Thursday, March 31, 2011
IT MAY BE A MIRACLE FOR THE 2010/2011 UGANDA BUDGET TO HAVE 30% PERFORMANCE
Syda Bbumba Minister of Finance!
Many people saw the 2010/2011 Uganda Government Budget as meant to will over votes for the Museveni Government which according to some of us would have not lived beyond the 2006 but the militarism. When we get to budget performance, it is not likely that the budget may have 30% performance, that is achieving its objectives. I wish someone gave us the actual position 'not the cooked one'. What people expected may be better termed as 'air supply'. It is now two months to the close of the financial year.
William Kituuka Kiwanuka
Uganda 2010/2011 Budget Speech delivered by Finance Minister Syda Bbumba
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THE REPUBLIC OF UGANDA
BUDGET SPEECH for Financial Year 2010/2011
Uganda National Budget case
Theme: Strategic Priorities to Accelerate Growth, Employment and Socioeconomic Transformation for Prosperity.
DELIVERED AT THE MEETING O F THE FIFTH SESSION OF THE 8 PARLIAMENTT OF UGANDA ON
THURSDAY, 10 JUNE, 2010 BY
HONOURABLE SYDA N. M. BBUMBA (MP)
MINISTER OF FINANCE, PLANNING AND ECONOMIC DEVELOPMEENT
Your Excellency the President of the Republic of Uganda,
Your Excellency the Vice President
The Right Hon. Speaker of Parliament,
The Right Hon. Deputy Speaker of Parliament,
Your Lordship the Chief Justice,
Honourable Members of Parliament,
1. I beg to move that Parliament resolves itself into a Committee of Supply for consideration of:
i. The Revised Revenue and Expenditure Estimates for the Financial Year 009/2010; and
ii. Proposals for the Estimates of Revenue and Expenditure for Financial Year 2010/2011.
2. Mr. Speaker Sir, Article 155(1) of the Constitution requires the President to cause to be prepared and laid before Parliament, estimates of revenue and expenditure for the next financial year. I am accordingly performing this duty, with pleasure, on behalf of His Excellency the President. I wish to thank His Excellency the President for giving me yet another opportunity to deliver the budget speech on
3. Mr. Speaker Sir, allow me to take this opportunity to express my gratitude to His Excellency the President of the Republic of Uganda, Yoweri Kaguta Museveni, for his visionary and tested leadership which has spearheaded the return to peace throughout the country and the reconstruction of the economy. Since 1986 His Excellency has overseen the management of the economy that has graduated from
one of despair, to one of great hope and positive aspiration.
4. Mr. Speaker Sir, due to sound economic management under the NRM Government, the economy has continued to grow at a pace averaging 8.4 per cent since 2006. This solid performance is even higher than the remarkable economic growth that Uganda has experienced since 1986, which has led to a six-fold increase in the size of the economy that now stands at Shs. 34.2 Trillion.
The economy has been transformed from a largely agriculture-based one, to one spurred by significant industrial and service growth. The industrial sector has increased its share in GDP from 9.9 per cent in 1986 to 24.5 per cent in 2009; the service sector has increased from 36.1 per cent in 1985 to 50.3 per cent, while the dominance of the agricultural sector has declined from 53.9 per cent in 1985 to
14.9 per cent in 2009 indicating the extent of transformation. Bringing inflation down and keeping it to single digit from the peak when annual headline inflation rates averaged about 153 per cent between 1986-1990’s is yet another major achievement of the NRM. Even skeptics cannot justifiably belittle the significant progress our economy has made under the sound economic management of the
III. STRUCTURE OF THE BUDGET STATEMENT
5. Mr. Speaker Sir, the structure of the budget I am presenting today is as follows:
i. First, I will highlight the Economic and Sector Performance in line with the policy pronouncements made in my Budget Speech for the Financial Year 2009/10;
ii. Second, I will outline some of the emerging trends in the domestic, regional and international economy and the outlook for the Financial Year 2010/11;
iii. Third, I will focus on the Budget Strategy and Priorities for the Financial Year 2010/11; and
iv. Finally, I will announce the Proposed Taxation and Revenue Measures and outline the Way Forward.
IV. ECONOMIC AND SECTORAL PERFORMANCE FOR THE FY 2009/10 AND OUTLOOK FOR FY 2010/11
Performance of the Economy
6. Mr. Speaker Sir, a year ago, I presented a budget strategy which broadly focused on improving the business climate of the country and revitalizing production through a range of strategic interventions. I am glad to report significant progress in the following areas:-.
7. Mr. Speaker Sir, the economy is estimated to have grown by 5.8 per cent in real terms in 2009/10, compared to 7.2 per cent growth recorded in 2008/09. This year’s performance is in line with the Eastern African region average growth rate of 5.75 per cent, which is the highest in Africa’s regions. This shows the resilience of the region to economic shocks. Honourable Members may recall that at this time last year, we were concerned about the impact of the global economic crisis on our economy, which has had a secondary lagged effect. The slowdown in economic growth has also been attributed to the drought experienced in most parts of the country, rising oil and fuel prices.
8. Mr. Speaker Sir, the economy has experienced inflationary pressures since 2008 due to events which led to double digit inflation for the first time since Financial Year 1991/92. These events ranged from the 2008 floods in the Eastern region, rising region-wide demand for food crops and regional disturbances, as well as the rise in global prices of oil and food, which exerted significant upward pressure
on commodity prices. The country experienced high fuel prices in March this year due to shortages arising from the maintenance of the oil pipe line from Mombasa to Eldoret. This resulted in higher fuel pump prices and increased costs which were passed on to consumers through production and transport prices.
9. Mr. Speaker Sir, in response to these developments, Government prudently implemented structural and anti inflationary policies in collaboration with Bank of Uganda. Government’s timely interventions in the Agricultural Sector, together with the increased regional trade, also led to greater agricultural productivity and output, keeping food inflation in check.
10. Mr. Speaker Sir, as a result, inflation has since reverted to single digit from 13.9 per cent last financial year, to 4.4 per cent by the end of May 2010.
11. Mr. Speaker Sir, the exchange rate appreciated from over Shs.2,100 in July 2009 to Shs.1,874 in November due to increased proceeds from exports, increased inflows of foreign exchange from FDI and remittances from abroad.
