Budget Committee Report on NBFP FY 2014-15
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Transcript of Budget Committee Report on NBFP FY 2014-15
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THE PARLIAMENT OF UGANDA
RECOMMENDATIONS OF THE
PARLIAMENTARY BUDGET COMMITTEE
ON THE
THE MEDIUM TERM MACROECONOMIC PLAN AND PROGRAMMES FOR SOCIAL AND
ECONOMIC DEVELOPMENT
FOR FISCAL YEARS 2014/15 2018/19
AND THE
INDICATIVE PRELIMINARY REVENUE AND EXPENDITURE FRAMEWORK OF THE
GOVERNMENT FOR FY 2014/15 2018/19
May 2014
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TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................................11
PART 1: MACROECONOMIC SECTION ................................................................................................12
GENERAL OBSERVATIONS ON THE BUDGET FOR FY 2014/15 .................................................... 12
MACROECONOMIC PROJECTIONS FOR FY 2014/15 AND THE MEDIUM TERM ......................... 18
Observations on the Macroeconomic Assumptions .........................................................................18
Resource Envelope for FY 2014/15 .................................................................................................19
Fiscal/Budget Strategy for FY 2014/15 ............................................................................................20
PART II: SECTOR POLICY OBSERVATIONS AND RECOMMENDATIONS ........................................22
EAST AFRICAN COMMUNITY AFFAIRS (EACA) ...............................................................................24MINISTRY OF INFORMATION COMMUNICATION TECHNOLOGY .................................................27
EDUCATION AND SPORTS SECTOR ................................................................................................32
WORKS & TRANSPORT & LANDS, HOUSING & UBARN DEVELOPMENT SECTORS ..................39
WORKS & TRANSPORT SECTOR .................................................................................................39
LANDS, HOUSING & URBAN DEVELOPMENT SECTOR .............................................................45
DEFENCE & INTERNAL AFFAIRS SECTOR ...................................................................................... 50
VOTE 144 UGANDA POLICE ..........................................................................................................50
MINISTRY OF DEFENCE ................................................................................................................57
MINISTRY OF INTERNAL AFFAIRS HEADQUARTERS ................................................................ 58
VOTE 145: UGANDA PRISONS SERVICE ..................................................................................... 62
MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT .......................................63
NATIONAL PLANNING ATHUORITY (NPA) ................................................................................... 67
OFFICE OF THE AUDITOR GENERAL (OAG) ...............................................................................69
UGANDA REVENUE ATHUORITY .................................................................................................. 69
VOTE 143: UGANDA BUREAU OF STATISTICS (UBOS) ............................................................. 70
VOTE 153: PUBLIC PROCUREMENT & DISPOSAL OF PUBLIC ASSETS AUTHORITY (PPDA)
..........................................................................................................................................................71
HEALTH SECTOR ................................................................................................................................72
MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES ..............................................................79
MINISTRY OF TOURISM, WILDLIFE AND ANTIQUITIE ....................................................................81
AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES SECTOR ....................................................84
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SOCIAL DEVELOPMENT SECTOR .................................................................................................... 92
MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT ............................................. 92
AUTONOMOUS BODIES UNDER THE MGLSD ............................................................................95
Vote 122: Kampala Capital City Authority (KCCA) ....................................................................... 103
JUSTICE LAW AND ORDER SECTOR ............................................................................................ 106
Vote 007: Ministry of Justice & Constitutional Affairs (MJCA) ...................................................... 106
The Electoral Commission (EC) .................................................................................................... 109
JUDICIARY .................................................................................................................................... 112
PARLIAMENTARY COMMISSION (PC) ....................................................................................... 116
NATURAL RESOURCES SECTOR .................................................................................................. 117MINISTRY OF WATER & ENVIRONMENT .................................................................................. 121
MINISTRY OF PUBLCI SERVICE ..................................................................................................... 127
