Replace excessive borrowing with effective use of taxpayer's money: CSBAG tells gov't

Civil Society Organizations (CSOs) under Civil Society Budget Advocacy Group (CSBAG) and others have cautioned government on how to replace excessive borrowings with effective use of taxpayers' money. According to these CSOs, “The increasing public debt puts pressure on the country’s revenue obligations. For example, interest payments are projected to amount to Shs5.08Tn (11.8%) of the total FY2022/23,” Patrick Rubangakene, the Budget Policy Specialist at the Civil Society Budget Advocacy Group (CSBAG) said. It is worth noting that recent data from the Central Bank of Uganda indicated that Uganda’s public debt rose to Shs70.03 trillion in August 2021. “As CSOs, we are concerned on increasing public expenditure, for example of the total domestic revenue in FY2022/23, 73% of the projected budget is towards consumptive expenditure and only 27% is for development,” Rubangakene said adding; The CSOs revealed these in their National Budget Framework Paper (NBFP) FY2022/23, under the theme: key priorities for economic recovery and safeguarding livelihoods. “We, therefore, call upon the government to expedite the rationalization process by providing a clear roadmap for the process to eliminate redundancies and improve efficiency,” he said. Read The CSOs Statement Below; ''We the members of the Civil Society Budget Advocacy Group (CSBAG) are gathered here today to share our perspectives on the National Budget Framework Paper (NBFP) for the FY 2022/23, which was tabled by thefinance minister to Parliament for scrutiny in December 2021in accordance with Section 9 (3) of the Public Finance Management Act, 2015 (Amended)[1]. The FY2022/23 NBFP comes at a time when the economy is recovering from the devastating effects of the COVID-19 pandemic. We commend Government for the various measures to mitigate the impact of the pandemic on the economy, business, and households. Through these measures, the economy was able to register positive growth rates of 3.4 percent in FY2020/21. For example, modest growth rates were registered in industry and services sectors.ie 3.4 percent and 2.7 percent respectively.Mr Ruba Patrick From CSBAG Addressing The Media Macroeconomic Outlook According to the FY 2022/23 NBFP, the economy is expected to grow at 3.8 percent in FY 2021/22 and is projected to grow at about 6 percent in FY 2022/23. This growth is expected to be generated by private sector activity due to increased aggregate demand post Covid-19; increased returns from public infrastructure investments; and increased activities in the oil and gas sector. Relatedly, annual headline inflation in FY 2021/22 is projected to slightly increase to 2.7 percent, mainly due to the impact of measures introduced to mitigate the spread of the corona-virus pandemic on prices of goods and services. Resource Envelope The total resource envelope for FY 2022/23 is projected to decrease by UGX 1,695.60 billioni.e. from UGX 44,778.80 billion in FY 2021/22 to UGX 43,083.20 billion.Domestic revenues are projected to amount to UGX 25,516 billion in FY 2022/23 of which UGX 23,755 billion is projected to be raised from tax sources and UGX 1,761 billion from Non-tax revenue sources.Additionally, 59.22 percent of the budget will be funded through domestic revenue while 40.7 percentwill be from other sources i.e.Grants (UGX 869 billion), External financing (UGX 3,536 billion), Domestic financing (UGX 2,836 billion). Public Debt We note that Uganda’s total public debt stock increased by 27.4 percent from UGX 57,215.30 billion in June 2020 to UGX 69,512 billion in June 2021. Public debt is further projected to increase to over 52.7% of GDP by the end of FY 2021/22 and peak at 53.1% at the end of the FY2022/2023. The increasing public debt puts pressure on the country’s revenue obligations for instance interest payments are projected to amount to UGX 5,088 billion (11.8%) of the total budget in FY 2022/23. Therefore, we call upon Government to slow down the pace at which it contracts commercial external financing and domestic debt and contract concessional loans. Expenditure Projections for FY 2022/23 Out of the projected domestic revenue, UGX 5,514.72 billion is wage, UGX 13,085.9 billion is non-wage and UGX 6923.15 billion is domestic development. The Human Capital Development programme will take the largest share of the budget amounting to UGX 6,577.7 billion (25.3%), Governance and Security programme UGX 6,420.5 billion (24.7%),Integrated Transport Infrastructure & Services programme is projected to be allocated UGX 4,573.8 billion (17.6%), Agro Industrialization will receive UGX 1,528.5 (5.9%). While the programmes which are