During hard times such as these, any review of the national budget goes back to the basics of national budgeting. The budget is a contract between citizens and state, showing how resources are raised and allocated for the delivery of public services. The budget is a central policy document of government, showing how it will prioritize and achieve its objectives. Alongside other government instruments such as laws, regulations, the budget aims to turn plans into reality. During a pandemic, the question is: what are the main aspirations of the citizens?
On Thursday while listening to the reading of the budget, I called a research colleague who is an economist to ask for clarification on some technical items in the budget. Her initial response was that she had not tuned in because she was in hospital having taken a relative who had contracted COVID-19. The outbreak of COVID-19 has disrupted everyone globally, disorganizing normal human life, governance routines and budgeting rituals. The priority on citizens’ minds is health and economic survival. These are not normal times and therefore the main question to ask about a national budget during such a time, is whether it is the right response to a pandemic situation.
Our analysis ought to consider President Museveni’s remarks made on 10/06/2021 after the reading of the budget. He gave an analogy of the existence of a struggle between “wealth-creators” and “parasites”. One would have thought that these ideas from the president would have distilled into the actual budget presented by Hon. Amos Lugoloobi. In a time of a combined health and economic crisis caused by COVID-19, the budget should have placed emphasis on cushioning and encouraging the local “wealth-creators” within the country. The local entrepreneurs are left to fend for themselves with almost mention of stimulus packages for them. The State Minister projected that Uganda’s economy will grow by 3.3% in the 2021/22 financial year but this optimism has to be based on corresponding investments.
Instead, the 2021/2022 budget has added new taxes on internet data, increased rental tax and added a UGX 100 levy on fuel. The budget added excise duty of 12% on airtime, value-added services and internet data excluding data for provision of medical services and the provision of education services. This may turn to be misguided because many SMEs are struggling to transfer their transactions to the internet given the health risk of person-to-person transactions. Research shows that the Ugandan ICT sector, where internet data is most needed, is growing at a rate of over 25% per annum. The sector contributes more than 6.2% to the nation’s GDP and is a major contributor to national revenue. The sector attracts over USD $73 million in investment and employs over 1 million people.
This year’s budget is at 44.7 trillion UGX (12.61 USD billion) and has claimed to be program based rather than sector based according to the NDP-3. It has allocated 17.2% (7.7 trillion) to Human Capital Development; 15.4% (6.9 trillion) to Governance and Security; 11.4% (5.1 trillion) to Transport and Infrastructure; 3.7% (1.7 trillion) to agricultural industrialization initiative; 2.8% (1.2 trillion) to Regional development; 2.6% (1.15 trillion) to Sustainable energy development; 0.8% (358.5 billion) to innovation and technological development. All these allocations indicate a lack of a robust stimulus package for local entrepreneurs which could guarantee quick economic recovery during a pandemic. The economic recovery is almost entirely entrusted with state organs; but in a private driven economy this seems overreliance on the state organs.
The pandemic has slowed economic activity. Real gross domestic product (GDP) growth fell to 2.9% in FY20, from 6.8% in FY19 as major trade partners faced a recession, travel restrictions choked the tourism industry, and the sharp decline in world oil prices stifled foreign direct investment inflows. These areas that the government should put emphasis on in order to fasten the resilience and recovery of the country health sector and economy.
It is commendable that the budget has allocated 560 UGX billions ($159 million) to purchase of COVID-19 vaccines. It plans to improve 43 health facilities, recruit additional staff and construct and equip specialized health institutes. The National Medical Stores (NMS) budget has been increased from sh420.3b this fiscal year to sh600.3b in the 2021/22 financial year. But we know that the biggest challenge in the procurement of medical supplies has been the loss incurred through corruption and disappearance of drugs and supplies which do not reach the local health facilities.
Kanakulya Dickson
The writer is a lecturer at Makerere University