However, it depreciated to Shs.2200 in May 2010 driven by increased demand for dollars, together with the depreciation of the Euro against the dollar. The turmoil in the Euro Zone also has contributed to the strengthening of the dollar against other currencies as global markets continue to shift into dollar denominated assets.
12. Mr. Speaker Sir, the performance of exports of tea, tobacco and fish sectors was over 25 per cent higher in this Financial Year than in the previous financial year. Ninety-Six Thousand (96,000) metric tons of tobacco was exported, compared to Twenty-Six Thousand (26,000) metric tons in the previous year. Recently, the volcanic ash cloud which affected Europe caused an estimated 35 per cent drop in flower exports and 6 per cent reduction in fish exports in the month of April 2010. However exports in both the flowers and fish sectors have since rebounded. Import growth has stagnated due to fall in private sector imports. The total import bill for the twelve months up to end of March 2010 was around US $3.9 billion, down by 6.1 per cent compared to the previous year.
13. Mr. Speaker Sir, Uganda is the only country in the East African region which did not resort to the International Monetary Fund for balance of payments support during the global economic crisis. This was due to the strength of our international reserves position, which stood at 5.3 months of imports, reflecting the sound economic management by the NRM Government.
14. Mr. Speaker Sir, the banking sector continued to support growth of businesses by increasing the range of products and services offered and by expanding the network. During the year, 21 new bank branches were opened to expand access to the banking system. The industry has managed to combine rapid expansion with financial stability. The ratio of non-performing loans remains at around 3 per
cent, which is within international standards.
15. Due to competition in retail banking, the private sector is demanding diversified banking products from the sector beyond what is covered under the existing Law. I will therefore be submitting amendments to the Financial Institutions Act 2004 to Parliament which will allow commercial banks to offer bank assurance, financial products under Islamic banking and other market responsive products, to their customers. This will allow banks to move into previously untapped markets.
16. The Rural Financial Services Strategy continued to increase coverage of services to the wider population, especially in rural areas. Government has facilitated the establishment and strengthening of the financial infrastructure of Savings and Credit Cooperative Organizations (SACCOs) and other micro finance institutions as means for financial intermediation. There are now over 1,060 sub counties, city divisions and municipal divisions with registered SACCOs, having over one million members in total. The SACCO infrastructure has generated Shs 44 billion as share capital, Shs 83 billion as savings and Shs 122 billion in their lending portfolio in the Financial Year 2009/10.
17. Mr. Speaker, Sir, technological innovations have now made it possible to extend financial services to millions outside the formal banking system. A case in point is mobile telephone money transfer services that allow mobile phone users to make financial transactions or transfers across the country conveniently and at low cost. MTN Mobile money, ZAP and M-Sente have demonstrated that low cost means that use modern technology can effectively expand the financial services frontier. Today, millions of Ugandans use mobile money to make payments, send remittances, and store funds for short periods. These innovations have illustrated how financial services can be extended to millions of people outside the formal banking sector at low costs.
18. The Bank of Uganda continues to maintain effective regulatory and supervisory safeguards to ensure that expanded access to banking is not at the expense of financial stability. Because of prudent regulation, the banking sector in Uganda has been insulated against the contagion of the toxic assets from the Global banks. I commend the Governor Bank of Uganda and his team for managing the sector efficiently.
19. Mr. Speaker Sir, Lending rates on shilling denominated loans also fell from 21.8 per cent in August 2009 to 19.6 per cent in January 2010. However, this is still higher than the EAC regional average, which is at about 15 per cent.
Government’s efforts to bring down interest rates have yielded some results that have seen yields on treasury bills decline. Government has introduced measures to bring interest rates down, such as the introduction of the Credit Reference Bureau, lowering cost of doing business, and increasing competition between banks and boosting transparency by regularly publishing bank rates and charges,
as well as maintaining macroeconomic stability and fiscal consolidation.
20. Mr. Speaker Sir, in line with the diversification process of the financial sector, the value of wealth held by Ugandans in the form of capital and equity shares has continued to grow. The Initial Public Offer (IPO) of the National Insurance Corporation (NIC), which was oversubscribed by 32 per cent, has increased the opportunity for the public to invest in the insurance sector in particular, and the
equity markets, in general. 92 per cent of shares in the NIC were bought by Ugandans. I urge companies to embrace capital markets as a source of long term financing as we broaden the equity market. This is yet another record success of the NRM Government’s Policy of Privatization of Public Enterprises, which give Ugandans an opportunity to directly own shares of Public Enterprises.
21. Mr. Speaker Sir, the Securities Central Depository which was recently launched will foster safer and more efficient clearance and settlement of securities. It will also lead to electronic trading once the Automated Trading System is in place. This computer-based trading will enable negotiations to take place between bidders anonymously, thereby reducing the cost of information exchange between participants. This system will also be linked with other East African stock markets.
22. Mr. Speaker, Sir, while our insurance service penetration is still low by regional standards and accounts for less than one per cent of GDP, we commend the effort of the industry players who have played a big role to create awareness.
As a result, the industry has registered an increase in insurance premium from Shs.129 billion in 2008/09 to 167 billion this year, dominated mainly by non-life insurance which accounts for over 90 per cent of the policies underwritten.
23. The Insurance Industry has also taken advantage of the opportunities available under African Trade Insurance (ATI) Agency and so far, the Agency has underwritten 14 projects in Uganda worth 106 million dollars in the areas of manufacturing, telecommunication and infrastructure. I therefore urge the Ugandan business community to take advantage of the insurance policies available at ATI to increase competitiveness and profitability of their businesses by hedging against insurable risks.
24. Mr. Speaker Sir, the expenditure outturn for the Financial Year 2009/10 budget is projected at Shs 6,576 billion, financed by domestic sources amounting to Shs 4,856 billion and Shs 1, 720 billion from external loans and grants. URA revenue is projected to perform better this year with a 17.6 per cent annual growth compared to the 15.6 per cent growth in the previous year. This revenue effort is equivalent to 12.5 per cent of GDP which is still low, though is a great improvement from the 4.23 per cent of revenue as a percentage of GDP, collected in 1987. Several reforms are currently being implemented to improve tax administration.
25. Mr. Speaker Sir, overall expenditure is projected to perform at about 90 per cent, the underperformance being on account of slow performance of the development budget. This low absorption is expected to be transitory, as Ministries, Departments and Agencies become more conversant with new conditions precedent to accessing funds, which include preparation of work plans, recruitment and procurement plans which are meant to enable them implement their activities in a timely manner. The new requirements were instituted by my Ministry to ensure Value for Money right from the time of disbursement of Government funds.