VOTE 501-778: LOCAL GOVERNMENTs (LGs) .......................................................................... 132
MINISTRY OF FOREIGN AFFAIRS .................................................................................................. 133
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Abbreviations and Acronyms
ACME Area Cooperative Marketing Enterprises
ACP AIDS Control Programme
ACT Anti Corruption Threshold
ADB African Development Bank
AIDS Acquired Immune Deficiency Syndrome
APRM African Peer Review Mechanism
ART Anti-retroviral Therapy
ARVs Antiretroviral Drugs
AU African Union
BFP Budget Framework Paper
BoU Bank of Uganda
BPO Business Process Outsourcing
BTVET Business, Technical and Vocational Education and Training
CAA Civil Aviation Authority
CADER Centre for Arbitration and Dispute Resolution
CAO Chief Administrative OfficerCDC Centre for Disease Control
CDO Cotton Development Organisation
CICS Competitiveness & Investment Climate Secretariat
CID Criminal Investigations Directorate
CIS Community Information Systems
COMESA Common Markets for Eastern and Southern Africa
DDA Diary Development Authority
DFID Department for International Development
DHO District Health Officer
DHS Demographic Household Surveys
DPP Directorate of Public Prosecutions
DRDCs Deputy Resident District Commissioners
DSC District Service Commission
DUCAR District Urban Community Access Roads
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EA Exploration Area
EAC East African Community
EADB East African Development Bank
EAPC East African Petroleum Conference
EC Electoral Commission
EDF European Development Fund
EFT Electronic Funds Transfer
EOC Equal Opportunities Commission
ESC Education Service Commission
ESO External Security OrganisationEU European Union
EU-ACP European Union - African Caribbean Pacific
FAL Functional Adult Literacy
FAO Food and Agricultural Organisation
FBO Faith Based Organisation
FGM Female Genital Mutilation
FINMAP Financial Management Accountability Programme
FY Financial Year
GAVI Global Alliance for vaccines and Immunisation
GBV Gender Based Violence
GDP Gross Domestic Product
GoU Government of Uganda
HIPIC Highly Indebted Poor Countries
HIV/AIDS Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome
HMIS Health Management Information System
HSC Health Service Commission
HSSP Health Sector Strategic Plan
IAEA International Atomic Energy Agency
IAF Inter Agency Forum
ICC International Criminal Court
ICESCR International Convention on the Economic, Social and Cultural Rights
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ICJ International Court of Justice
ICT Information and Communication Technology
IDA International Development Association
IDB Islamic Development Bank
IDP Internally Displaced Persons
IDPC Internally Displaced Peoples' Camp
IEC Information Education and Communication
IFMS Integrated Financial Management System
IGAD Inter-Government Authority on Development
IGAs Income Generating ActivitiesIGG Inspector General of Government
ILO International Labour Organisation
IPP Independent Power Producers
IPPAs Investment Promotion Protection Agreements
IPPS Integrated Personnel and Payroll System
IPSAS International Public Sector Accounting Standards
IREMP Indicative Rural Electrification Master Plan
ISO Internal Security Organisation
IT Information Technology
ITeS Information Technology enabled Services
JLOS Justice Law and Order Sector
JPC Joint Permanent Commission
JRM Joint Review Missions
JSC Judicial Service Commission
KIBP Kampala Industrial Business Park
KIDDP Karamoja Disarmament and Development Programme
LAN Local Area Network
LCs Local Councils
LG Local Government
LGAC Local Government Accounts Committee
LGFC Local Government Finance Commission
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MAAIF Ministry of Agriculture Animal Industry and Fisheries
MDAs Ministries, Departments and Agencies
MDGs Millennium Development Goals
MEMD Ministry of Energy and Mineral Development
MFIs Microfinance Institutions
MIA Ministry of Internal Affairs
MLHUD Ministry of Lands, Housing and Urban Development
MOD Ministry of Defence
MoEACA Ministry of East African Community Affairs
MoES Ministry of Education and SportsMoFPED Ministry of Finance, Planning & Economic Development
MoGLSD Ministry of Gender Labour and Social Development
MoH Ministry of Health
MoICT Ministry of Information and Communications Technology
MoJCA Ministry of Justice and Constitutional Affairs
MoLG Ministry of Local Government
MOPS Ministry of Public Service
MoU Memorandum of Understanding
MoWE Ministry of Water and Environment
MoWT Ministry of Works and Transport
MP/GKMA Master Plan for Greater Kampala Metropolitan Area
MPS Ministerial Policy Statement
MTEF Medium Term Expenditure Framework
MTTI Ministry of Tourism, Trade and Industry
MUBS Makerere University Business School
MUST Mbarara University of Science and Technology
NA Not Available
NAADS National Agricultural Advisory Services
NACS National Anti Corruption Strategy
NAD Norwegian Association of the Disabled
NAGRC&DB National Animal Genetic Resources Centre & Data Bank
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NALSIP National Adult Literacy Strategic Investment Plan
NAM Non Aligned Movement
NAMERA North Africa, Middle East and the Rest of Africa
NAPE National Assessment of Educational Progress
NBFP National Budget Framework Paper
NCC National Council for Children
NCD Non Communicable Diseases
NCDC National Curriculum Development Centre
NCHE National Council for Higher Education
