Finance Minister Matia Kasaija has presented the Shs40.4trillion National Budget for Financial Year 2019/2020.
Kasaija presented the Budget on behalf of the President in accordance with Article 155(1) of the Constitution.
Below is Kasaija’s full speech:
Your Excellency the President
Your Excellency, the Vice President
The Right Honourable Speaker of Parliament
The Right Honourable Deputy Speaker
His Lordship the Chief Justice
His Lordship the Deputy Chief Justice
The Right Honourable Prime Minister and Leader of Government Business
Right Honourable Deputy Prime Ministers
Madam Leader of the Opposition
Honorable Ministers and Members of Parliament
Members of the Diplomatic Corps
Distinguished Guests, Ladies and Gentlemen.
1. In accordance with Article 155(1) of the 1995 Constitution of the
Republic of Uganda and Section 13(13) of the Public Finance Management
Act 2015, I presented the Budget proposals for Financial Year 2019/20 to
Parliament on 28th March 2019. I applaud Honourable Members of
Parliament for their dedication in the reviewing the proposals and the
approval of the Budget on 24th May 2019.
2. My statement today therefore presents the economic and
development context under which the Financial Year 2019/20 Budget was
prepared and highlight the priority actions that underpin the allocations
that have been appropriated by Parliament.
B. INTRODUCTION
Development Progress
3. Madam Speaker, in the Financial Year 2018/19 Budget Statement, I
reaffirmed the NRM Government’s commitment to attain our cherished
goal of a middle income status for the country through interventions
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targeted at inclusive growth and socio-economic transformation. Uganda
has made substantial progress towards this goal as demonstrated by the
following few examples:-
i) Uganda’s economy has recovered and picked momentum, growing
at over 6% per annum over the last two years.
ii) With the progress in economic growth, average incomes of
Ugandans have increased to US$ 825 per person in Financial Year
2018/19, compared to US$ 800 in 2017/18, notwithstanding increase
in the population size to 39 million Ugandans.
iii) The quality of Uganda’s labour force has dramatically improved,
with the proportion of labour force with tertiary education increasing
from 7.5% in 2013 to 13.6% in 2017. In addition, the annual growth in
formal employment has averaged 9.8% between 2010 and 2017,
higher than the average growth of the economy during the same
period.
iv) The structure of the economy has changed. The share of industry in
the economy is now 21% compared to 11.3% in 1986. Services have
increased to 48.7% from 32% over the same period. In contrast, the
share of agriculture has reduced from over 50% in 1986 to 22% in
financial year 2018/19.
v) Export performance has been excellent, with diversification leading
to non-traditional cash crops earning Uganda US$ 2.84 billion last
financial year, compared to the traditional cash crops, which
earned US$ 0.79 billion.
vi) Trade with our East Africa Community partners has significantly
improved generating a surplus of US$ 557 Million last year. The
composition of exports has also changed positively with exports of
light manufacturing products exceeding traditional merchandise.
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vii) National grid electricity connections have increased to 1.3 million
customers, and the rural electrification access rate rising from 1% in
2001 to over 13% in 2019.
viii) Many new factories have been opened in the course of FY2018/19
with the result that the proportion of Ugandan products in
supermarkets has increased from 15% to 45%. Our target is to reach
50% by the year 2020.
4. Madam Speaker, the few examples I have mentioned are a direct
outcome of the NRM Government’s deliberate policies over the years to
promote socioeconomic transformation.
Development Challenges
5. Madam Speaker, despite these positive milestones we, however, are
still faced with some major development challenges. Let me single out
three:- (i) Unemployment, (ii) Income Inequality, (iii) Malnutrition and
Unhealthy Life Styles.
(i) Unemployment
6. There are now approximately 600,000 entrants into the job market
every year, as a result of the universalization of health and education. This
has created the need for new jobs to meet this demand. Currently, 4 out of
10 young Ugandans are out of work.
7. Furthermore, the quality of jobs is of concern. The 2016 labour force
survey indicates that 50% of Ugandans work in the Services sector, 35.6% in
Agriculture, and 14.4% in Industry. The informality of the Agriculture and
Services sectors implies that about 80% of our labor force is in the informal
sector, and therefore not optimally employed. With most Ugandans
engaged in the rural economy, it is of paramount importance to increase
labour productivity in agriculture and aggressively promote agroPage
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processing which in the end will be the basis for Uganda’s industrialization
and further job creation.
(ii) Income Inequality
8. Secondly, Income Inequality has widened between rural and urban
areas, as wealth has not been created faster in rural communities in
comparison to urban areas. This is despite the country’s progress in
narrowing regional income inequality, for example, in Northern and Eastern
Uganda following Government’s affirmative action programmes. As a
consequence, rural-urban migration has increased with high urbanization
rates causing challenges of congestion, housing shortage and population
pressure on urban social services. These challenges have compromised the
potential of Uganda’s urban areas to serve as engines of growth and
structural transformation. World Bank studies estimate traffic congestion is
costing Uganda over US$800m in lost National Output.
(iii) Malnutrition and Unhealthy Life Styles
9. Thirdly, malnutrition adversely affects the quality of life of children and
mothers, despite the variety and quantity of foods that Uganda can
produce. 53% of children under five years are malnourished and hence
anemic, and 29% of them are stunted or wasted. Many women of
reproductive age are also malnourished, with 32% of them being anemic.
10. In addition, inappropriate feeding especially among the more
affluent, is also a major cause of a surge in chronic non-communicable
diseases including coronary heart disease, cancer, diabetes, high blood
pressure, and obesity. These maladies are largely attributable to unhealthy
life styles. Consequently, Uganda has been spending on average US$ 500
million on treatment of preventable diseases. Improving the nutrition status
of Ugandans accordingly requires (i) coordinated actions (ii) mass
sensitization and education, and (iii) life style awareness.
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11. Madam Speaker, the financial year 2019/20 Budget, therefore,
focuses on interventions aimed at increasing the wealth and improving the
livelihoods of all Ugandans. The NRM Government will continue to pursue a
growth strategy that aims to create jobs and ensure that growth benefits
every Ugandan. I will elaborate this strategy later in my statement.
12. So, the theme for the Financial Year 2019/20 Budget, accordingly,
remains ‘Industrialization for Job Creation and Shared Prosperity’.
13. Madam Speaker, the Budget Statement today will cover the
following:-
i) Economic Performance in Financial Year 2018/19;
ii) Economic Growth Strategy for Financial Year 2019/20 and the
Medium Term;
iii) Financial Year 2018/19 Sector Performance and Priorities for Financial
Year 2019/20; and,
iv) Financing Strategy for Financial Year 2019/20.
C. ECONOMIC PERFORMANCE IN FINANCIAL YEAR 2018/19
Global and Regional Economy
14. Madam Speaker, on the global scene, Africa’s economic
performance continues to recover. The EAC region is the fastest growing
economic bloc in Africa, with growth projected at 6.2% in 2019, increasing
from 5.9% in 2018. This performance is mainly accounted for by the growth
in the services and agriculture sectors as well as increased consumption
and investment. Rising incomes in Africa increases demand for exports
within African countries themselves.
15. Uganda’s trade with other Africa countries is increasing, and
amounted to 59% of total goods exported in 2018. During the same year,
the East African Community (EAC) continued to be the largest destination
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for Uganda’s exports. Total goods exported to the EAC amounted to US$
1,469 million compared to imports of US$ 911 million, thus registering a trade
surplus of US$ 557 million.