26. External support is projected to finance about 26 per cent of the Financial Year budget. The sectors that are expected to receive the highest support are Transport and Works, Agriculture, and Public Sector Management, which are key to growth and are complimentary sectors in the economy. Sector Performance for the FY 2009/10
27. Mr. Speaker Sir, in the budget statement of this financial year, I announced a number of measures aimed at stimulating economic growth with substantial allocations in the following areas; (i) increasing agricultural production and value addition; (ii) transport infrastructure; (iii) energy infrastructure; (iv) human resource development; and (v) peace, security and good governance.
28. For transparency and accountability, which is a cherished principle by the NRM Government, it is imperative that I present the key achievements and challenges of the Financial Year 2009/10, before I present the Budget Strategy and Priorities for Fiscal Year 2010/11.
Increasing Agricultural Production and Value Addition
29. In the agricultural sector, the budget for the FY 2009/10 set out to address the biggest constraints to agricultural production including crop pests and livestock diseases, lack of suitable inputs, appropriate technologies to increase productivity, the vagaries of weather and limited access to financial and extension services.
30. Mr. Speaker Sir, we undertook these interventions which enabled the agricultural sector to recover from the earlier slowdown in growth. This is exhibited by bumper harvests in the Financial Year 2009/10 in many parts of the country. Preliminary estimates of agricultural sector output covering cash and food crops, livestock, forestry and fisheries grew by 2.4 per cent in FY 2009/10
compared to 2.3 per cent in the previous financial year, even as falling fish stocks led to the fisheries sub-sector experiencing an annual decline of 7.3 per cent. The bumper harvest of largely maize produce, caused challenges of post harvest handling which Government is addressing.
31. Mr. Speaker Sir, the restructuring of NAADS has enabled the organization to provide better advisory services. NAADS has enabled farmers to access technologies and gradually shift from subsistence to market based activities. It supported the establishment and development of over One Thousand (1,000) sub-county farmer fora and over Sixty Thousand (60,000) technology learning sites.
During the financial year, NAADS extended direct support to about Thirty One Thousand (31,000) farmers in form of improved technologies for demonstration and expanded coverage.
32. As articulated in the State of the Nation Address by His Excellency the President, NAADS extended different technologies in crop, livestock, fisheries and apiculture to farmers. Tractor hire services were also operationalised in Teso, Lango, Acholi, W.Nile and Busoga regions. In order to increase the availability of water for production, funds were provided for the construction of bulk water facilities as well. The dams and valley tanks which were commissioned are as follows:
i. Rwenjubu in Isingiro District;
ii. Makukulu in Lyantode District;
iii. Kibanda in Rakai District;
iv. Dyangoma in Mubende District;
v. Kasejere in Kiboga District;
vi. Ajamaka in Kumi District;
vii. Atar in Apac District;
viii. Wangkwok in Kitgum District.
ix. Imeri in Kamuli District and
x. Kasiira in Kumi District.
33. Mr. Speaker Sir, for the first time, Government in partnership with Commercial Banks, established an Agricultural Credit Facility amounting to Shs. 60 billion to be lent to borrowers at interest rate not exceeding 10 per cent per annum for a maximum period not exceeding of eight years. Under this arrangement, the Banks match the Government of Uganda contribution. The objective of the Credit Facility is to facilitate farmers in the acquisition of agricultural and agro-processing machinery and equipment. To date, Shs. 54billion has been disbursed from Government and partner financial institutions investments in the following areas:-
i. Tractors, planters and other farm implements;
ii. Irrigations systems
iii. Milk processing equipment
iv. Maize and feed mills
v. Tea processing plant and machinery
vi. Refrigeration equipment for meat processing; and
vii. Flower and Horticulture equipment.
Industrialization and Value Addition
34. In order to improve business environment and competiveness of Uganda’s economy, Government set aside funds for industrialization and value addition. Through concerted efforts by His Excellency the President, Government has supported Uganda Industrial Research Institute (UIRI) to become a centre of excellence in value addition, business incubation, innovation, product and process
design, as well as technology transfer. UIRI has undertaken the following interventions, among others, as a result:
i. developed new technologies for soap production;
ii. developed machinery for paper production from banana stems and other fibers;
iii. fabricated machinery for producing feeds;
iv. developed machinery for silk processing;
v. built a variety of looms for weaving and enhanced its capacity to process bamboo into a variety of products; and
vi. Renovated and equipped a vaccine production pilot plant.
35. The above technologies have all been prototyped and are ready for commercialization. Two virtual incubation centers have been built in Lira district for peanut butter production, and in Mpigi district for fruit juice processing.
36. Mr. Speaker Sir, Government has also provided support towards new business incubation centre at Makerere University Department of Food Science to enable it equip students and new graduates of Food Science Technology with skills and knowledge in the operation and management of agro-processing enterprises in order for them to become job-makers and employers. This is being done through
i. Developing viable technologies and knowledge driven food processing and nutrition enterprises
ii. Promoting entrepreneurship amongst researchers and graduates
iii. Providing support to commercial enterprises based on technologies developed at the University.
iv. Building human capacity in agro-processing, value-addition, nutrition and entrepreneurship
37. Mr. Speaker Sir, Special Economic Zones (SEZ) have been set up in Kampala Industrial and Business Park (KIBP) Namanve, Luzira, Mbarara and Bweyogere; land for two estates in Mbale and Soroti were acquired and extra land was identified in Kasese, Masaka, Gulu, Fort-Portal, Jinja, Bukwo, Arua and Nakasongola. Graveling of 15Km roads and construction of office blocks in
Namanve was completed and 230 plots were allocated to investors.
38. The Uganda Development Corporation (UDC) which was revived as the investment arm of Government and is already playing a role in the implementation of the Soroti Fruit Processing Facility Project; the Tororo Phosphates Mining Project; and the manufacture of iron and steel from the abundant iron ore deposits in Kabale and Kisoro Districts.
39. Mr. Speaker Sir, in order to strengthen the legal framework for improving the business environment, the following acts were passed by Parliament: Mortgage Act, 2009; Trade Secrets Act, 2009; Hire Purchase Act, 2009; Partnership Act, 2009; Contract Act, 2009, in addition, the following bills are before Parliament: Companies Bill, 2009; Insolvency Bill, 2008; Chattel Securities Bill, 2008; Trade
Marks Bill, 2008; E-Transactions Bill ,2008; Computer Misuse Bill, 2008; E-Signature Bill, 2008; Industrial Property Bill, 2009 Anti Money Laundering Bill. The following draft bills are before Cabinet: Sale of Goods Bill, 2008, Counterfeits Bill, 2009; Capital Markets Amendment Bill, 2009; Free Zones bill.