NCI Nation Construction IndustryNCS National Council of Sports
NCSP National Community Service Programme
NDP National Development Plan
NEMA National Environmental Management Authority
NEPAD New Partnership for African Development
NEU Nuclear Energy Unit
NGOs Non-Governmental Organisations
NHIS National Health Insurance Scheme
NITA-U National Information Technology Authority- Uganda
NLGA National Local Governments Authority
NLUP National Land Use Policy
NMS National Medical Stores
NPA National Planning Authority
NPART Non Performing Assets Recovery Tribunal
NTR Non Tax Revenue
NWSC National Water and Sewerage Corporation
OAG Office of the Auditor General
OPM Office of the Prime Minister
OVC Orphans and other Vulnerable Children
PAeN Pan African e-Network
PAF Poverty Action Fund
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PFA Prosperity for All
PFAA Public Finance & Accountability Act
PMA Plan for the Modernisation of Agriculture
PNFP Private Not for Profit
PPDA Public Procurement and Disposal of Assets Authority
PPP Public Private Partnership
PRDP Peace Recovery and Development Plan
PS Permanent Secretary
PSC Public Service Commission
PWD Persons with DisabilityRDCs Resident District Commissioners
ROM Result Oriented Management
RSFP Rural Financial Services Programme
SACCOs Savings and Credit Cooperative Organisations
SADC Southern Africa Development Cooperation
SALW Small Arms Light Weapons
SMEs Small and Medium sized Enterprises
SNE Special Needs Education
SRA SACCO Regulatory Agency
STI Science & Technology Initiative
UBC Uganda Broadcasting Cooperation
UBOS Uganda Bureau of Statistics
UBTS Uganda Blood Transfusion Services
UCC Uganda Communications Commission
UCDA Uganda Coffee Development Authority
UCE Uganda Commodity Exchange
UCICO Uganda Construction Industry Commission
UCSCU Uganda Cooperative Saving & Credit Unions
UEPB Uganda Export Promotion Board
UGX Uganda shillings
UHRC Uganda Human Rights Commission
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UIA Uganda Investment Authority
UICT Uganda Institute of Information and Communications Technology
UIRI Uganda Industrial Research Institute
ULC Uganda Lands Commission
ULGA Uganda Local Government Association
ULRC Uganda Law Reform Commission
UMI Uganda Management Institute
UN United Nations
UNBS Uganda National Bureau of Standards
UNCRL Uganda National Chemotherapeutics Research LaboratoryUNDP United Nations Development Programme
UNEB Uganda National Examination Board
UNICEF United Nations Childrens Fund
UNRA Uganda National Roads Authority
UPDF Uganda People's Defence Forces
UPE Universal Primary Education
UPF Uganda Police Force
UPS Uganda Prisons Service
URA Uganda Revenue Authority
URC Uganda Railways Cooperation
UREA Uganda Rural Electrification Agency
URSB Uganda Registration Services Bureau
USAID United States Agency for International Development
USD United States Dollar
USE Universal Secondary Education
UTB Uganda Tourism Board
UWEC Uganda Wildlife Education Centre
VAT Value Added Tax
VBDC Vector Borne Diseases Control
VHT Village Health Teams
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INTRODUCTION
1. Section 7 (3) of the Budget Act, 2001, obligates the Budget Committee to prepare and submit areport on the national budget estimates and recommendations to the Speaker who shall in turn
send the report to H.E the President. Accordingly, Parliament has considered the National
Budget Framework Paper, comprising the Medium Term Macroeconomic Plan, Programmes for
Social and Economic Development and The Indicative Budget Framework for the next fiscal year
presented to Parliament in accordance with Section 4 (1) and (2) of the Budget Act 2001.
2.Further to the above, Section 11 of the Budget Act also obligates Parliament to analyzeprogrammes and policy issues that affect the national budget and the economy and where
necessary, recommend alternative approaches to the Government. Parliament through the
various sectoral Committees has interrogated the Policy options and Programmes presented by
the different Ministries, Departments and Agencies with a view of ascertaining their compliance
of prudent budgeting
3. The Budget Committee has examined the Budget Framework proposals of the Government andmade proposals for effective budgetary allocations and implementation. These are expected to
guide H.E the President in the preparation and subsequent presentation of the budget proposal
in June 2013.The Budget Committee also considered the reports and recommendations of
Sectoral Committees on the Governments proposals.
4. This report is presented in two main parts. These are the Macroeconomic section and theSectoral policy observations and recommendation section.
5. The Budget Committee considered the submissions from Sectoral Committees and wherenecessary proposed adjustments to figures within and across sectors in accordance with
priorities of the country and in line with national goals contained in the National Development
Plan (NDP). The Budget Committee has made general and specific observations and
recommendations.
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PART 1: MACROECONOMIC SECTION
GENERALOBSERVATIONSONTHEBUDGETFORFY2014/15Budget Absorption
6. The Committee is concerned about the poor performance of the development budget particularlyin the first half of 2013/14. This has been largely attributed to lengthy procurement processes. It
is therefore important that procurement regulations are reviewed to ensure timely procurement
to overcome the low absorption of the development budget.