The Domestic Economy
Economic Growth
16. Madam Speaker, the economy has sustained the remarkable
recovery witnessed in Financial Year 2017/18. The economy is estimated to
have grown by 6.1% in the Financial Year 2018/19. The size of the economy
is now Shs. 109 trillion, equivalent to US$ 29.5 billion. The significant revival in
economic growth was a consequence of increased private and public
sector activity, improved weather conditions and a relatively stable global
economy.
17. The Agriculture sector maintained its recovery sustaining a 3.8%
growth rate in financial year 2018/19. Among other contributing factors let
me mention two:- (i) the strengthened enforcement of fishing activity has
resulted in recovery of fish captures (ii) provision of extension services and
control of pests and diseases has also led to a bumper harvest in crops such
as maize, beans, fruits, vegetables, and sim sim. I must say though that the
growth in the agriculture sector is still sub-optimal, given the natural
resources that we have.
18. During financial year 2018/19, the Services Sector grew at 7.2%, the
highest of all sectors. This good performance was largely driven by tourism
and hospitality.
19. The Industry sector grew at 5.8% this year, continuing the rebound
which started in financial year 2016/17. Manufacturing is also beginning to
pick up. It grew at 2.8% this year compared to 1.7% in the previous year. This
is partly because of the newly commissioned factories, as I will later
demonstrate.
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Domestic Prices
20. Madam Speaker, domestic prices remain stable. Average Inflation
was 3.4%, well within the policy target of 5% per annum. This is because of
increased food supplies in the markets, relatively stable exchange rate and
effective co-ordination of monetary and fiscal policies. Stable prices, we all
know, allow investment planning, improve investor confidence and
preserve the value of savings.
Exchange Rate
21. The Uganda Shilling has also largely been stable against major
currencies. It strengthened against the US dollar by an average of 0.6% for
the period between July 2018 and April 2019. The strengthening of the
shilling against the US Dollar was a result of higher export performance,
improved disbursement of external support for Government programmes,
continued Foreign Direct Investment (FDI) inflows, and robust remittances
from Ugandans’ abroad.
Financial Sector and Private Sector Credit
22. Madam Speaker, the financial sector has continued to strengthen.
Non-performing loans reduced to 3.4% at the end of December 2018
compared to 5.6% in December 2017. Private sector credit grew by 6.1%
between July and December 2018 with Trade and Construction sectors
receiving the largest share of credit, at 20.1% and 19.8%, respectively.
Credit to Agriculture has registered the highest growth, though it still remains
low, at only 12.9% of total credit extended as at December 2018.
Public Finance
23. Madam Speaker, domestic revenue collection too, has increased
significantly. It is projected at Shs. 16,711.66 billion in the financial year
2018/19, of which Shs. 16,181.66 billion is tax and Shs. 530 billion is non-tax
revenue. The surplus is Shs. 352.66 Billion over the target of Shs. 16,359 Billion.
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24. The ratio of domestic revenue to GDP is estimated at 15.2% this
financial year, compared to 14.6% achieved last year. This is an increment
of 0.6% of GDP in one financial year.
25. Madam Speaker, Government spending excluding domestic debt
refinancing this financial year is projected to be Shs. 24,297.85 billion, which
is equivalent to 22.1% of GDP.
D. ECONOMIC GROWTH STRATEGY FOR FINANCIAL YEAR 2019/20
26. Madam Speaker, the Economic Growth Strategy that underpins the
Financial Year 2019/20 Budget seeks to consolidate made interventions
towards the attainment of shared prosperity. Ensuring Shared Prosperity
requires that the benefits of economic growth reach all Ugandans. Our
people must be provided with opportunities to create wealth and earn
higher incomes. This strategy is built on the rapid industrialization of our
economy linked to high productivity and production in agriculture; while
nurturing the potential of the key growth sectors of tourism, minerals, oil and
gas. The growth of these sectors is what will provide gainful employment to
the majority of Ugandans. Entrepreneurs who have strong links with the
productive households, are the key to unlocking the potential of these key
sectors, leading to prosperity for us all.
27. The Economic Growth Strategy consists of three interlinked parts:-
i) Expanding the Industrial Base of the Economy;
ii) Exploiting Natural Resource Endowments with Environmental
Protection in mind; and
iii) Providing affordable Financing for Production and Business.
Expanding the Industrial Base of the Economy
28. Madam Speaker, the NRM Government has already successfully laid
the foundation for Uganda’s industrialization. The key bottlenecks such as
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inadequate electricity and transportation infrastructure, the lack of basic
education and health, have, to a large extent, been addressed.
Consequently, the manufacturing sector is now able to meet domestic
demand for basic products like cement, tiles, light steel products and
consumables such as sugar and soap. The next phase of manufacturing in
Uganda will be to produce goods for exports and also replace Uganda’s
imports.
29. Uganda’s industrialization process in the future has accordingly been
designed based on two strategic pillars. The first strategic pillar provides
developed and serviced areas, where industrial production for several
enterprises takes place. The plan involves building fully planned and
serviced Industrial Parks in 22 locations across the country. Industrial Parks
will house medium and large scale industries.
30. The second strategic pillar supports the development of Product
Value Chains which link nucleus entrepreneurs to out-grower farmers. These
Product Value Chains permit marketing of agricultural products, agroprocessing
for value addition, as well as the efficient provision of finance
and other inputs of production. It will also ensure the vast majority of
Ugandans are productively engaged. We have already successfully
established a few Product Value chains in agro-industry in Citrus Fruit,
Vegetable Oil and Dairy industries. The next move is to expand Product
Value Chains to other commodities across the country.
Exploiting Natural Resource Endowments with Environmental Protection in
Mind
31. Madam Speaker, exploiting Uganda’s natural resource endowments
provides opportunities for growth, and the provision of incomes and a
decent livelihood to the majority of Ugandans. The three natural resource
endowments Uganda has include vast arable land and fresh water
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resources; abundant wildlife and diverse environment, and plentiful
minerals, oil and gas deposits. Appropriately exploiting these natural
endowments requires being mindful of the adverse impact of overextraction,
over-utilization and wasteful use of benefits they provide.
Addressing Climate change aggressively is therefore key to appropriately
exploiting our natural resource endowments.
Commercializing Agriculture
32. Appropriate exploitation of Uganda’s arable land and fresh water
resources, requires climate-smart commercialization of agriculture.
Because the majority of Ugandans are part of rural households, achieving
inclusive growth requires that we use modern farming practices, advanced
agricultural inputs and technology, post-harvest storage, and improve
product market access. This will positively change the livelihoods of over
68% of Uganda’s households who are currently engaged in subsistence
agriculture.
33. Commercializing agriculture has the greatest potential for increasing
household productivity and incomes, while addressing unemployment in
the rural communities. The use of Product Value Chains based on the
National Agricultural Zoning Strategy will also facilitate agricultural
commercialization. Successful agro-processors will be engaged to serve as
a nucleus linked to farmers who sell their produce to the processor. IN
addition, Product Value Chains permit inputs such as extension services and
finance to be delivered. This approach will lead to an increase in
sustainable production at the farmer household level, while increasing
productivity and incomes. In addition, the approach will nurture agrobased
industries across the country, employing labour that will have been
released from primary agriculture.