projected to receive the least allocations include Innovation, Technology Development& Transfer UGX 22.6 billion (0.1%), Mineral Development UGX 35.6 billion (0.1%),Community Mobilisation& Mindset Change UGX70.0 billion (0.3%) and Manufacturing UGX 70.8 billion(0.3%). As CSOs,we commend Government for: Alignment of the FY 2022/23 NBFP to the Program Budget Approach Calling upon Government institutions to pay suppliers within 10 days after from the date of invoice to avoid accumulation of domestic arrears. Proposal to have contractors to pre-financethe entire construction of the road project and the government repays the contractor within a period of seven (7) to ten (10) years, including the construction period. Strategy to reduce public wastage through rationalization of funds, expected to save UGX 1,056.02 billion. CSO Concerns on the NBFP FY 2022/23 Increasing Public Expenditure:Of the total domestic revenue in FY 2022/23, 73% of the projected budget is towards consumptive expenditure and only 27% is for development. UGX 88.08 billion has been marked for operationalization of new administrative units (Districts, cities, constituencies) all of which have an implication on the meagre revenue collections. Government has also delayed the rationalization process of Government Agencies,Commissions and Authorities as one of the measures for reducing expenditure. Therefore, we call upon Government to expedite the rationalization process by providing a clear roadmap for the process to eliminate redundancies and improve efficiency. Slow Implementation and harmonization of the Program approach: We notethat there is still hangover of the sector wide approach to work being exhibited by government entities e.g. most of the districts don’t have approved District Development Plans.The program approach envisaged in the National Development Plan III was meant toincrease coordination and harmonization among programs for better linkage of resources to results and reduce the ‘silo’ approach to implementation across stakeholders and programs. This being the third year of implementation of NDP III, we call upon National Planning Authority together with MoFPED to expedite the implementation of the program-based approach.In addition, a change management strategy should be adopted and shared with other MDAs for their guidance. Unclear criteria of fund allocation for the Parish Development Model: We commend Government for the Parish Development Model (PDM) which is key for the socioeconomic transformation of the country. The PDM aims at alleviating poverty by improving household incomes and welfare through employment and wealth creation, especially targeting the 39% of households still outside the money economy. In FY2022/23, UGX 465.48 billion is being earmarked for operationalization of the financial inclusion pillar. However, we note that the criteria for allocation of the funds are not clear. Government is proposing to give parishes the same amount of money even thoughparishes have different population thresholds. For example, Mutungo parish in Nakawa Division has a population of 64,663 while Ibbiaworo ParishinAdjumani District has a population size of 892. Therefore, to promote equity, Government needs to come out with a clear allocation formula for funds under the PDM bearing in mind the different demographic dynamics. Human Resource Gap for Nutritionists and Water Officers; we note the commitment to food security, nutrition and Water, Sanitation and Hygiene as demonstrated in the UNAP 11 and the Country Zero Hunger Strategy requires adequate staffing especially of Nutritionists, Water officers and Health Inspectors. However, we note that staffing gaps remain a challenge. For example, 12 District lack of District Water Officers[2], while the current district Human Resource Structure only provides for recruitment of a Nutritionist only at a level of a general hospital in Local Governments. This has affected nutrition planning and budgeting at Local Governments. We therefore call upon Ministry of Public Service together with Health Service Commission to create a position of District Food and Nutrition Officer as part of the Local Government structure. Delayed assentment to the Local Content Bill 2019: One of the key Government Proposals for FY2022/23 to aid speedy recovery of the economy is the promotion of the local content. This will ensure that Government procurement targets purchase of locally produced goods and services to enable expansion of the private sector investments. However, unlocking investments and private sector growth requires implementation and operationalization of the Local Content Policy, and other related legal and institutional framework such as a Local Content