Human Development-Gaps (Manpower Survey)
7. The high human resource gaps in all sectors are a key challenge to the realization of growthtargets. Uganda last had a manpower survey in 1987-89 and since then, there has been no
effort to harmonize the manpower demand and supply. Most of the education institutions are
now focusing on commercially attractive degree programs without guidance on the critical
manpower gaps needed in the country. The Budget Committee is concerned with this trend of
events and implores government to allocate resources to enable the process of carrying out a
comprehensive manpower survey to guide education institutions in their planning of academic
programmes. This will not only avail the country with the needed manpower, but will also reduce
the high levels of unemployment resulting from the mismatch between the demand and supply of
manpower in the country.
Budget Implementation Issues
8. The Committee welcomes measures to strengthen public finance management and controlsystems in order to fight corruption and theft of public resources at all levels. More specificallylinking resource allocation to development results, alignment of work plans, procurement plans
and budget and most significantly, the implementation of the Treasury Single Account (TSA) to
improve the overall management of public resources in line with international best practice. The
efficient Public Finance Management System (PFMS) together with a robust legal framework will
restore confidence of the development partners and normalize their relations Government.
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Monitoring of Budgets
9. The committee has observed the inadequate monitoring of the budget by the responsibleagencies including the OPM and NPA. Lack of monitoring gas compromised the quantum and
quality of outputs reported by different MDAs. Although the BMAU in MFPED has done
commendable job, it has only covered a very narrow scope of what is required. The Budget
Committee recommends that government should seriously consider strengthening the
monitoring function to improve service delivery.
Certificate of Financial Implications and Budget allocations
10.The Budget Act 2001 provides that for every bill presented to Parliament, must be accompaniedby a certificate of financial implications indicating the likely financial obligations and
commitments to government in the course of implementing the Act. Over the years, the Ministry
of Finance has been providing these certificates to all bills presented before Parliament.
However, many institutions or authorities that have been created, lack the necessary finances to
be operationanlised. Some of the notable examples are; the Petroleum Authority, the National
Oil Company, Warehouse Receipt Systems Act 2006 and the resultant Authority and Prevention
of trafficking in Persons (PTIP) Act 2009, Free Zones Act among others. The government is
urged to take appropriate action to address the problem.
Membership/ Subscriptions to International Organizations
11.The committee learnt that in many MDAs, there is either no or inadequate budgetary provision forpayment of subscription fees to various international organizations. This state of affairs has
embarrassed the country on several international meetings including H.E the President himself
and other senior Government officials. Whereas the committee appreciates the limited resources
envelope to cater for all subscriptions, government should rationalize and prioritize allocation of
funds to the most critical organizations to avoid further embarrassment for example, United
Nations, COMESA, EAC, IGAD among others.
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Establishment of the Salary Review Commission
12.The Committee urges government to expedite the establishment of the Salary ReviewCommission to deal with issues relating to salary discrepancies in the public service to avoid
selective awards across the service. This will greatly enhance the productivity of labour across
the entire public service
Efficiency Gains
13.The Committee welcomes a new measure requiring all government agencies to becomeconnected to prepayment systems for all utilities such as Water, Electricity and Telephone
services. In this regard any domestic arrears should be charged against the Budget provision forthe respective Votes in order to reduce the current public debt burden.
Parastatals
14.The Committee welcomes measures the bold decision to bring on board Government Parastals,authorities and all semi-autonomous institutions currently receiving Government subventions so
as to provide totality in the Government Budget. This should enable Parliament to do scrutinize
all revenues and expenditures of these organizations with a view of increasing the efficiency and
effectiveness of resources use. It will also help in harmonizing budgets and work plans of these
institutions in line with the NDP and MTEF and reduce of resource abuse by streamlining
procurement plans, human resource issues including remuneration that have not been
consistent with other public sector organizations.
Construction of Central Government Offices
15.The committee observed that budgeting for the construction of Central Government Offices is notcoordinated. The committee was informed that the office of the President was charged with the
responsibility of coordinating all initiatives for constructing government offices including the
mobilization of resources. The committee further noted that a number of MDAs had presented
unfunded proposals for consideration for funding. The Budget for office accommodation for
MDAs is huge and threatening the availability of resources that could be otherwise allocated to
other critical areas. The committee recommends that government seriously considers thi s
matter with a view to coming up with a harmonized strategy whose implementation
should become effective in 2014/15.