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Addressing Climate Change
34. Madam Speaker, deforestation and destruction of wetlands
adversely impacts the welfare of our people in the following way:-
(i) water shortage, or no water at all, for domestic use and
production;
(ii) increased temperatures and severe long droughts;
(iii) over-flooding and/or increasing landslides in highlands, and
(iv) destructive winds due to lack of windbreakers.
35. Re-forestation and restoration of wetlands must be undertaken as a
matter of urgency, and the destruction of wetlands and forest cover will be
penalized through the enforcement of environmental laws and regulations.
Local Governments must enact and enforce ordinances on tree planting,
efficient waste management and wetland conservation. The ban on use of
harmful materials such as environmentally destructive polythene bags,
among others, will also be unequivocally enforced. I appeal to the Private
sector to adopt climate-smart technologies.
Tourism
36. Madam Speaker, Uganda’s natural and cultural heritage are critical
to tourism. Utilizing our natural heritage endowment by realizing its tourism
potential will provide Uganda significant benefits. Notwithstanding its
current level of development, the Tourism sector has made dramatic
progress and now ranks as the highest foreign exchange earning sector. In
2018, foreign receipts from tourism reached US$ 1.02 billion, with 1.6 million
international tourist arrivals being recorded. Uganda is now a known
international touristic destination of choice, which strongly justifies
developing its tourism potential for benefits it will provide to Ugandans in
particular and the economy in general.
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37. Sustained growth of Uganda’s tourism therefore requires conservation
of our natural and cultural heritage. Appropriate legislation will be enacted
and vigorously enforced to preserve cultural sites and monuments and
deter illicit trafficking of protected wildlife and antiquities. Tourist hubs and
circuits will be developed for product development and the marketing of
Uganda as touristic destinations of choice based on religious, natural and
cultural heritage. Infrastructure, including road and air transport, electricity
and hospitality facilities, will be developed to enable efficient access to
tourist destinations, and adequate hospitality. World-class skills will be built
in hospitality and tourists handling, wildlife conservation, tour and travel
management, food and beverage services.
Minerals, Oil and Gas
38. Madam Speaker, extracting minerals, oil and gas will contribute to
building a solid resource base for the economy, while providing jobs to
many more Ugandans. The priority Minerals to be exploited include:- Iron
Ore, Limestone, Phosphates, Oil and Gas, Dimension Stones, Gold, and rare
earth metals.
39. The key strategic actions required to commercialize this sector
include minimizing speculation and hoarding of mineral licenses;
enforcement of mining regulations; the airborne geo-physical mapping of
Karamoja, and provision of key road and energy infrastructure.
40. Madam Speaker, in order to avoid wasting and leakage of the
benefits from minerals, oil and gas resources, proceeds of extraction will be
invested for both the current and future generations. In this regard, a
Petroleum Revenue Investment Advisory Committee has been appointed
to guide this process in line within a clear and transparent policy. Uganda
has also joined the Extractive Industries Transparency Initiative (EITI) to
publicly account for all proceeds of minerals, oil and gas sectors.
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Affordable Financing for the Private Sector
41. Madam Speaker, access to affordable finance is an important
catalyst for the growth of viable private sector enterprises. Affordable long
term finance from development financing, pensions, and capital markets
sources, facilitate Private Sector investment. Commercial bank lending
rates remain high. This calls for Government interventions.
42. In this regard, the Uganda Development Bank (UDB) will be further
capitalized. I have allocated Shs. 103.5 Billion next Financial Year for this
purpose. In additions, to support private companies raise equity capital, the
Capital Markets Authority will establish a center to facilitate access to long
term domestic and foreign capital on the stock exchange. The necessary
legal and regulatory framework for the operation of Private Equity funds will
also be designed to attract more investment into Uganda’s private sector.
43. Madam Speaker, financial sector reforms including agency banking,
bancassurance, Islamic banking, and enhanced access to Credit
Reference Bureau services, will reduce operational costs of commercial
banks. The use of movable assets as collateral for loans has also been
facilitated with the enactment of the Security Interest in Movable Property
Act, 2019.
44. In addition, the Uganda Microfinance Regulatory Authority is now
fully operational. This will enhance consumer and investor confidence in the
microfinance industry and money lending business. The electronic chattels
register will be also be operationalized to ease access to credit.
Furthermore, business clinics will be run by the Uganda Registration Services
Bureau to enhance registration of informal businesses.
45. Madam Speaker, Small and Medium Enterprises require affordable
credit. I have provided an additional Shs. 40 Billion to the Microfinance
Support Centre for on lending at affordable interest rates, not exceeding
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12% per annum. Special programmes to enhance access to credit for youth
and women entrepreneurs will also continue to be implemented. The skills
programme for Youth and the Uganda Women’s Entrepreneurship
Programme have been allocated Shs. 130 billion and Shs 32 billion
respectively.
46. Madam Speaker, to de-risk lending to agriculture, the Uganda
Agriculture Insurance Scheme (UAIS) subsidizes agriculture insurance
premiums paid by farmers. Agriculture insurance protects farmers against
key agricultural risks, such as those resulting from natural disasters. This
ultimately attracts affordable credit to agriculture. By March 2019, 77,000
farmers had accessed Agriculture Insurance, across all regions of Uganda.
47. Madam Speaker, in order to develop a sound financial sector that
supports sustainable and inclusive economic growth, we recently
developed the Medium Term Financial Sector Development Strategy.
Enablers of the Growth Strategy
48. Madam Speaker, effective implementation of the Economic Growth
Strategy I have just talked about requires that certain pre-conditions are in
place. These pre-conditions include Peace and Security, Good
Governance and an efficient judicial system, together with macroeconomic
stability. Additional enablers required for economic growth
include (i) reliable, efficient and affordable electricity supply; (ii) water,
transport and communications infrastructure, (iii) a healthy, well-educated
and skilled workforce and (iv) an effective government machinery. The
NRM Government has since 1986 striven to provide these pre-conditions,
which have, to a large extent, been met.
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E. FINANCIAL YEAR 2018/19 SECTOR PERFORMANCE AND FINANCIAL YEAR 2019/20
PRIORITY INTERVENTIONS
49. Madam Speaker, I now turn to the specific priority interventions that
will be implemented in the forthcoming year in furtherance of the
Economic Growth Strategy, while reporting respective developments that
have been recorded during the financial year now ending. These
interventions include:-
i) Enhancing Key Primary Growth Sectors
ii) Increasing Infrastructure Access and Reliability;
iii) Human Capital Development; and
iv) Maintaining Peace and Security, and Good Governance.
I. Enhancing Key Primary Growth Sectors
(i) Industrialization
50. Madam Speaker, Government has already commenced the
establishment of an industrial base. The Iron and Steel industry now has 24
steel industries and its installed capacity has doubled to 1.7 million tons per
annum from 866,000 tons five years ago. The Cement industry has
expanded to five cement factories more than doubling annual production
to 4.43 million tons, from 2 million tons five years ago.
51. Agro-processing factories have been commissioned in Teso and
Luweero for Citrus fruits, Dairy in Ankole, Vegetable Oil in Kalangala, and
Tea in Toro and the Kigezi sub-regions. The Uganda Development
Corporation (UDC) has acquired a 32% stake in Atiak Sugar Factory, which
will serve as a nucleus facility for an out-grower scheme in Atiak and
Lamwo. UDC has also extended ten-year equipment lease financing
arrangements to tea factories in Western Uganda, namely:- the Kigezi
Highland Tea Company Limited, Kayonza Growers Tea Factory and
Mabale Growers Tea Factory Limited.