Monitoring Committee. However, we are concerned that the President is yet to assent to the Local Content Bill 2019. We therefore call upon the President to expedite assentment to the Local Content Bill to support implementation of the Buy Uganda Build Uganda (BUBU) Policy. Limited access to blood: We note that hemorrhage continues to be the leading cause of maternal death, contributing 42% of all deaths reviewed. Of these, postpartum hemorrhage contributes to 90% of all hemorrhage cases reported.Up to 50% of HC IVs do not provide blood transfusion services to increase Comprehensive Maternal, Newborn and Obstetrics Care (CeMNOC) coverage and newly upgraded HC IVs lack staff and theatre equipment. Therefore, we call upon government to prioritize funding to Ministry ofHealth and Uganda Blood Bank and Transfusion Services to increase blood accessibility, safety and availabilityby recruiting and deploying health workers key in blood collection and transfusion for improved health systems and service delivery. Absence of a Health Insurance Scheme:Access to health services continues to be a burden to the ordinary citizen with an increasing cost of health care and rise in out-of-pocket expenses.According to the Uganda National Household Survey Report 2020, only 3.9 % of the population have access to health insurance. We note that achieving universal health coverage requires Government to put in place a Health Insurance Scheme. We therefore call upon Government to fast track the enactment of the National Health Insurance Scheme Bill into law. Inability of some Small and Medium Enterprises to recover:We commend Government for supporting SMEs that were affected by the COVID-19pandemic through flexible tax payment terms and extension of filing tax returns, allowing employers to reschedule their social security contributions for the next three months without accumulating a penalty, and providing financial relief through Uganda Development Bank and the Microfinance Support Centre.However, some of the SMEs may not be able to recover and operate smoothlyas they are heavily indebted, high cost of doing business, and low demand, which could affect economic growth.SMEs employ more than 2.5 million people equivalent to 90 percent of total non-farm sector workers and comprises about 1,100,000 enterprises which makes the sector one of the largest employers in the country.[3]Therefore for the economy to fully recover Government needs to prioritize funding to SMEs through provision of low-cost capital and adequately capitalizing Uganda Microfinance Support Center. Unclear strategy of the Education Sub program to operate amidst the COVID – 19 pandemic:We commend the government for full re-opening schools after a period of 2years due to the COVID-19 pandemic.However,we are concerned about the state of the schools to receive the students and continued learning including enforcement of the new curriculum, management of children’s health with the mutation COVID – 19 variants, teachers’ readiness to continue teaching, management of teenagers who got pregnant during the lockdown, and dropouts, among others. Government has not provided a clear roadmap on the management of these concerns to support education. According to a monitoring exercise by the Directorate of Education Standards (DES) under GPE in 135 districts, 9% of institutions still do not have functional foot operated hand washing facilities. (MOES, December 2021)The NBFP schools’ capitation grant has not changed financially to cater for COVID-19 interventions and promote seamless operations of schools. Therefore, we call upon Ministry of Education and Sports to reconsider revising the capitation grant to factor in budget provisions to address COVID-19 related expenditures. Inadequate Provision of Extension and Advisory Services; we commend government efforts to recruit over 3,820 extension workers and enhancing their capacity during FY 2020/21 and trained 454 extension workers in the same period. We are however concerned that as FY 2020/21, the recruitment levels stagnated at 3,854 (77%) of the targeted 5,000 numbers, with a ratio standing at 1: 1,800 extensions to farmers against the recommended 1:500 (ie 13 officers at district level and 3 extension staff at sub-county level). The 5,000-extension staff were for 116 districts in FY2015/16, but districts have since increased. We therefore call upon Government to expedite the formulation of Agricultural Extension Bill 2017 and designing of the agricultural extension strategy 2021/22-2025/2026 Conclusion As CSOs, we call upon Government to ensure that the NBFP is geared towards prioritizing economic recovery and safeguarding livelihoods of Ugandans.…………because every shilling counts!!''