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NDP Financing
16.The Budget Committee has noted that financing of the NDP I in the first four years ofimplementation (FY 2010/11 to FY 2013/14) has exceed the NDP financing estimate on the
overall by shs. 1,596.5 billion. Based on FY 2014/15 estimates, government is on the right track
to meeting the estimated total financing requirement for the NDP1 of shs 54 trillion. This has
been made possible due to increased investments for infrastructure development to address the
infrastructure deficit and keeping the role of the public sector in national development.
17.The share of national budget devoted to complementary sectors (infrastructure- transport, energyand ICT) increased from 20% in FY 2009/10 to an average of 31.2% over the NDP period.
However, this remains below the projected NDP estimates of 44.2% for the period under review.The enabling sector cluster (Security, Accountability, Public Sector Management; Legislature;
Public Administration; and Justice, Law and Order) have received MTEF Budgets above the
NDP projections as indicated in Table 1.
Table 1: MTEF VS NDP Cluster Spending, Average for NDP Period as a
Proportion of total MTEF Budgets
NDP Clusters MTEF Approved Budgets and
Budget Estimate for FY 2014/15
NDP Projections-FY 2014/15
Primary Growth(Tradable) 4.5% 8.8%
Complementary (Infrastructure) 31.2% 44.2%
Social Cluster 23.3% 26.5%
Enabling (Other) 34.3% 21.1%
Source: MFPED and PBO Computations
18.Table 1 suggests that more budget resources have been allocated to the enabling cluster, awayfrom other critical clusters like the primary growth cluster, which has received half of the require
resources. While the NDP envisaged declining share of agricultural financing over the NDP
period, actual allocations were much less than the NDP projections and the desired sector
growth rates have been missed over the NDP 1 period.
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PerformanceoftheEconomyduringtheFirstHalfofFY2013/1419.GDP Growth:Growth in Uganda is expected to remain subdued at 6% in FY 2013/14, which is
slightly below the earlier projections of 6.3% and below the NDP projection of 7.4%, due to
unfavorable weather conditions in most parts of the country are affecting both food and livestock
production. Over reliance on agriculture to spur growth is unsustainable without adequate
investment in addressing the biding constraints in the Agricultural Sector.
20.Bank lendingrates though receding at a much slower pace (to 20.8%); continue to be high toattract private sector borrowing, which has only increased marginally by 6% as at February
2014. The slow growth in private sector lending points towards unfavorable lending terms
especially for the Agriculture sector which needs long term financing from the banking industry. .
21.Trade Balance: despite the improvement in the trade balance from a deficit of US$ 87.3 million asat February 2014; government does not have an effective national export strategy to improve the
countrys export base. The Export Promotion Board which is mandated to promote exports
continues to operate at low ebb as it is grossly underfunded.
22.External financing: The donor flows in terms of loans and grants have improved from US$39.3million recorded in July 2013 to US$ 161.5 million in February 2014, which is a sign of restored
confidence in government financial management systems by donors.23.External Debt: There is low absorption of resources resulting into unnecessary costs in servicing
external loans. This is due to inadequate project selection and design coupled with poor project
implementation. In addition, there are weaknesses in procurements and contract management of
some projects, also leading to implementation delays.
24.Fiscal stance: the Committee is concerned with the poor performance of domestic taxesresulting from shortfalls experienced in corporation tax and withholding tax with a shortfall of
Ushs. 161.19 billion Ushs. 30.72 billion, respectively during the half year period of fiscal year
2013/14. This implies the economic environment has not favored companies to make profits or
profits are understated, on which corporation tax should be based. In addition, excise duty
realized from mobile money transactions, has not yielded the desired levels of tax revenue
owing to some loopholes in the law.
25.The overall budget deficit (including grants) was 11% beyond the anticipated level of Ushs1,123.31 billion. The implication of this was the unplanned domestic borrowing which was 200%
above the targeted level. This creates additional pressures on the budget to finance the
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associated domestic interest costs and also crowds out private sector borrowing, through high
interest rates.
Recommendations
26.The strategy of Government to increase investment spending should be supported; however, thestrategy should be accompanied by other strategies to boost the revenue base, increase the tax
revenue to GDP ratio and avoid excessive recurrent spending growth. The investment spending
should be financed by a sustainable combination of external and domestic borrowing and to
properly utilize government savings earmarked to infrastructure investment.
27.Government should continue with infrastructure investment by exploring alternative sources offinance from traditional grants and concessional borrowing to non- concessional borrowing,
issuance of sovereign bonds and other forms of financing including Public Private Partnership
arrangements.
28.Government should place the tax efforts on a more comprehensive strategy in order to widen thetax base. In addition government should remove critical VAT and income tax exemptions, while
also focusing on better tax administration.
29.Government should, among other initiatives, introduce Islamic banking, fast track implement ofthe national Identification project to enable financial institutions hold confidence in their clients
against default risks.