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52. Madam Speaker, one private and three public industrial parks are
already operational at Kapeeka, Namanve, Luzira and Bweyogerere. The
Kampala (Namanve) Industrial Business Park is 40% complete, and will be
fully serviced in the medium term. The Park already boasts of 33 operational
factories with an estimated 15,000 jobs created. 87 factories are under
construction and 120 are at pre-investment stage. During the year, the
following strategic factories were commissioned at Namanve Industrial and
Business Park:- Orion Transformers and Electric Ltd which manufactures
electricity transformers, switch gears, and smart meters; Alfasan Company
Ltd which manufactures veterinary and human medicines, and Steel and
Tube which produces steel products.
53. At the Luzira Industrial and Business Park, 9 industrial plants are
operational with 7,000 employees. The Bweyogerere Industrial Park has 4
operational industrial plants in agro-processing and other manufacturing
with 5,000 employees. At the Soroti Industrial Park, the Soroti Fruit Factory
was commissioned during the year.
54. In addition to the above public industrial parks, Lio Shen Industrial Park
at Kapeeka where Government is providing infrastructure, 5 factories out
of the targeted 10 are operational now. These include Ho and Mu Food
Technology (U) Ltd which dries fruits for exports and Goodwill Ceramics (U)
Co. Ltd which manufactures tiles using more than 90% of local inputs.
55. Development of the Mbale, Soroti, Iganga, Mbarara and Jinja
Industrial Parks is on-going. Other industrial parks will also be developed by
providing basic infrastructure including roads, electricity, water and
information technology and communications infrastructure. 14 Free Zones
to promote exports have also been licensed in Arua, Jinja; Kalungu, Mpigi,
Mukono, Wakiso, Tororo, Kampala, and Buikwe.
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56. Madam Speaker, in order to speed up industrial growth, the budget
for FY 2019/20 will undertake the following priority actions:-
i) Fast-track feasibility studies, including engineering designs, for all the
proposed industrial parks;
ii) Develop serviced industrial parks and workspaces;
iii) Reform Technical and Vocational Education and Training (TVET) to
provide the skills required in the job market;
iv) Establish the Industrial Skills Production Center at Kampala Industrial
Area (Namanve) to provide skills development, innovation and
knowledge transfer critical for researchers, industrialists, innovators
and youth in particular. The Center will also address technology gaps
in Uganda while boosting value addition.
v) Promote and expand the Uganda Industrial Research Institute’s (UIRI)
Industrial and Technological Incubation Center. In addition UIRI will
establish Regional and Model Value Addition Centers
vi) Provide an additional Shs.10 billion to the Soroti Fruit Factory for
working Capital requirements to purchase required raw materials
vii) Support applied research, innovation and industrial development at
the Presidential Initiative on Banana Industrial Development (PIBID),
the Presidential Initiative on Science and Technology (PIST), and the
Kiira Electric Vehicle Project among others. In addition, preparatory
work to establish Regional Science and Technology Parks, Municipal
Innovation Hubs, Value Addition and Technology Transfer Centers,
Material Science program and Petrochemical Industry will be
commenced.
viii) Reduce the minimum investment threshold that allows developers of
free zones and industrial parks to be eligible for tax incentive from US$
100 million to US$ 50 million
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ix) Reduce the minimum investment threshold that allows operators
within industrial parks to be eligible for tax incentives to US$ 10 million
for foreigners and US$ 1million for local investors.
57. Madam Speaker, I have provided Shs. 428.68 Billion next financial
year for:- (i) electrification of industrial parks (Shs. 147 Billion), (ii) the
development of supportive export infrastructure in export processing zones
and industrial parks (Shs. 103 Billion) and (iii) science technology and
innovation (Shs. 178 billion).
(ii) Commercializing Agriculture
58. Madam Speaker, Government’s efforts to modernize and
commercialize Agriculture, are bearing positive outcomes. For instance,
the volumes and value of export of strategic commodities has registered
notable improvements.
59. Coffee export volumes in 2018 increased by 6% to 4.5 million bags
valued at US$ 492 million compared to 4.2 million valued at US$ 490 million
exported in 2017. Oil palm production in Kalangala in 2018 increased by
55% to 37,800 Tons valued at Shs. 21.4 billion compared to the 2016
production of 24,300 Tons valued at Shs. 13.4 Billion. Milk production in 2018
increased by 19% from 2.1 billion litres in 2015 to 2.5 billion litres in 2018. The
volume of fish exports has also increased by 27%. The support to fisheries
enforcement interventions by the UPDF has led to the opening of four (4)
fish factories – Gomba in Jinja, Iftra in Kampala, Marine and Agro in Jinja
and Ngege in Kampala. The established production capacity of all these
factories is 330 tons per day.
60. The actions that Government has taken to support the significant
outcomes I have illustrated include the following:-
i) Distribution of key planting, breeding and stocking materials including
the establishment of almost 110,000 acres of citrus orange and about
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144,000 acres of mango; 22,000 acres of tea in Kigezi, Ankole,
Rwenzori, Mubende, West Nile and Bunyoro sub zones; and 16,500
acres of cocoa. Breeding and genetic development continued with
the multiplication of beef and dairy cattle, goats, pigs and poultry.
ii) Construction of four (04) medium sized irrigation schemes have been
completed at Agoro (650ha) in Lamwo, Doho I (1000ha) in Butaleja,
Mubuku I (516ha) in Kasese and Olweny (600ha) in Lira district.
Construction of the major irrigation schemes have progressed and
are at different stages of completion- Doho II in Butaleja (48.6%);
Mubuku II in Kasese (22.5%); Wadelai in Nebbi District (18.2%); Torchi
in Oyam District (57%); Ngenge in Kween District (54.1%); and
Rwengaaju in Kabarole district (50%).
iii) Completed construction of ten (10) Small scale Irrigation systems at
Zonal Agricultural Research and Development Institutes (ZARDIs) at
Pallisa, Bukedea, Katakwi, Tororo, Kamuli, Bugiri, Soroti, Abim,
Kaabong and Mayuge Districts. The demonstration will benefit 300
registered farmer groups.
iv) Construction of solar-powered irrigation systems at seven (7) more
Zonal Agricultural Research and Development Institutes (ZARDIs) at
Bulindi, Rwebitaba, Abi, Buginyanya, Nabiun, Mukono and Ngetta
are being finalised. In addition, 15 solar water pump systems for small
scale irrigation were established in 13 districts of Katakwi, Kamuli,
Bukedea, Buikwe, Kayunga, Mpigi, Lyantonde, Kiruhura, Mbarara,
Kamwenge, Rubirizi and Mukono.
v) Regional mechanization centers were opened in South Western
Region, at Buwama, and North Eastern Region, at Agwata. In
addition, several valley tanks were constructed/rehabilitated in the
drought-prone and cattle corridor districts countrywide. The number
of valley tanks increased by 83 from 155 in December 2017 to 238 in
December 2018, with total holding capacity increasing from 8 million,
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to 9 million cubic meters during the same period. This has improved
the number of farmers accessing and utilizing water for irrigation,
aquaculture and livestock from 5% to 8%. Two hundred and eighty
(280) tractors were distributed to farmers to further boost
mechanization.
vi) The Agriculture Credit Facility cumulatively disbursed Shs. 332 billion
by 31st March, 2019, to finance 551 eligible projects. This enabled
borrowers to establish large capacity agro-processing facilities,
expand grain trade and investment in warehousing and expanding
farm infrastructure.