40. Mr. Speaker Sir, through you I want to thank the Eighth Parliament for enacting those laws and request for the speedy consideration of the pending enabling legislation.
41. In line with the National Skills Programme, Enterprise Uganda has supported the youth to generate jobs. Over Seven Thousand (7,000) youth have benefited from ‘Business and Enterprise Start-up Tool’ (BEST) clinics in Kampala and up-country. Within six months of gaining the business and entrepreneurship skills, 60-65 per cent of the youth under the programme have been able not only
to employ themselves but have each generated one to two additional jobs.
42. Mr. Speaker Sir, during the FY 2009/10, Government continued to improve the condition of the road network through tarmacking gravel roads, rehabilitation and maintenance of the national, district and community access roads. I am happy to report that Government is making progress in the road sector. The list of tarmacked roads under reconstruction, and gravel roads being upgraded to tarmac
total 3,624 kilometers throughout the country. Some of these roads are:-
i. Kampala Northern Bypass which was completed in September 2009;
ii. Soroti-Dokolo which was completed in December 2009;
iii. Fort Portal-Bundibugyo-Lamia border; Construction commenced
iv. Completion of the design of Gulu-Atiak-Bibia/Nimule, and Ntungamo-Mirama Hill/Kagamba-Ishaka Roads, completed
v. Substantial progress towards completion of Gayaza-Zirobwe-Wobulenzi and Matugga-Semuto-Kapeeka
43. Mr. Speaker Sir the Uganda Road Fund (URF) commenced operations in January 2010 and has financed the routine maintenance of over Twenty Nine Thousand (29,000) kilometres of road, the rehabilitation of about One Thousand Two Hundred (1,200) kilometers and maintained 87 bridges. Under the District, Urban and Community Access Road (DUCAR) network, an additional Thirty One Thousand Seven Hundred (31,700) kilometers and about Five Thousand (5,000) kilometers of community access roads have been maintained under routine and periodic maintenance respectively. In order to address the slow pace of road maintenance in Kampala City, with effect from the third quarter of financial Year 2009/10, the five (5) Divisions of Kampala City Council started receiving road maintenance funds directly from the Uganda Road Fund. This will continue as a means of improving road maintenance in the city.
44. Mr. Speaker Sir, I am happy to report that the power supply has considerably increased since mid-2005. As stated in the State of the Nation Address, Government’s major priority in the energy sector remains focused on increasing generation and transmission capacity through construction of large and mini hydro power plants. The construction of the 250 MW Bujagali Hydropower Project is on course and will be completed as scheduled. The feasibility studies for the 700MW Karuma and the100 MW Isimba Hydropower projects are also underway. The 13 MW Bugoye renewable energy project was also completed and commissioned during the financial year. Load shedding is currently at a minimum, and only localized due to network overloading.
45. Mr. Speaker Sir, for emphasis allow me to restate the list of rural electrification schemes which were articulated in the State of the Nation Address under the Rural Electrification Programme. The following schemes were completed during the FY 2009/10; Corner Kilak-Patongo-Adiang-Abim-Kiru with tee-offs to Pader and Kalongo, Iceme-Oyam district headquarters and environs, restoration of Soroti-Kalaki-Lwala power line, Kapchorwa-Kaprooni-Kelle Farm Institute, restoration of Kidongole-Bukedea-Masanda in Mbale,
Bumbeire in Bushenyi, Atari in Apac; Buwekula-Musika-Kanyogoga in Jinja, and Kiyunga-Mbulamuti in Kamuli.
46. Mr. Speaker, progress on the above schemes is a further demonstration of the NRM Government’s commitment to deliver investments throughout the country as promised under the NRM 2006 Manifesto
Petroleum Exploration and Production
47. Mr. Speaker Sir, investment in the petroleum exploration has so far exceeded US$ 900 million and is expected to increase when the development and production phases commence. To date, five out of the ten exploration areas in the Albertine Graben are licensed to various companies. The Principles for the Oil and Gas legal and regulatory framework were approved by Cabinet and the Bill
will be submitted to Parliament in the next financial year. In Financial Year ending, as articulated in the State of the Nation Address, 33 out of 35 wells have yielded hydrocarbons, a positive sign of existence of oil.
Human Resource Development
48. Mr. Speaker Sir, in the financial year ending, the Education Sector placed focus on the consolidation of the achievements so far gained under Universal Primary and Secondary Education programmes. Specific emphasis was put on improvement of the quality of schooling through the construction, provision of instructional materials and improving inspection and sanitation in primary
49. The Universal Secondary Education programme was rolled out to cover senior four. In addition, Government has carried out emergency repairs at Kakungube and Kamodi Secondary Schools and completed 4 classroom blocks in 10 new seed secondary schools at Ruyonza, Busembatia, Serere, Busalaamu, Rubongi Army, Buhimba, and Kapchorwa Secondary Schools and Bukooli College. The ground floors of storied blocks at Kabale, Pallisa and Nkoma Secondary Schools were also completed; and an administration block at Kyamate Secondary School, a classroom block, science laboratory and administration block at Rubaare Secondary School were also constructed. Government has also completed the payment for land compensation for the construction of Entebbe
50. Government has also financed the completion of construction of a total of One Thousand Eight Hundred (1,800) classrooms. An additional 2,600 new classrooms, 130 multi-purpose science rooms, 28 libraries, and 23 teachers’ houses are in final stages of completion.
51. In higher education, Government recognizes the contribution of the Private Sector to the provision of access to higher Education. Accordingly, Government has supported the following Private Universities with a total of Shs. 7.7 billion.
These are: Bugema University, Busoga University, Kampala International University, Kumi University, Mountains of the Moon University, Nkumba University, Uganda Christian University in Mukono and Uganda Martyrs University in Nkozi. Government has also supported the Islamic University in Uganda by guaranteeing their borrowing from the Islamic Development Bank.
52. In order to provide the necessary human resource for the petroleum sector, the Uganda Petroleum Institute was established at Kigumba, with an initial allocation of Shs.1.5bn for infrastructure development, and the Institute is now operational.