30.Government should extend financial literacy campaigns to rural areas; and liberalize the pensionindustry to improve liquidity in the credit markets and; broaden and deepen the financial sector
and non financial sector
31.Government should design an effective export promotion strategy to guide and prioritize publicinvestments in export oriented sectors. In addition, the export promotion board should be
prioritized in terms of additional financing to strengthen its capacity to boost the export sector.
32.In order to deal with supply side constraints which lead to inflation and curtail growth,government should transform its contribution of the Agricultural Credit Facility into an agricultural
bank to be able to provide medium and long term affordable finance to the agricultural sector to
improve production and productivity in the Sector.
33.Government should improve the implementation of the development budget to be able to realizeits growth objectives, while at the same time increase employment levels in the country.
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MACROECONOMICPROJECTIONSFORFY2014/15&THEMEDIUMTERMObservationsontheMacroeconomicAssumptions
34.Given that the government budget is only about 20% of GDP and contributes to 28% on GDPgrowth, the overall growth will have to rely more on the performance of the private sector. The
private sector expenditure is about 80% of GDP and contributes more than 50% to GDP growth.
35.In the FY 2012/13 the household consumption was subdued due to the declining real wages. Tocounter the trend, real wages ought to rise proportionate to inflation expectations. Connectedly,
in the first half of FY 2013/14, growth in private sector credit was slower than anticipated due to
the sticky lending rates. Should the private sector credit trend continue this way, then the overall
growth projection of 6.8% will not be realized in FY 2014/15.36.The current key challenge to growth is translating into higher living standards, poverty reduction
and improved social indicators. Government is challenged to ensure that growth is not only
sustainable, but with quality and inclusiveness. Government action should be aimed at
integrating lagging regions, foster agricultural productivity and strengthen institutions that
contribute to improvement of social indicators.
37.Government can make growth more inclusive by promoting job creation and skills development,especially for the masses that are leaving the unproductive land and joining the service and
industrial sectors. Such efforts can be complemented by fostering financial inclusion and access
to finance.
38.Uganda is vulnerable to regional political instability, governance challenges, spending pressures,and capacity constraints. All these and more pose a potential risk to growth target for FY
2014/15.
39.The projections also point towards a drop in international foreign reserves required to cushion theeconomy against external shocks. This is due to planned utilization of government deposits to
finance the infrastructure projects.40.The anticipated decline in foreign reserve cover will ease the burden on budgetary resources, as
the fiscal deficit is projected to fall in FY 2014/15 compared to FY 2013/14 levels. Other factors
leading to a declining fiscal balance, one is the anticipated rise in domestic revenues by 0.6% of
GDP and the drop in budget expenditure by 2.6% of GDP in FY 2014/15. However, as observed
in FY 2013/14, tax revenue growth is projected to be off pace by 0.1% of GDP. The shortfall is
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happening in spite of the numerous tax revenue enhancements through policy refinements,
modernization, and administration improvements.
41.In absence of any new approaches aimed at capturing the untapped revenue potential tax areas,the FY 2014/15 tax revenue target will be hard to attain.
Recommendations
42.The macroeconomic assumptions should clearly indicate the financing plans of government inparticular the large projects. If the projects are to be financed by borrowing, then the processing
and implementation should be fast tracked to avoid fiscal liabilities and non-absorption costs.
Institutions involved in processing and implementation of huge projects should be strengthenedto ensure efficiency and transparency in financial management and accountability.
43.Given the above observations, Government should modify the above assumptions to reflect theeconomic realities and abide by them during the implementation of the macroeconomic policy.
ResourceEnvelopeforFY2014/1544.The Committee observes the growth of the resource envelop by 21.5% (or by Ushs 2,565 billion)
in FY 2014/15 compared to current FY 2013/14. However, the committee is concerned with the
significant projected rise in borrowing from the domestic sources to finance by Ushs. 995.4
billion (153%), which has translated into an interest cost rise by 129.5 billion (13.3%) from FY
2013/14 levels. This trend has continued despite its effects on interest rates. And the threat it
imposes on the availability of private sector credit and overall growth of the economy
45.The Committee commends government financing the larger part of the budget where, domesticand external resources will constitute 81% and 19% respectively, compared to the current
composition of 79% (domestic) and 21% (external).however, domestic mobilization efforts
should be further encouraged with a view to expanding resource envelope and reducing the
fiscal deficit.
46.The committee notes that in the event that external support is unforthcoming, government willhave to mobilize additional domestic resources to maintain the same level of fiscal deficit or cut
spending, which could negatively impact on growth. Any negative consequences to growth will
dampen any prospects for additional domestic revenue mobilization efforts.