61. Madam Speaker, in order to further support commercialization of
Agriculture, the following key priority actions will be implemented in the
forthcoming budget:-
i) Provision of storage facilities and linking farmers to agro-processing
facilities to support agro-industrialisation. Post-harvest facilities will be
built in Bunyangabu, Kibuku, Kumi, Kyenjojo, Ntoroko and Nakaseke
districts.
ii) Delivery of quality inputs and services including seed and planting
materials, mechanization, fertilizer, agricultural credit and extension
services.
iii) Provision of irrigation infrastructure, both at large scale such as the
Wadelai, Torchi, Mobuku ll, Doho ll and Ngenge projects;
iv) Providing small-scale solar powered irrigation systems for last mile
irrigation.
v) Construct five micro irrigation schemes in Alebtong, Kabarole,
Katakwi, Ntoroko and Gomba, under the Local Economic Growth
Support (LEGS) project.
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vi) Strengthen inputs and product standards certification to improve
production and enhance the quality of products to enable market
access both regionally and internationally.
vii) Continue enforcement of rules and regulations on major water bodies
to prevent overfishing and promote sustainable capture fishing and
aquaculture.
viii) Enhance agricultural research and development in new crop
varieties for national strategic commodities including coffee, maize,
beans, cassava, rice, cotton, oilseed and cocoa.
ix) Undertake research in pest and disease control, including efficacy
trials for three new acaricides namely Vectoclor, Bantick, and
Eprinometim.
62. Madam Speaker, I have provided Shs. 1,054.6 Billon to the Agriculture
Sector next financial year.
(iii) Tourism Development and Promotion
63. Madam Speaker, during the financial year now ending, the key
interventions that the sector has implemented include the following :-
i) Two domestic tourism promotion drives (Tulambule) were conducted
in Western and Eastern Uganda with enhanced focus on popularising
tourism sites and encouraging Ugandans to visit and experience
Uganda’s beauty.
ii) Museums at Kabale, Wedelai, Soroti, Fort Lugard, Bweyogerere,
Nyero, Kapir, Mukongoro and Moroto have been maintained.
iii) Uganda Tourism Board participated in 8 expos and 14 events in the
international, regional and domestic markets.
iv) Breeding programmes for various bird species such as the shoebill
and peafowl were conducted.
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64. Madam Speaker, next financial year the following actions will be
prioritized in the sector:-
i) Aggressive marketing of Uganda’s tourism in key markets, e.g. South
Asia and Europe.
ii) Tourist product development, e.g. religious, historical, cultural, natural
heritage and agro-tourism including farm visits, etc.
iii) Destination marketing to identify and sell key tourist circuits such as
Kidepo, Bwindi, Kibale and products including Historical sites like Fort
Patiko, and Bigo Byamugenyi.
iv) Reduce the minimum investment threshold that allows investors in
hotels and tourist facilities operators to be eligible for tax incentives
from US$ 15 million to US$ 10 million.
v) Upgrade and renovate key tourism infrastructure including airfields
and priority roads to improve accessibility; electricity and internet
infrastructure, and highway stopovers along the tourism routes.
65. Madam Speaker, I have allocated Shs. 193.7 Billion to the Tourism
sector next financial year.
(iv) Development and Commercialization of Minerals, Oil and Gas
66. Madam Speaker, in the Minerals, Oil and Gas sector, preparations for
the commercialization of Oil and Gas resources continued during the year.
The Lead Investor for the Oil Refinery commenced detailed designs that will
inform the Final Investment Decision (FID) to be taken in September 2019.
The detailed designs for the East African Crude Oil Pipeline (EACOP) were
completed and First Investment Decision is due to be taken after
negotiations of final agreements.
67. With respect to Mineral Development substantial progress has been
recorded. Three gold refineries have been set up to refine gold to 99.9%.
These are the African, Simba and Bullion Gold Refineries. The Sukulu
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Phosphate and Steel Project first phase to process fertilizers was
commissioned in October 2018. The Sukulu Project’s steel, glass sheet, brick
and cement plants are due for commissioning in July 2019.
68. Several new cement factories were built during the year while others
have been expanded, including Simba, Tororo, Hima and Kampala
cement plants. Total production capacity of cement now stands at 6.8
million tons compared to only 2.3 million tons in 2015 and 1.6 million tons in
2011. This has resulted in increased jobs, lowered cement prices, reduced
construction costs, and consequently reduced cement imports.
69. Madam Speaker, during next financial year, the following
interventions will be undertaken:-
i) The airborne geophysical survey of Karamoja region.
ii) The divestiture of Kilembe Mines on a fast-track basis with an emphasis
on prospective investors with capacity to carry out further
exploration, following repossession by Government from the previous
Investor.
iii) The exploration of the 18 priority mineral target areas for rare earth,
and metallic minerals to a level of certified mineral resource
iv) The review of the licensing rules and regulations to eliminate
speculative and non-performing licenses and allow opening up the
sector for reputable exploration and mining companies.
v) The establishment of a certified mineral assy laboratory to test
samples for exploration and mining companies affordably and in a
timely manner; and
vi) The development of a Mineral Sector strategy emphasizing the
marketing of Uganda’s mineral potential to prospective investors.
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II. Increasing Infrastructure Access and Reliability
70. Madam Speaker, His Excellency the President extensively elaborated
during the State of the Nation Address, the progress we have made and
the way forward in the transport and energy infrastructure, and I will
therefore present highlights in this area.
(i) Transport Infrastructure:
71. The paved road network now is 5,111 kilometers equivalent to 25% of
the national road network, exceeding the NDP II target of 5,000km. 97% of
the national paved road network and 83% of unpaved roads were
reported to be in fair to good condition. This was above the NDP II target of
85% for paved roads and 70% for unpaved roads.
72. Madam Speaker, next financial year, the target for completed
national paved roads is 6,000 km. Rural roads connectivity and low-cost
sealing of district roads will be prioritized. Road maintenance and
rehabilitation of District, Urban and Community Access Roads (DUCAR) and
National roads will be undertaken using the Force Account approach to
cut on costs. The rehabilitation of the national airport, the meter gauge
railway in the short-term and the revamping of water transport facilities,
including the navigational capacity on Lake Victoria, will also be
undertaken. The construction of the Kabaale International Airport in Hoima
District, and the operationalization of the Uganda National Airline, and the
acquisition of two more Bombardier regional aircrafts, have been prioritized
next Financial Year.
73. Land acquisition and counterpart funding has also been given priority
in the budget, particularly for the new Kampala Port at Bukasa, the
completion of Katuna One Stop Border Post (OSBP) and development of
upcountry aerodromes. Land acquisition for three Oil Roads namely Hoima
– Butiaba – Wanseko; Masindi – Biiso, Masindi – Bugungu and Buhimba –
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Kakumiro – Mubende has been fully provided for in the Budget, while loan
negotiations for the Construction Works are being soon concluded.
74. Madam Speaker, to enhance access to tourism sites, an additional
Shs. 57.8 billion has been provided to UNRA to embark on the South-West
tourism circuit. The other tourism roads will be sequenced over the short and
medium term. In addition, support will be provided for rehabilitation of
aerodromes to facilitate domestic flights.