I am happy to report that thirty students in geo-physics, chemistry and oil science related disciplines have been admitted to the institute this year.
53. Mr. Speaker Sir, with respect to vocational education and training, Government completed construction of 44 classrooms and 34 workshops in 14 vocational schools enrolling Primary 7 leavers in the financial year now ending. Furthermore, Machinery & Equipment has been supplied to 15 vocational schools enrolling Primary 7 leavers.
54. In addition, the following outputs were achieved:-
i. Construction of a Library block on going at Uganda College of Commerce, Kabale.
ii. Construction of a Library block on going at Uganda Technical College, Elgon.
iii. Rehabilitation of classroom and dormitory at Lake Katwe Technical Institute.
iv. Provision of 3 workshops, mainhall, and 2 dormitories at Nalwire Technical Institute.
v. Training of 80 Instructors and 60 technical Teachers is ongoing at Uganda Technical Colleges at Bushenyi, Elgon, Kichwamba, Lira and the Nakawa Vocational Training Institute.
vi. Procurement process for construction of an administration block, 2 workshops and 2 Dormitories at Ahmed Sseguya Memorial technical Institute is ongoing.
55. Mr. Speaker Sir, according to the 2009 Uganda Malaria Indicator Survey, the proportion of households having at least an Insecticide Treated Mosquito Net (ITN) increased from 49 per cent in the Financial Year 2008/09, to 59 per cent this year. In November 2009, the Global Fund in Geneva disbursed US Dollars 40 million to Uganda for procurement of Long Lasting Insecticide Treated Nets (LLITNS). Delivery of the nets throughout the country, which started in February 2010, is expected to end this financial year.
56. The Ministry of Health attained the targeted coverage for Indoor Residual Spraying in the 7 districts where malaria is endemic. These districts are: Apac, Pader, Kitgum, Oyam, Gulu, Katakwi and Gulu. Mr. Speaker Sir, the scheduled rehabilitation and reconstruction of Regional Referral Hospitals, particularly of Lira, Masaka and Kabale is at advanced stage. Construction of 6 mental health units at Masaka, Jinja, Mubende and Mbale, Moroto and Lira referral hospitals is near completion, and civil works have been completed and the facilities commissioned at Masaka, Jinja, Mubende, Lira, and Mbale. The construction and
rehabilitation of 13 Health Centre IVs and 26 Health Centre IIIs in south western Uganda districts of Mbarara, Isingiro, Ibanda, Kiruhura, Ntungamo, Bushenyi, Rukungiri, Kabale, and Kanungu is at an advanced stage. However, delays have been reported in the rehabilitation works in Soroti and Buhinga.
Water and Environment
57. Mr. Speaker Sir, under water for production, the following schemes were completed in the FY 2009/10; Rubaare and Nshenyi Valley tanks in Ntungamo, Kailong dam in Kotido, Leye dam in Apac and Mayikalo dam in Sembabule. In addition, construction of the following dams is almost complete; Kagango dam, Kagamba and Obwongerero valley tanks in Isingiro district, Kawomeri dam in
Abim, Olelpec and Alamia valley tanks. Other ongoing projects include Akwera dam in Lira, Lutunku and Kisozi valley tanks in Sembabule, Longoromit dam in Kabong, Kobebe dam in Moroto and Arechet dam in Moroto district. The challenge in this sector is unit costs which appear to be disproportionately higher than the increases in the underlying cost of inputs.
58. Mr. Speaker Sir, rainwater harvesting aims at supplementing other efforts to improve safe water supply, which currently stands at 65 per cent. The main intervention is to implement demonstration schemes and subsidizing of rain water storage tanks for basic household consumption and promote use through raising awareness. A total of 385 rainwater harvesting systems were constructed by 2007 in the districts of Mbarara, Bushenyi, Isingiro and Kabale Districts. In financial year ending, 340 rain harvesting systems are under installation in Kakyera, Lwamagwa, Ddwaniro, and Kyalulangira sub counties in Rakai District and in Namasagali and Balawoli Sub counties in Kamiuli Districts Information and Communication Technology
59. Mr. Speaker Sir, this financial year, Government planned to complete the inter-connectivity of the entire country by laying over 1500 km of optical fiber to link most major towns in the country. Under phase two of the project, the fibre optic cable was laid through Jinja, Iganga, Bugiri, Busia, Tororo, Mbale, Kumi and Soroti; Luwero, Nakasongola, Masindi, Lira and Gulu; Mityana, Mubende,
Kyenjojo, Kabarole, Kasese, Bushenyi, Mbarara, Masaka and Mpigi. The National Information Technology Authority (NITA-U) setup Business Information Centres in the districts of Busia, Iganga, Lira, Kamwenge, Mityana and Rukungiri.
Increasing Public Private Partnerships (PPPs) to Support Efficient Delivery of Infrastructure Services:
60. Mr. Speaker Sir, Government recently approved the PPP Policy and Principles to be enshrined in the PPP Bill for presentation to Parliament in the coming financial year. The proposed PPP Bill will provide the framework for the implementation of selected public infrastructure by harnessing private sector financial and human resource skills, while sharing the construction and operational risks between public and private sectors. This will ensure improved efficiency and value for money in the delivery of public infrastructure services, including speedy implementation of public-private sector investments. In the meantime, the Uganda Police Force and Uganda Prisons Services are being supported to deliver office and housing accommodation through a PPP arrangement, under existing
laws and regulations.
Northern Uganda Peace, Recovery and Development Plan (PRDP)
61. Mr. Speaker Sir, in the current financial year, Government commenced on the full implementation of the Northern Uganda Peace, Recovery and Development Plan (PRDP) with an allocation of Shs. 100 billion, which has been fully disbursed. In terms of planned investments, over 90 per cent of the activities are being implemented with the following as the major key deliverables:
i. Over 700 classrooms are under construction.
ii. About 55 Classrooms have been rehabilitated.
iii. 275 teachers’ houses are under construction
iv. 930 toilet stances are being built.
v. Over 220 boreholes are under construction.
vi. About 30 shallow wells are under construction.
vii. 160 boreholes have been rehabilitated.
viii. 46 maternity wards under construction.
ix. 203 Health workers’ houses are under construction.
x. Over 36 Out Patient Departments in the Health Centers are
xi. Over 25 new Health Centre IIs are under construction.
xii. 670 Kms of feeder roads have been rehabilitated
xiii. Over 360 km of community access roads opened.