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47.URA Tax revenue is projected to rise by 0.5% of GDP next FY 2014/15. While the 0.5% target isprojected to be missed in FY 2013/14, prospects for FY 2014/15 are mixed unless there is a
comprehensive strategy to reform the tax system.
48.According to IMF, Uganda faces a large shortfall in VAT revenues compared to other EACcountries as illustrated by the Country (C) efficiency measure, which captures both revenues
lost from statutory exemptions in the law and from poor administration and enforcement of tax
laws.
Recommendations
49.Government should use the cost benefit analysis to determine which tax exemptions are worthmaintaining and which ones should be dropped to improve efficiency.
50.Government should undertake a comprehensive review of exemptions under the income tax actand pay close attention to capital gains tax on the disposal of commercial property.
51.URA should focus more on areas with the highest revenue potential.
Fiscal/BudgetStrategyforFY2014/1552.The design of the fiscal stance to be consistent with the objective of monetary policy of reducing
core inflation to the medium term target of 5% is costly in terms of the interest cost to the budget.
53.Total expenditure is projected at about 19.6% of GDP and include among other items, wageincreases to compensate civil servants for the decline in purchasing power of their salaries;
election related expenditures; and the continuation of spending on the two large-scale hydro
power projects.
54.Consequently, the overall deficit is projected at 5.5% of GDP. Financing of the deficit will rely onexternal sources (including non-concessional loans), which will account for about 3.9% of GDP,
while up to 1.6% of GDP will be from domestic sources.
55.Achieving the growth in tax to GDP ratio by 0.5% remains a challenge which affects financing ofthe budget.
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Recommendations
56.Government should explore cheaper sources of financing the deficit, especially concessionalborrowing from external sources, to relive the budget from increasing domestic interest costs
57.Government should take a cautious approach in increasing non concessional external finance, tominimize risks associated with external non concessional debt
58.Government should explore various options of widening the tax base to be able to realize the taxto GDP ratio over the medium term.
59.Government needs to further streamline Public financial management systems in order to winback development partners confidence to finance the national budget priorities.
60.Given the pressing needs presented in the NBFP as unfunded priorities. Parliament shares theview that the tax base should be further widened. To this end, the committee recommends that
taxes on gambling and sports betting should be increased by 100%. The committee further
recommends for an inspection fee on vehicles for roadworthiness.
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PART II: SECTOR POLICY OBSERVATIONS AND
RECOMMENDATIONS
61.The Committee noted the following key programmes for social and economic development, whichare derived from the NDP and the NRM Manifesto ( See table 1 below)
i. National Security and Defense;ii. Transport and Energy Infrastructure;iii. Science, Technology, innovation and employment;iv. Agriculture production and productivity;v. Human Capital developmentvi. Governance and public service delivery
Table 2: Sector Nominal Allocations in the MTEF for FY 2013/14 Vs FY 2014/15(Ushs. Billion)
Sector Allocation 2013/14 Approved Budget 2014/15
Budget Proj
2013/14
% Share
2014/15
% Share
Works and Transport 2510.70 2,575.50 19.22% 18.08%
Energy and Mineral Development 1675.70 1,711.70 12.83% 12.02%
Eductaion 1761.60 1,699.40 13.48% 11.93%
Health 1127.50 1,197.80 8.63% 8.41%
Interest Payments Due 975.30 1,104.80 7.47% 7.76%
Public Sector Management 1093.80 1,070.40 8.37% 7.52%
Security 1048.50 1,005.50 8.03% 7.06%
Justice/Law and Order Sector 625.70 778.50 4.79% 5.47%
Accountability 698.80 707.10 5.35% 4.96%
Public Administration 398.30 504.20 3.05% 3.54%
Agriculture 382.70 440.70 2.93% 3.09%
Water and Environment 383.90 430.80 2.94% 3.02%
Legislature 237.60 237.60 1.82% 1.67%
Lands, Housing and Urban Dev't 30.00 99.10 0.23% 0.70%
Tourism, Trade and Industry 54.80 68.40 0.42% 0.48%
Social Development 44.40 52.90 0.34% 0.37%
ICT 15.40 15.40 0.12% 0.11%
Unallocated 542.89 3.81%
o/w Salaries 450.19 3.16%
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Table 2: Sector Nominal Allocations in the MTEF for FY 2013/14 Vs FY 2014/15(Ushs. Billion)
Sector Allocation 2013/14 Approved Budget 2014/15
Budget Proj
2013/14
% Share
2014/15
% Shareo/w VAT Arrears 20.00 0.14%
o/w Taxes on Government Imports 70.00 0.49%
o/w Various Local Governments 2.70 0.02%
GRAND TOTAL 13,064.70 14,242.69 100.00% 100.00%
Source: NBFP 2014/15 -2018/19
62.The committee analyzed the nominal sectoral allocations by government as summarized in table2 above and makes the following observations and recommendations.
a) The high investment in works and transport, energy, education, health and security isappreciated. However, to achieve a double digit GDP growth, this high spending in
infrastructure should correspond with high investment in agriculture, industry and trade
and tourism to ensure that infrastructure maintains a high level productivity and return
on investment.