75. Madam Speaker, Shs. 6.4 Trillion has been provided to the works and
transport sector next financial year.
(ii) Energy Infrastructure:
76. Madam Speaker, total installed electricity generation capacity is now
1,200MW, with the completion of several hydropower generation projects
including Isimba Hydropower dam. High Voltage Electricity transmission grid
infrastructure now totals 2,258km. Detailed progress of specific energy
infrastructure projects was well-elaborated in His Excellency, the President’s
State of the Nation Address.
77. With respect to electricity infrastructure in industrial parks, substations
in Iganga, Luzira, Mukono and Namanve have been completed, which will
enable increased consumption of electricity. With respect to power
distribution, the Distribution Concession with Umeme Limited will be renegotiated
and extended to ensure further investment, and also lower
electricity tariffs.
78. With the rate at which we are industrializing including the increase in
demand for power by the population for various uses, we plan to have
more power production to avoid entering into a shortage. The Ayago
(840MW), the Oriang (392MW), the Kiba (330MW) and the Uhuru (600MW)
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hydropower projects will be developed in the medium to long term, in
partnership with the Private Sector.
79. In line with our strategy to ensure power access, the Electricity
Connection Policy will continue to subsidize the cost of electricity
connections. Over 300,000 connections are targeted annually. This initiative
will realize growth in access to electricity to 30% by end of 2020, and 60%
by 2026. Furthermore, the use of renewable energy such as solar system for
lighting rural homes and for the national grid is being implemented.
Currently, 40MW of solar power has been installed nationwide, and feeds
into the national fgid.
80. Madam Speaker, Shs. 3 Trillion has been provided to the energy
sector next financial year.
(iii) Information and Communication Technology
81. Madam Speaker, in the Information and Communications
Technology sector, the total optical fibre network covers 49% of all districts
and 24% of sub counties; and all the border points. The number of internet
users has increased from 13 million in 2015 to 18.8 million in 2017 translating
to a penetration rate of 45.4%. 297 Government services have been
automated, 71 of these being provided online. The automation of
Government services has led to a reduction in processing times and an
improvement in service delivery.
82. Madam Speaker, the National Backbone Infrastructure for ICT will be
eventually extended to cover all districts. In addition, internet costs will be
reduced through the implementation of the new national broad band
policy. The policy will compel Telecommunication Companies to provide
services to people countrywide. This will enhance improved service delivery
both in Government and the Private Sector.
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83. Madam Speaker, Shs. 146.2 Billion has been provided next financial
year to the ICT sector.
III. HUMAN CAPITAL DEVELOPMENT
(i) Education, Skills Training and Sports
84. Madam Speaker, the provision of universal primary and post primary
education has led to 92% of all parishes and 71% of all sub-countries having
a Government aided primary and secondary school respectively. All major
regions of the country have a public university. Consequently, the literacy
rate of persons aged 10 years and above currently stands at 74%.
85. During financial year 2018/19, scholastic materials were distributed to
all public primary schools, improving pupil to book ratio from 14:1 to 2:1.
Traditional secondary schools of Kyenjojo, St. Balikudembe Mitala Maria,
Kigezi College, Sir Samuel Baker and Ntare School were extensively
rehabilitated. Teacher absenteeism at UPE Schools in 20 pilot districts has
reduced from about 15% in 2015 to 4% in 2019 with the use of biometric
finger print readers.
86. In terms of skills training, critical infrastructure for technical and
vocational training has been built. Currently, 55% of all districts have
technical and vocational institutions. Consequently, enrolment into
Business, Technical and Vocational Training (BTVET) institutions now stands
at 129,000. Centers of excellence have also been built at Uganda
Technical Colleges at Elgon – for civil works and building technology; Lira –
for drainage, bridges and road construction; Bushenyi – for food
manufacturing and food processing; and Bukalasa Agricultural College –
for crop and animal husbandry. Technology incubation centers where fresh
graduates can translate business ideas into viable business enterprises,
have been established at Mbarara, Gulu and Makerere public universities
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87. In Sports, the construction of the national high altitude centre in
Kapchorwa is 68% complete and the Nakivubu stadium is undergoing reconstruction.
I congratulate the Uganda Cranes for qualifying to the
African Cup of Nations for the second time running.
88. During the next year the following interventions in formal education
will be undertaken:-
i) Improve instructional practice, especially for early grades, in the use
of reading materials, to enhance early grade numeracy and literacy;
ii) Improve teacher monitoring and inspection by rolling out biometric
finger print readers to improve school teacher attendance and
eliminate absenteeism;
iii) Enhance school management, accountability and learning
conditions including school classrooms, offices, water and sanitation
facilities, and teacher housing;
iv) Establish and enforce minimum standards on teacher numbers,
instructional materials, classrooms and sanitary facilities across
schools.
v) Operationalize seed secondary schools currently under construction
with adequate staffing and other necessities.
vi) Provide Technical institutions with adequate instructors and
instructional materials and guided curriculum to meet market
demands.
89. Madam Speaker, Shs. 3.4 Trillion has been provided to the Education
sector next financial year.
(ii) Health
90. Madam Speaker, in the Health sector continued progress has been
registered in disease prevention and treatment; provision of essential
medical supplies and the development of critical health infrastructure. For
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instance, malaria prevalence among children under five has reduced
significantly from 30% in 2015 to 17% in 2018, majorly as a result of the
distribution of 26.5 million Long Lasting Insecticide Nets and indoor residual
spraying undertaken in 26 districts in east and northern regions. Antiretroviral
Therapy coverage has improved from 73% in 2016/17 to 86% this year,
contributing significantly to treatment of HIV and reduced mother to child
transmission. Preventive interventions including immunizations have
improved, with measles immunization coverage, for example, increasing to
88%.
91. Madam Speaker, as a result of equipping and improved staffing at
health facilities, health service provision has improved at all levels. For
instance, 81 Health Center IVs offer Caesarean Section and blood
transfusion out of a total 186 centers. In addition, the number of maternal
deaths recorded at health facilities has also reduced by 30% from 148 per
100,000 in financial year 2016/17, to 104 per 100,000 deliveries this year.
Health worker staff attendance has improved from 51% in June 2016 to 93%
in February 2019 in 20 pilot districts where biometric finger print readers are
used to monitor staff attendance.
92. In terms of regional and national health infrastructure, the
construction, expansion, rehabilitation and equipping of Mulago National
Referral Hospital and its transition into a super- specialized facility is at 97%
completion and will be commissioned in December, 2019. The construction
of a 320-bed Specialized Women and Neonatal Hospital at Mulago
National Referral Hospital was completed and commissioned in November,
2018. It is functional and offers first class services to Women and new borns.
The specialized Regional Centre for Pediatric Surgery Hospital is under
construction in Entebbe and will be commissioned by December, 2019.
Kawolo General Hospital has been rehabilitated and will be commissioned
in July, 2019, while the rehabilitation of Busolwe Hospital will commence
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next financial year. These projects will also address reproductive health, in
addition to provision of Emergency care.
93. Madam Speaker, in the next financial year, the following interventions
will be prioritized:-
i) Improve the functionality of Lower level health facilities by providing
additional resources for operations and upgrading 124 Health Centre
Twos (HC IIs) to Health Centre Three (HCIIIs) in 99 Local Governments.
