Private Sector and Livelihoods Transformation Opportunities in The Budget for FY 2023/24

by Business Times
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By Apollo Munghinda

The budget for FY 2023/24 provides an opportunity for every Ugandan – a farmer; a trader; an industrialist; a professional service provider, the youth; the elderly; and every woman and man in their various capacities to have a stake in the economic growth and development of Uganda.

Finance Minister, Matia Kasaija in the budget speech for FY 2023/24 in June 2023, delivered at Kololo Independence grounds dedicated the budget to those Ugandans who are working hard, day and night to expand and modernise the economy.

It should be noted that the overall goal of the budget for FY 2023/24 is to redirect more resources towards wealth creation by facilitating more Ugandans to join the money economy and accelerate the rapid expansion of the economy.

It is interesting to note that the economy has remained resilient despite facing a series of shocks, and is on a steady recovery path.

For the first time in about 15 months, inflation has dropped to 3.9% for July 2023 due to falling commodity prices. The Ministry of Finance and Bank of Uganda have continued to work closely to maintain macroeconomic stability with a well-coordinated fiscal and monetary policy.

If we can recall, after the budget speech reading, there were many debates by commentators in various media spaces as to whether this was ‘a pro-people budget,’ with some casting doubt on the commitment to prioritise resources to the wellbeing of Ugandans amidst competing priorities more so when the economy was just recovering from economic shocks occasioned by COVID-19.

But what are some of the pro-people opportunities in the budget for FY 2023/24?

The Parish Development Model (PDM)

As at the end of National Development Plan two (NDP II),69% of Ugandans had transitioned into the money economy leaving 39% in the subsistence economy.

Government is now focusing on effective implementation of the Parish Development Model (PDM) to lift the 39% of Ugandans from the subsistence economy into the money economy.

A total of Shs 1 trillion and 59 billion was provided for in the budget for FY 2022/23 for the PDM SACCOs and another Shs 1.1 trillion has been provided in the budget for FY 2023/24.

The Finance Ministry which is responsible for Pillar 3 of the PDM (Financial inclusion) has already successfully disbursed the 100 million shillings to 10,585 PDM SACCOs across the country.

Government has also provided Shs 5.3 billion to cater for loan processing fees to save the PDM beneficiaries from this cost. This will be disbursed to all PDM SACCOs. In addition, Shs 12.7 billion has been set aside to cater for office accommodation of the Parish chiefs and other operational costs.

Many target beneficiaries across the country have already accessed the PDM money and are using it to improve their livelihoods. During my recent trip to Butaleja District in Eastern Uganda, some beneficiaries who have chosen to rear local chicken could not hide their excitement about the PDM initiative. “I thank President Museveni for thinking about us, and supporting us to fight poverty. He has all our support,” said Joab Higenyi one of the PDM beneficiaries.

Support to Economic and Business Recovery Funds

The budget has also prioritised supporting the private sector to access affordable and patient capital through Uganda Development Bank (UDB), Agricultural Credit Facility (ACF), Emyooga, Small Business Recovery Fund (SBRF)and Microfinance Support Centre. A total of Shs.2.7 trillion is available under these initiatives.

The Investment for Industrial Transformation and Employment Project (INVITE) grant of USD 218 million (about Shs 800 billion) is expected to mitigate the effects of COVID-19 on private sector investment and employment and support new economic opportunities through manufacturing, value addition and export in strategic sectors.

Besides INVITE, government recently rolled out a grant for Generating Growth Opportunities and Productivity for Women Enterprises (GROW Project) worth USD 217 million (Shs 800 billion) which will ultimately, ease access to capital by women entrepreneurs among other opportunities. This financial year, a total of Shs 112.7 billion is available in the budget.

Government has also earmarked Shs 176 billion for road maintenance in all the districts. In line with the local content policy, the biggest share of this budget is expected to go to the local contractors. This means, local contractors should be prepared to exploit this opportunity by ensuring that they are fully registered, tax compliant and with competent workers who are closely supervised to produce quality work.

Opportunities for special interest Groups

Under the Ministry of Gender, government has set aside Shs 20 billion to enhance women participation in development, Shs 139 billion for empowerment and protection of People with disabilities (PWDs) and the elderly, Shs 4 billion for promotion of Arts and Crafts as well as Shs 10.8 billion for empowerment and protection of youth and children.

E-government interventions

World over, ICT has played a critical role in improving service delivery by facilitating automation of business processes and real-time exchange of information thereby reducing the process turnaround time and cost of doing business. As such, Government is currently implementing the e-government policy to improve government effectiveness, create opportunities for the youth and facilitate access to domestic and global markets.

Accordingly, about Shs 96 billion has been earmarked in the FY 2023/24 budget under the National Information Technology Authority, for extension of the national backbone last mile connectivity to government institutions such as schools and health centres, parishes and other key public places such as markets.

 Ugandans, especially the youth can exploit the opportunities resulting from the above digital transformation investments by using ICT platforms for skill enhancement, knowledge transfers, innovation and wealth creation.

Indirect opportunities

Besides the above direct opportunities, the budget also contains indirect opportunities that can only be exploited by those who are prepared for them. For example, Ministry of Works has over Shs 1 trillion for transport infrastructure development projects normally implemented through outsourcing of competent contractors, service providers and consultants.

 Similar opportunities are also available in the Ministries of Education, Agriculture and Energy among others, but can only be exploited by the prepared Ugandans. Whereas, some local contractors often complain about award of contracts to foreign firms, in many cases, this is due to inadequate preparations during the bidding process and breach of contract terms during execution by the local Contractors awarded contracts which undermines their competitiveness.

Pro-people fiscal and monetary Policy measures

In order to support and accelerate private sector led economic recovery, government did not introduce new taxes in the budget, but rather amended existing tax measures to harmonise and improve tax administration and domestic revenue mobilisation efforts.

Government has also cut down on domestic borrowing so that the private sector can continue to access affordable credit.

In order for Ugandans to fully exploit the above opportunities government is investing heavily in its people. In the budget for FY 2023/24, an allocation of Shs 9.6 trillion has been provided for human capital development (health, education and water) to accelerate improvements in healthcare and learning outcomes, including skilling of Ugandans for the job market and overall improvement in the standard of living.

All the above will be anchored on continued investment in peace and security which are the bedrock for socio-economic transformation.

The fiscal outlook for Uganda remains positive and the future looks bright.  Ugandans have a duty to support and embrace the numerous opportunities created to quickly accelerate economic recovery and also speed up the growth of the productive sectors of the economy to create more jobs and wealth.

The writer is a Principal Communications Officer, Ministry of Finance, Planning and Economic Development

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