62. In addition, the resettlement programme for former Internally Displaced Persons (IDPS) registered remarkable achievements. For example, under the tractor hire scheme, a number of tractors were procured and communities were supported to open up land which has increased food production in the region. Seven Thousand Nine Hundred (7,900) hectares of land has been allocated for ploughing under the scheme. Iron sheets were procured and distributed to returnees. We have piloted construction of low cost housing using Hydraform technology in Karamoja, Teso and Acholi Regions, which has worked well. Government has also procured 300 ox-ploughs, 700 oxen, 350 heifers to distribute to farmers in the Lango sub region.
Luwero-Rwenzori Development Plan
63. Mr. Speaker Sir, last month Government launched a 5 year Development Plan for the Luwero-Rwenzori Reconstruction Programme. This is as an affirmative plan for this area that was affected by the NRA protracted war and the ADF insurgency. In FY 2009/10, Shs. 10 billion was provided to cover the 40 districts in the two regions. So far grants have been provided to 240 parishes, 60 sub-counties and 7 districts to support interventions in agricultural commercialization, roads and bridges, schools and water in the cattle corridor. In financial year 2010/11, the plan will focus on establishing secondary schools in 50 sub-counties and primary schools in 108 parishes which have none. In addition, support will be extended to water, roads and bridges.
IV. ECONOMIC OUTLOOK 2010 AND THE MEDIUM TERM
64. Mr. Speaker Sir, as stated in the State of the Nation Address, the economy has performed very well in the face of the global financial crisis that erupted in 2008. While the first rounds of effects of the global financial crisis were relatively limited, the international economy remains volatile. The recent turbulence in the Eurozone has raised some challenges for the Uganda economy. The global
economy is still clouded by a high degree of uncertainty but this, so far, should not warrant a radical change in the near term macroeconomic policy of the budget which I am presenting to this August house today. We shall continue to monitor the developments closely and we stand ready to adjust policies promptly if needed.
65. Mr. Speaker Sir, regardless of the recent developments, the economic growth outlook for the medium term remains positive and reflects the resilience of our economy because of continued economic stability and diversification of our exports in regional markets. The economy is projected to grow at 6.4 per cent in the coming financial year, and at an average rate of 7 per cent for the outer years.
This compares favourably with a forecasted growth trends in the Eastern Africa region where growth is expected to rebound to rates of 6 per cent per annum.
Balance of Payments
66. The coffee sector is expected to rebound in FY 2010/11. We expect to ship 3.15 million bags of coffee, compared to 2.95 million last year, representing 10 per cent increase in the value of the exports. The tobacco sector is also continuing its rapid progress and exports for next financial year are projected to be worth over US Dollars 100 million for the first time, from an average of US Dollars 58
million over the last three years. I will be requesting the Bank of Uganda to revive the study of the Domestic Resource Costs (DRC) and also compile the Index of Agricultural Production Statistics, so as to assess the relative price competitiveness of agriculture commodities.
67. Mr. Speaker, Sir, the NRM Government remains committed to low and stable inflation over the medium-term in order to provide stable environment for investment. Government will continue to aim at stimulating demand in the economy, while keeping inflation at around 5 per cent.
68. Mr. Speaker, Sir, we recognize the problems associated with high interest rates and are therefore, working with commercial banks to bring lending rates down. Government is proceeding with the computerization of land registries as well as lowering the cost of doing business through investments in the necessary economic, physical, energy and social infrastructure. Underwriting risk, as the case is under the Agricultural Guarantee Scheme, the introduction of the National Identification System and the full operationalisation of the Credit Reference Bureau, will further reduce the risks which raise the cost of loanable funds. The operationalisation, in a phased manner, starting next year. of the fibre-optic based
National Transmission Backbone Infrastructure (NBI), will also reduce the cost of Communication.
Deepening Regional Integration
69. Mr. Speaker, Sir, on 1st July, 2010, the East African Community will establish a single economic territory within which business and labour operate. It is envisaged that the EAC Common Market will stimulate greater productive efficiency, higher levels of domestic and foreign investment, increased employment, and growth of intra-regional trade and of extra-regional trade. The Common Market allows freedom of movement of goods, services, capital, business enterprises and skilled labour within an area bound by a Customs Union.
The Customs Union has been largely completed, and the entire EAC region is looking forward to implementation of the Common Market. We give credit to His Excellency the President for his commitment and strong support towards regional integration.
THE BUDGET STRATEGY FOR FINANCIAL YEAR 2010/11
70. Mr. Speaker Sir, let me now turn to the Budget Strategy for the FY 2010/11. The theme for next year’s budget is ‘Strategic Priorities to Accelerate Growth, Employment and Socio-Economic Transformation for Prosperity’, in line with the thrust of the National Development Plan. Mr. Speaker Sir, the Financial Year 2010/11 budget marks the transition from the Poverty Eradication Action Plan
(PEAP) to the recently newly launched National Development Plan (NDP) which lays out the strategic five-year plan for Uganda’s development up to 2014/15. The NDP provides a single framework for guiding the strategic allocation of national
resources as a means towards the attainment of its strategic objectives. The objectives of the NDP clearly reflect the strategic vision of the NRM Government to transform Ugandan society from a peasant to a modern and prosperous country within 30 years, through growth, employment, and prosperity for socio-economic development. Achievement of the NDP’s and Government’s core objectives
require identification and targeting of key areas of the economy responsible for accelerating economic growth and socio-economic transformation.
71. The NDP seeks to address structural bottlenecks to the economic and social transformation of Uganda over the next five years. It spells out the most binding constraints to achieving the vision of a transformed Uganda as the following:-
i. Inadequate Physical Infrastructure to efficiently transport inputs to production and final goods to markets, together with high communication costs; and limited availability of energy infrastructure to increase productivity and enhance the quality of life
ii. Low application of science and technology that impedes technological capabilities and competitiveness;
iii. Inadequate supply and limited access to critical production inputs such as fertilizer, water, and construction materials leading to high costs for these items;
iv. Inadequate Quality and Quantity of Human Resource due to limited capacity of the education system and low health and education service delivery standards;
v. Limited availability of Financial Services and high costs of financing;
vi. Weak public sector management and administration; and
vii. Poor mind-sets, negative attitudes and perceptions that limit business and entrepreneurship, limited use of modern science and ICT tools and discrimination against women in certain spheres.
