MUCH OF THE BUDGET ISN’T OURS! Here’s the Problem with Uganda’s Shs72 Trillion Budget

Civil Society Organizations (CSOs) in Uganda have given their take on the country’s approved national budget for the FY2024-2025. After President Yoweri Museveni’s State of the Nation Address delivered last week, government will present the National Budget on June 13, 2024.

Although it is the highest in Uganda’s history, the Shs72tn budget has attracted concerns from civil society organizations. On June 09, 2024, the directors of several CSOs addressed reporters in Kampala, detailing what they think the problem with the FY2024-2025 budget is. For The Pearl Times, SAMUEL KAMUGISHA writes on the key concerns from CSO leaders

NATIONAL DEBT

Uganda’s debt stood at Shs96.1tn – Shs44.6tn from domestic lenders and Shs52.8tn from foreign lenders – as at June 2023, according to the Auditor General’s report. The total debt is higher than next year’s financial year’s budget, meaning that even if Uganda were to sacrifice the entire budget, it would not be enough to pay off the debt.

According the budget estimates, Uganda will spend Shs41.7tn on debt repayment and financing. This will be 57 per cent of the Shs72tn budget – above a half of the total budget.

Government will only remain with about Shs31tn for service delivery after paying debt. Sophie Nampewo from Oxfam Uganda put the situation more bluntly, thus “a big portion of this budget is not ours. We are paying interest on debt.”

The country’s estimated tax collection of Shs32tn would be Shs9tn short of meeting the debt repayment and financing obligation. Looked at another way, daily, government will spend Shs114bn on debt repayment and financing.

Jane Nalunga, the Executive Director of the Southern and Eastern Africa Trade, Information and Negotiations Institute (SEATINI), which works on trade, fiscal and investment related matters, says the debt has reached a “historic level.”

“My plea to Government is to rethink how to get the economy out of the debt trap we are in and make sure we have a vibrant economy,” said Nalunga.

“The increasing indebtedness has deprived the country of the much-needed resources to finance social service delivery, development projects and aspirations.”

Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group (CSBAG), expressed concern over government’s failure to use the money borrowed. This makes taxpayers part with billions in commitment fees.

“Even in the current challenges that we are having, we are unable to absorb the available resources given to sectors and the consequence is that service delivery is affected.  We have Shs14tn in undisbursed loans yet government continues to pay commitment fees. Commitment fees are like fines paid for not using the money you borrowed,” explained Mukunda.

To cure excessive borrowing and the debt trap, the CSOs have proposed cuts on expenditure they consider wasteful and to review measures that make government miss revenue that would otherwise be used to finance the budget instead of borrowing.

“We are going to remain in this cycle of borrowing if Government doesn’t revise the wasteful expenditures such as travel allowances, the tax exemptions and illicit spending,” noted Angella Nabwowe, the Executive Director of Initiative for Social and Economic Rights (ISER ), an organization seeking full recognition, accountability and full realization of social and economic rights.

You can read our previous story on some of the items considered wasteful expenditure in the budget Here.

Nampewo from Oxfam in Uganda urged government to invest in the economy because “if government isn’t investing in the economy, the taxpayers will be burdened.”

As a way of improving tax enforcement, she also called on government to invest in trainings such as for taxpayers from whom it hopes to collect Shs32tn to finance less than a half of the Shs72tn budget for the next financial year.

AGRICULTURE

Food Rights Alliance (FRA) Executive Director Agnes Kirabo was concerned that the agricultural sector, a key part of the agro-industrialization program, would suffer budget cuts in the FY2024-2025.

With non-wage budget cuts for key institutions like National Agricultural Research Organization (NARO) and Dairy Development Authority (DDA), Nampewo is worried that “this threatens the ability to guarantee food security and nutrition.”

SEATINI’s Nalunga wondered why coffee, a key cash crop that contributes significantly to the economy, was only getting Shs13.9bn in the FY2024-2025 budget.

Data from the Uganda Coffee Development Authority (UCDA) indicates that Uganda earned $952m (about Shs3.6tn) from coffee exports in the November 2022-October 2023 period.

TRADE

Nalunga further noted that such little allocations as has been given to the coffee sector and the Ministry of Trade are “troubling given the EU’s stringent directives on key issues like climate change, non-compliance could pose significant challenges.”

The government has cut the trade ministry’s budget from Shs170bn to a little over Shs113bn. Even when she believes “we can trade our way out of poverty,” the trade ministry budget cut, about Shs57bn, is “concern.”

HEALTH

Government has allocated Shs3tn – about 4 per cent of the budget – to the health sector. This is 11 per cent below Uganda’s commitment to the Abuja Declaration (2001) where government should be injecting at least 15 per cent of its budget to improving the health sector.

Also, major concerns on a national health care scheme and mental health worry the CSOs. In terms of government-led health insurance schemes, Uganda lags behind most of its East African Community (EAC) counterparts, including Rwanda, Kenya and Tanzania.

“Is government really committed to providing Ugandans a national health care scheme like the rest of the peers in EAC? Ugandans continue to pay heavily in the out of pocket expenditure,” said Fatia Kiyange, the Executive Director of the Center for Health, Human Rights and Development (CEHURD).

Kiyange was also unhappy that government was “not prioritizing mental health issues in the country” as demonstrated by the reduction in the budget allocation for Butabika National Referral Hospital.

In recent years, officials from Butabika Hospital, the country’s largest mental hospital, have pleaded with Parliament to increase their budget to enable them handle increasing numbers of patients with mental health conditions. Recent reports have suggested an increase in mental health cases, with some being attributed to the Covid19 pandemic and how it disrupted the economy.

Kiyange was also concerned that most of the health sector budget will go into infrastructure development and less into human resources.

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