restructuring of the National Agricultural Advisory Services (NAADS) to make it more effective. He pointed out how 143 billion Shillings of the 203 billion Shillings given to NAADS were being spent on salaries and workshops. Only 50 billion Shillings is being spent on farm inputs, tools and other extension services.
Coffee, an agricultural product, is still the single largest export earner and with the potential of bringing in one billion US Dollars a year, according to Uganda Coffee Development Authority.
Munyambonera also says that the budget need be balanced, between infrastructure and service delivery. He says most of the budgets for education and health cater for salaries and new buildings. He says more attention needs to be paid to making medicine and more human resource capacity, if service delivery is to improve.
Notably, the health sector was allocated 1.19 trillion Uganda Shillings in 2013/14, of which the government contribution was 760 billion, with the bulk of this going to wages and salaries. Donor funds for the health sector are mainly for development finance and totaled 480 billion Uganda Shillings.
In 2013/14, inflation was kept in the single digit range, and the Uganda Shilling remained stable – save for the depreciation in February 2014 after the signing of the Anti-Homosexuality Act 2014 by President Museveni. Uganda was also able to keep Dollar reserves above 3 trillion Uganda Shillings, which has the potential of mitigating external shocks for about four months. The South Sudan war also took its toll on government finances as the Ministry of Defense requested for a supplementary budget of close to 200 billion Uganda Shillings.