72. Over the medium term, the Ugandan economy will be faced with a number of macroeconomic management challenges, but also a number of opportunities. Among the opportunities are the continued progress towards economic integration, particularly in regard to the East African Community and the discovery of oil resources. The former provides opportunities for increased trade and more employment opportunities.
73. At the macro-level therefore, Government policies and the budget allocations will be geared towards ensuring enhanced efficiency, competitiveness and productivity, if the country is to benefit from regional integration.
VII: THE BUDGET FRAMEWORK FOR FINANCIAL YEAR 2010/11
74. Mr Speaker Sir, the Resource Envelope for the next financial year amounts to Shs. 7,552 billion of which Shs. 5,640 bn is financing from domestic sources and Shs. 1,912.1 bn is financed from external loans and grants. Resources from both Tax and Non-Tax Revenues will contribute Shs. 5,034.4 billion and Shs. 91.5 bn respectively, while loan repayments will contribute Shs. 59.9 bn. Next year’s
budget will be about 19.1 per cent of GDP. Domestic sources are projected to finance about 75 per cent of the budget in the coming financial year, while the balance of 25 per cent will be provided by our development partners. This is in line with our objective of gradually increasing the share of the budget financed through domestic sources.
75. As the Ministry responsible for mobilizing resources for Government, I wish to register our gratitude to our development partners for the continued support to our country.
VIII. BUDGET PRIORITIES FOR FINANCIAL YEAR 2010/11.
76. Mr. Speaker Sir, the Financial Year 2010/11 budget priorities seek to implement the goals of the National Development Plan (NDP). Next year’s budget priorities are therefore in tandem with the NDP’s and are as follows:-
i. Infrastructure Development in Roads and Energy;
ii. Promotion of Science, Technology and Innovation to facilitate value addition and employment;
iii. Enhancing agricultural production and productivity;
iv. Private Sector Development; and
v. Improving Public Service Delivery.
77. Mr. Speaker Sir, I now wish to turn to the details of the budget priorities for the Fiscal Year 2010/11.
A: INFRASTRUCTURE DEVELOPMENT
78. Mr. Speaker Sir, whereas the national road network has registered substantial progress, the status of our road infrastructure still remains inadequate by regional and international standards. This hinders access to markets and negatively affects overall economic performance by imposing high transport costs. The focus of the roads sector in FY2010/11 will be concentrated on completing on-going projects and road maintenance to clear the backlog.
79. During the coming financial year, priority will be given to completing the tarmacking, rehabilitating and maintaining critical road links that are important to the promotion of production, competitiveness and regional trade. The road development programme will encompass the following:-
i. Completing the upgrading or reconstruction of works on the following roads: Dokolo – Lira (60.4km), Kampala – Gayaza – Zirobwe –
Wobulenzi (Phase 1 – 43km), Matugga – Semuto – Kapeeka (41km), Kabale – Kisoro – Bunagana/Kyanika (98km) , Masaka – Mbarara
(154km), Busega – Masaka (124km) and Busega – Mityana (57km) Roads.
ii. Commencement of the upgrading to tarmac or reconstruction of the following roads: Mbarara – Kikagati (75km), Gulu – Atiak – Bibia (Sudan border)108km), Vurra – Arua – Koboko – Oraba (92km), Nyakahita – Ibanda – Kamwenge – Fort Portal (208km), Fort Portal – Bundibugyo – Lamia (104km), Mukono – Kyetume – Katosi/ Kisoga – Nyenga (72km), Ntungamo – Mirama Hills/ Ishaka – Kagamba (72km), Rukungiri-Kihihi - Kanungu-Ishasha (74km), Moroto – Nakapiripirit (90km), Kapchorwa – Suam, (77km), Mpigi – Kabulasoke – Maddu – Sembabule (135km), Hoima – Kaiso – Tonya (85km), Mbarara – Katuna (152km), Mukono – Jinja (52km), Mukono – Kayunga/ Nkoloto – Njeru (94km), Tororo – Mbale – Soroti (155km), Malaba/Busia – Bugiri (82km), Kawempe – Kafu (166km), Kafu – Karuma (67km) and Jinja – Kamuli (60km) and Kamdini – Gulu (60 km).
iii. Completing the rehabilitation of the following roads: Kampala – Mukono (23km), Lira – Kamdini road (68km), Masaka – Kyotera; Villa/Maria – Nyendo roads (38km) and Mbarara – Ishaka/ Mbarara – Ibanda roads (123km).
iv. Completing the design for upgrading to tarmac of the following roads: Olwiyo- Gulu- Kitgum (167.1 kms), Muyembe- Moroto- Kotido (291.5 kms), Soroti- Katakwi- Moroto- Loktanyala (290 kms), Masaka- Bukakata (36Kms), Mpigi – Maddu- Sembabule (124Kms), Mukono-Kyetume-Katosi/Kisoga-Nyenga (74 km), Villa Maria – Sembabule (48 Kms), Rukungiri – Kihihi – Kanungu – Ishasha (74Kms), Kyenjojo- Hoima-Masindi-Kigumba (238Kms), Musita – Lumino – Busia/Majanji (140Km), Tirinyi – Pallisa – Kumi/Pallisa – Mbale (111Km), Mbale –Bubulo – Lwakhakha (41 kms), Namagumba- Budadiri- Nalugugu (30 kms), Kamuli- Bukungu (64 Kms), Hoima Wanseko (111km), Kayunga – Galiraya (88km).
v. Completing the design for capacity improvement of the following roads: Kampala – Jinja (80km), Kibuye – Mpigi (30km), Kampala – Entebbe (35km) and Kampala Northern Bypass (17.5 km). Commence the design for reconstruction of Tororo – Mbale – Soroti (156) and Lira – Kamudini – Gulu (122km).
80. Mr. Speaker Sir, Government will commence the rehabilitation of the Nalubale Bridge at Jinja; and the design of the second Nile Bridge at Jinja in the coming financial year. We will also complete construction of the following: Aswa bridge on Gulu – Kitgum road; commence construction/rehabilitation of 10 bridges in West Nile namely: Enyao, Alla and Kia Kia in Arua, Goli, Cido, Nyagak, Nyacara, Pakwala, Ora 1 and 2 in Nebbi district; commence the construction of bridges and landing sites on Atiak – Moyo – Afoji road;
Bunyamusenyu bridge on River Kafu which link Nakaseke to Masindi will also be constructed.