This is in line with the NRM Manifesto of having a Health Centre III in all
the sub-counties.
ii) Streamline the health referral system to reduce pressure on superspecialized
Mulago National Referral Hospital.
iii) Construct staff houses and maternity wards in 81 health centers
supported by the World Bank Reproductive Maternal Child Health
Services Improvement programme.
iv) Improve supply of medicines and health supplies and strengthen
controls for more efficient Drug Management across the country.
v) Improve human resources for health by training local health
professionals, and strengthening Village Health Teams (VHT).
94. Madam Speaker, Shs. 2.6 Trillion has been provided to the Health
sector next financial year.
(iii) Nutrition
95. Madam Speaker, to address malnutrition and the significant
prevalence of stunting in children and anemia among expectant mothers,
the Education, Health, Agriculture, Gender and Social Development
ministries will be jointly tasked to implement the following measures starting
next financial year:
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i) Ensure industrial food fortification with vital nutrients for major staples
and cooking oils consumed in public institutions such as schools,
hospitals and the country’s security forces.
ii) Require all schools to establish and maintain vegetable gardens for
both educational purposes and as a source of vital nutrients in school
diets.
iii) Revitalize nutritional education conducted by Village Health Teams;
Community Development Workers and the public and private media.
iv) Train and support small-scale millers with appropriate technologies to
enable food fortification; as well as enforce regulatory food
fortification standards
96. These interventions will require the revision of the Uganda Nutrition
Action Plan, and the prioritization of Food and Nutrition Security in the NDP
III.
(iv) Safe Water and Sanitation:
97. Madam Speaker, the following progress was registered in safe water
provision and sanitation during the financial year now ending:-
i) Rural water coverage is now at 71%, while the urban water coverage
stands at 80%.
ii) 38,200 villages representing 66% of the total villages in the country
have been served with clean water
iii) Rural sanitation coverage stands at 79%, while sanitation coverage in
urban areas is at 87.4 %.
98. Madam Speaker, during next financial year, the following
interventions will be undertaken in safe water provision and access to
sanitation:
i) Extending piped water systems and environmentally friendly
waterborne toilet facilities.
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ii) Construct sewerage treatment plants and ecofriendly toilet facilities
in rural growth centers.
iii) Undertake countrywide rehabilitation of water facilities including
wells, valley tanks/dams, shallow wells and boreholes, and
iv) Strengthen the operation and maintenance of water facilities in
collaboration with water user committees.
99. Madam Speaker, Shs. 1.1 Trillion has been provided to the Water and
Environment sector next financial year. The allocation will be spent mainly
on:- (i) provision of water for production (Shs. 218.5 Billion); (ii) Access to
safe water in rural communities (Shs.100.9 Billion), and (iii) Access to safe
water in urban areas (Shs. 463.1 Billion).
IV. Maintaining Peace Security and Improving Governance
100. Madam Speaker, the maintenance of Peace, Security, law and order
has laid a strong foundation for economic growth and development in
Uganda over several decades. Improved Governance and Public
Administration Management has been registered, notwithstanding
challenges such as regional global threats including terrorism, money
laundering and corruption particularly in the public service; and
constrained effectiveness of our judicial system that faces case backlog.
101. In order to maintain Peace and Security, and Good Governance, the
following interventions will be implemented by Government over next
financial year and the medium term:-
i) Continue to professionalize the UPDF through equipment and
training. To this effect, security has been allocated an additional Shs.
1,500 Billion to enhance its capacity.
ii) Commence the implementation of the Electoral Roadmap for the
2021 General Elections in pursuit of democracy and good
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governance for which Shs.223 billion has been allocated through the
responsible institutions.
iii) Continue to strengthen anti-corruption institutions, policies and
systems in order to crackdown on corruption in public service,
minimize fraud and money laundering and financing of terrorism in
the country.
iv) Enhance efficiency in justice system by addressing case backlog by,
among others, through: automation of case management, roll-out
plea-bargaining, mediation, and small claim procedures. I have
provided the Judiciary with an additional Shs. 53 billion.
v) Commence construction of the Supreme Court, for which Shs. 20
billion has been provided, as a start.
vi) Enhance pay for judicial officers, state attorneys and prosecutors for
which Shs. 22 billion has been provided.
vii) Fast track implementation of Safe City infrastructure by rolling out
installation of CCTV to municipalities and urban centers.
viii) Reduce Prison congestion by operationalizing Kitalya mini-max prison;
and 5 other reception centers. The National Community service
programme will also serve as an alternative to incarceration, and
ix) Install electronic gates and kiosks at major border points, including
Malaba, Busia, Katuna, Mutukula, Atiak and Mirama Hills.
Improving Public Investment Management and Public Sector Effectiveness
102. Madam Speaker, in order to strengthen the Public Investment
Management System (PIMS) in the country, Government has adopted the
following measures:-
i) Require all projects under preparation to adhere to the Public
Investment Management System (PIMS) framework, to ensure
alignment to the National Development Plan and are socially and
economically viable.
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ii) Fully roll out implementation of the online Integrated Bank of Projects
(IBP) system, and
iii) Prioritize allocation to ongoing projects to ensure their completion on
time, within budget and scope.
103. Madam Speaker, we will continue to undertake joint portfolio reviews
on all ongoing projects with development partners and civil society to
assess project implementation. These reviews enable identification of
reasons for slow implementation, and development of remedial actions.
104. Madam Speaker, the following measures to enhance the
effectiveness of public sector will also be implemented:-
i) Introduce the Electronic Government Procurement (e-GP) System to
improve efficiency, transparency and accountability in public
procurement.
ii) Launch the Resource Enhancement and Accountability Programme
(REAP) which requires strengthening of transparency and
accountability in Public Finance, among others.
iii) Complete the rollout of the Integrated Financial Management
System (IFMS), Treasury Single Account Framework and the e-cash
solution to all Government departments, at Local Government levels,
to enhance efficiency, transparency and accountability.
iv) Enhance asset management in Government for greater economy
and efficiency.
F. FINANCING STRATEGY FOR FINANCIAL YEAR 2019/20 AND THE MEDIUM TERM
105. Madam Speaker, the Financing Strategy for the next financial year
and the medium term, is underpinned by the recently developed Domestic
Revenue Mobilization Strategy that seeks to enhance Uganda’s revenue.
The Financing Strategy is also anchored on a prudent Debt Financing
Strategy consistent with a sound fiscal and monetary policy framework.
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Domestic Revenue Mobilization Strategy
106. Madam Speaker, the Domestic Revenue Mobilization Strategy will
strengthen tax administration and restore public confidence in the tax
system. The strategy aims to raise the ratio of revenue to GDP ratio to 18%
over a five year period. Therefore, the following interventions will be
implemented over the next five fiscal years:-
i) Review tax policies for greater simplicity, efficiency and sustainable
revenues, taking into account citizens welfare and regional
integration, bilateral and multilateral commitments.
ii) Involve taxpayers more fully into the tax policy formulation process, to
restore public confidence in the tax system.
iii) Promote an attractive business environment to potential investors,
including the provision of a business-friendly tax environment, and
eliminating distortions to private sector investment decisions
iv) Support investment in human capital by granting incentives to
businesses which provide apprenticeship in priority sectors,
accredited training and education based at the workplace
v) Eliminate revenue leakages and enforce tax obligations by reexamining
rules and restricting tax exemptions to those that have
significant public good.
vi) Enhance Uganda Revenue Authority’s administrative efficiency
through additional staff recruitment, better training, and
modernization and expansion of ICT capacity.
vii) Enhance compliance through registration, improved taxpayer
services and education.
viii) Develop a simplified tax regime for small and medium enterprises,
including informal sector businesses to encourage tax compliance,
while preserving Uganda’s entrepreneurial spirit; and
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ix) Strengthen the revenue-raising capacity of Local Governments by
broadening the range of revenue instruments available to them, and
make them less dependent on Central Government transfers.
Revenue Projections
107. Madam Speaker, domestic revenue projections for next financial
year amount to Shs. 20,449 billion. Of this, tax revenues amount to Shs.
18,877 Billion, while Non-Tax revenues (NTR) to Shs. 1,571 Billion.
108. Madam Speaker, next financial year, URA will collect all Government
revenues including Appropriation in Aid (AIA). For Government
departments that have been collecting Appropriation in Aid, appropriate
budget should be undertaken and resources shall be dully allocated. The
revenue target for next financial year, including AIA, therefore translates
into a revenue effort of 16.8% of GDP, in the NDPII target of 16% for financial
year 2019/2020.
109. Madam Speaker, Parliament approved tax measures for financial
year 2019/20 which will come into effect from 1st July 2019. Modest
adjustments to tax legislation have been made to streamline incentives
and protect viable and competitive sectors. Tax laws have also been
amended to support compliance, enhance competitiveness in the region,
while closing loopholes that may lead to revenue leakage. The details of
these measures are contained in the respective Tax Amendment Acts.
110. Madam Speaker, the following are some of the highlights of the tax
measures:-
i) The Excise Duty Act was amended to provide for registration of
manufacturers, importers and providers of excisable goods and
services. This will also reinforce other tax reforms like digital tax stamps.
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ii) Income derived from leasing or letting facilities in industrial parks has
been exempted from income tax for 10 years from the date of
commencement of construction.
iii) Withholding tax on long term bonds has been reduced from 20% to
10% to encourage investment in long term Government securities but
at the same time reduce financing costs to Government.
iv) The Stamp Duty Act was amended to provide for a uniform stamp
duty payable on bank guarantees, insurance performance bonds,
indemnity bonds and similar debt instruments in order to reduce the
cost of debt financing and ease tax compliance and administration.
v) In addition to VAT exemption on agro-processing, rice mills and
agricultural sprayers have also been exempted from VAT.
vi) Introduction of a 6% withholding rate for VAT.
vii) To promote investment and industrialization, import tariffs on products
which are locally manufactured have been increased.
Tax Administrative Reforms
111. Madam Speaker, effective tax administration is necessary for
sustainable revenue collection. The Uganda Revenue Authority will
therefore strengthen its capacity to effectively collect taxes. This will involve
recruitment of additional staff, skills development in specialized areas such
as audit, investigations and risk analysis; and the modernization and
expansion of ICT capability.
112. Madam Speaker, the following interventions in tax administration will
be implemented next financial year:-
i) Use of Electronic Fiscal Devices (EFDs) to improve compliance in VAT;
ii) Use of a digital tax stamps solution to avert under-declaration of
excise and customs duties;
iii) Enhance rental income tax collection;
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iv) Purchase and deploy Scanners at major ports of entry into Uganda,
to facilitate faster clearance of goods and curb mis-declaration;
v) Expand deployment of the Electronic Cargo Tracking system to
eliminate dumping of imports in the Ugandan market.
Resource Envelope for FY2019/20
113. Madam Speaker, the Resource Envelope of Financial year 2019/20
totals Shs.40,487.9 Billion of which Tax and Non-Tax revenue amounts to
Shs.20,895.6 Billion. Domestic Financing amounts to Shs 2,829.8 Billion; while
External Financing consists of Project Support of Shs. 9,433.6 Billion and
General Budget Support Shs. 675.2 Billion. Domestic re-financing amounts
to Shs. 6,452.6 Billion and Appropriation in Aid is Shs. 201.1 Billion.
Budget Deficit and its Financing
114. Rt. Hon Speaker, next financial year, the budget deficit as a ratio of
GDP is projected at 8.7% compared to 5.8% this year. This is a result of
increased in spending on infrastructure projects such as oil and tourism
roads, the National Airline and power transmission lines. This deficit, as usual,
will be financed largely through external borrowing, and to a lesser extent
through domestic borrowing.
Public Debt
115. Madam Speaker, the stock of Government debt rose to Shs. 42,760
Billion (equivalent to US$ 11.5 Billion) as at end-December 2018. At end-
December 2017, it was Shs. 37,208 Billion (equivalent to US$ 10.2 billion).
External debt constitutes is 66.5% of the total debt and this amounts to Shs.
28,427 billion (equivalent to US$ 7.7 Billion). Domestic debt constitutes the
balance.
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Debt Sustainability
116. Madam Speaker, I would like to assure the country that our debt
remains sustainable in the medium to long term. As of December 2018, debt
was at 41.8% of GDP in nominal terms and 31.7% of GDP in present value
terms, well below the threshold of 50% Debt to GDP ratio contained in the
Charter for Fiscal Responsibility and the East African Community (EAC)
Monetary Union Protocol. Uganda compares very favourably with its peers,
because most of our debt has been contracted on concessional terms. Our
debt has financed priority and productive sectors which will generate
positive economic returns.
117. Government will continue to exercise caution while taking on new
debt. The rate of debt accumulation is expected to reduce in the medium
term, as flagship infrastructure projects are completed. To ensure Debt
Sustainability in the short, medium and long term, Government will:
i) Continue to prioritise borrowing for mainly infrastructure development
projects to address the existing infrastructure gaps for industrial
enhancement, power transmission and distribution, transport, and
water for production;
ii) Improve loan absorption as well as effective utilisation of the
borrowed resources; including investing in export-oriented areas to
boost exports which also increase our capacity to service external
debt;
iii) Apply more stringent vetting of projects to be financed by loans,
including prioritizing only projects that enhance the productive
capacity of the economy, demonstrate high economic returns, and
help generate future growth.
iv) Minimize the financing risks arising from commercial loans and
associated volatility in exchange rates and interest rates.
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v) Enhance domestic revenue mobilisation to reduce the levels of
Government borrowing.
118. Madam Speaker, while debt financing is used to finance critical
public projects, some non-patriotic members of the society unfortunately
continue vandalizing project assets, mainly in the electricity and transport
sectors. This does not only undermine the generosity of the tax payers from
the countries of our development partners but also curtails effective
utilization of the assets when the projects are completed. I therefore appeal
to the public and citizens of this country to respect these assets and desist
from acts of vandalism.
G. CONCLUSION
119. Madam Speaker, the Financial Year 2019/20 Budget seeks to deliver
inclusive growth and development for the vast majority of our people. It
seeks to further build on the significant gains we have achieved in socioeconomic
transformation, by ensuring gainful jobs, increased incomes and
greater wealth for Ugandan households.
120. Madam Speaker, the NRM Government has built a firm foundation for
all to seize boundless opportunities. I implore the youth and women of
Uganda to seize opportunities that will build their skills, permit them engage
in productive work and also establish business enterprises, where they can.
I call upon farmers to cooperate and participate in the process of agroindustrialization
in order to fully benefit from higher rewards to their efforts.
This will enable households to improve production and productivity. As a
consequence, incomes will rise, and new jobs will be created. This will lead
to sustained growth and development of this beautiful Uganda.
121. I beg to submit.
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