81. In line with the National Transport Master Plan, Government is committed to improving the transport system and infrastructure within Greater Kampala Metropolitan Area. In the coming financial year, Government has earmarked US Dollars 50 million specifically for road rehabilitation and improvement within Kampala City. This is in addition to Shs..13billion that Government will continue
to provide directly to the City’s Divisions for road maintenance. Government has also embarked on plans to construct the Kampala-Entebbe express highway. This is expected to greatly improve the traffic flow between the City and the International Airport.
82. In order to address the challenge to maintenance and rehabilitation of district roads, urban roads and community access roads in the country, Government has secured funding to procure road equipment for zonal, district and urban road units. In a bid to improve transport infrastructure within Kalangala Islands, I have made a provision of Shs. 1.0 billion for the shadow road toll to enable the private contractor commence construction of the Kalangala Main Island Road under a Public Private Partnership Agreement.
83. I have provided an additional funding of Shs. 50billion over this year’s budget under the Uganda Road Fund towards the maintenance of 10,000kms of national roads in FY2010/11 that were taken over by the Uganda National Road Authority
(UNRA) from the Local Governments.
84. Under water transport, Ferries for Obongi – Sinyanya and Rwampanga – Namasale will be provided. The scope of works for the refurbishment of the MV Pamba is now complete and its rehabilitation to restore its sea-worthiness will be undertaken in the next financial year.
85. Mr. Speaker Sir, in order to improve the procurement process, next financial year, UNRA will strengthen its capacity in Contract Management Government will also institute an Inter-Ministerial Technical Committee in the sector to ensure cooperation across Government agencies.
86. Mr. Speaker Sir, in the coming financial year, the Auditor General will periodically undertake Financial and Technical Audits on road construction works before the works contract are completed, to ensure that quality is maintained.
87. Mr. Speaker Sir, Government has also undertaken a feasibility study for upgrading Tororo-Pakwach railway line and intends to carry out a study to extend the railway line from Gulu to Nimule/Southern Sudan. We have also commenced the feasibility study for the full restoration of the Kampala – Kasese railway line. Furthermore, Government is in the process of procuring consultancy services for
studies for development of a Standard gauge Railway between Kenya and Uganda.
88. Mr. Speaker Sir, our power supply needs to be in tandem with the growing demand as higher growth rates translate into higher levels of demand for electricity. In the short run, thermal power generation will continue to mitigate the hydro power shortages and Government will step up generation capacity in the long-run. In the next financial year, construction of the 250 MW Bujagali
Hydro power will continue and the first turbine will be commissioned in October 2011 raising installed generation capacity from the current 550 MW to about 800MW in 2012 when the Bujagali Project is fully commissioned. The feasibility study for the engineering design for the 700 MW Karuma hydro power project and 100 MW Isimba hydro power project will be completed.
Mr. Speaker Sir, next financial year, Government will undertake the following power transmission projects:
i.) complete upgrading of 132 KV Tororo-Oluyo-Lira and Mutundwe-Entebbe transmission lines; ii.) construction of the following lines; the 220 KV Bujagali-Kawanda-Mutundwe; the 132 KV Mbarara-Nkenda , Nkenda-Mputa, Mbarara-Mirama, Masaka-Mwanza, Jinja-Tororo-Lessos, Kawanda-Masaka, Karuma-Lira, Kaiso Tonya-Fortportal-Nkenda, Opuyo-Moroto, Karuma-Oluiyo and Mbale-Nakapiripirit-Moroto. iii.) Regional inter-connection of Bujagali-Tororo-Lessos (Kenya); Mbarara-Mirama-Birembo (Rwanda); Masaka-Mwanza (Tanzania) and Nkenda-Beni-Rutshuru and Beni-Bunia (DRC).
B: PROMOTION OF SCIENCE,TECHNOLOGY AND INNOVATION FOR VALUE ADDITION,PRIVATE SECTOR DEVELOPMENT AND EMPLOYMENT CREATION
90. Mr. Speaker Sir, in order to achieve the NRM vision of developing a self sustainable and private sector led economy, Government will continue to address impediments to private sector development. As a key priority in the coming financial year, Government will support industry by enabling the acquisition of appropriate technology, financial capital, and skilled human resource by the private sector complemented with a conducive entrepreneurial environment.
91. Mr. Speaker Sir, in the coming financial year, Government will focus on the promotion of science and technology application to enhance private enterprises technological capacity for greater employment creation. The Uganda National Council of Science and Technology (NCST) and UIRI have therefore, been strengthened to promote the use of technology and to spearhead the efforts of
translating Research & Development results into practical products and processes, using the business incubation model. Government will continue to support UIRI to expand its programs in business incubation by establishing four multipurpose value addition centers across the country and to expand its Small and Medium Enterprise outreach programme, among other interventions. An allocation of Shs.
1.207 bn has been provided to UIRI to set up a Science Unit. Makerere University will also receive an additional Shs. 5 billion for innovation in engineering and technology research and development. In order to enhance and retain high scientific skills in the country, I have provided Shs. 18 billion for salary enhancement for scientists.
92. In addition, an allocation of Shs. 1bn has been provided to Enterprise Uganda to provide existing entrepreneurs and enterprises with the necessary skills and training to re-orient their business processes to tested and fruitful ventures.
93. Mr. Speaker Sir, youth unemployment is a major concern to the Government. In the next financial year Government will set up a School Leavers Industrial Training Fund at the Directorate of Industrial Training. I am providing Shs. 2 billion for this Fund. Furthermore, in pursuit of employment opportunities for the youth, Government is sourcing funding to enable the acquisition of small scale machinery and processing units for ‘Jua Kali’ businesses. In addition, the Industrial Processing Venture Capital Fund will avail financing for bankable start-up ventures for University and College Graduates with interest rates not exceeding 5 per cent per annum payable within eight years. For a start, I am providing Shs 4 billion for the Fund in the next financial year.
94. Mr. Speaker Sir, in the Information and Communication Technology sector, Business Process Outsourcing (BPO) will be encouraged to create jobs for the educated youth and generate exports. The ICT sector will receive Shs. 2.6 billion in priority allocations for the operation of NITA-Uganda which is expected to eventually lead to the decline of the cost of access to ICT related services. The
operationalisation, on a commercial basis, of the National Transmission Backbone Infrastructure (NBI) will commence in the first quarter next financial Year.
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