The committee recommends that the current trend of sectoral allocations should be reviewed to
ensure;
i) More resources for agriculture, trade and industry and tourism are provided
ii) Structural reforms to improve the governance of these sectors should be implemented
immediately
Iv) Increase value for money and periodic monitoring for results to minimize loss of public
resources particularly at lower government level.
Each year there is a drought in Uganda, the macroeconomic stability of the country is severely
affected. The GDP Growth target is not achieved and there is general inflation experienced in
the country. This phenomenon which is increasingly becoming rampant has been reported in
almost all previous background to the budget documents explaining the failure to attain growth
targets.
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b) The committee recommends that the investment in the Water infrastructure especiallyfor the small and large irrigation schemes be upscale in order to ensure sustainable and
high annual GDP growth
c) The committee also noted that because of the surging population, demands for socialservices have to continue mounting pressure on the Budget. This NBFP carries very many
critical unfunded social priorities which can only be addressed with an expanding economy
characterized by a public investment structure illustrated above. Without this happening, the
government should be in for a cost sharing regime to ensure delivery of quality social
services
EASTAFRICANCOMMUNITYAFFAIRS(EACA)Dissemination of a National Policy on EAC integration:
63.The Committee was informed that a draft policy was place and a validation exercise had occurredin April 2014. A cabinet process for approval had been initiated with a memo. The Ministry has
planned to develop an implementation strategy by June 2014 to guide other stakeholders across
Government and other key stakeholders. A funding gap of 500 million was identified for rolling
out the policy.
64.The Committee recommends that Ministry of Finance gives Ushs. 500 million to the Ministry tofacilitate the dissemination of the National Policy on EAC integration.
Awareness of the EAC Integration
65.The Committee observed that since the inception of the EAC, the impact and benefits of theRegional Integration has not been felt by the Uganda Communities. MEACA needs to make
better awareness and communication strategies that will ensure that knowledge andparticipation of the citizens in the EAC integration are enhanced. The Committee was informed
that the low awareness of the EAC integration is largely contributed by inadequate funds and the
activity is largely considered by the Ministry of Finance to be a consumptive item. The
Committee was informed that MEACA needs to procure a dedicated awareness service van at a
cost of 200 million; in addition, MEACA needs to acquire Information Education and
Communication (IEC) materials for awareness effort at a cost of 200 million.
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The Committee recommends that Ushs. 400 million is given to MEACA to effectively carry out
sensitisation and awareness campaigns to enhance citizens participation in the EAC integration.
Office Space
66.Due to increasing staffing levels, office space at MEACA has remained a challenge. The Ministerinformed the Committee that MEACA is looking forward to acquiring another floor (third floor) on
Postel building at a cost of Ush 230 million. In addition, the Committee learnt that the property-
owner made revision in cost of rent from US$ 9.2 to US$10 per square meter, hence creating a
gap of Ushs 54 million in rent provision.
67.The Committee recommends that Ushs. 284 millionbe given to MEACA to secure more officespace on Postel building and to cover the rent provision for the coming FY. In addition, the
Committee urges Government to come up with clear policy on Office accommodation for all
Government institutions.
Timely and effective implementation of EAC decision, directives, policies and programmes
68.The Committee noted that MEACA receives, communicates, monitors and evaluates councilsdecisions and directives to the implementing MDAs. Timely and effective implementation of the
EAC decisions is a challenge due to capacity and resource constraints. Moreover, MEACA is yet
to fully operationalise the East African Monitoring and Evaluation system (EAMS-Uganda) for
tracking implementation of EAC directives and decisions.
69.The Committee recommends that Ministry of Finance gives MEACA Ushs. 100 million to fullyoperationalize the East African Monitoring and Evaluation System (EAMS) for Uganda.
Coordination of Implementation of the Common Market
70.The Committee was informed that Uganda has already developed a Common MarketImplementation Plan (CMIP) and a certificate of financial implication secured from Ministry of
Finance. CMIP will guide the country to realise the Common Market. Ugandas national laws are
also being harmonised to facilitate the implementation of the protocol.
71.The Committee recommends that Ushs. 200million should be given to MEACA to facilitate thecoordination and implementation of the Common Market Implementation protocol.
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Vacant Posi tions at MEACA
72.The Committee observed that the issue of vacant posts is still outstanding and this has continuedto affect the performance of MEACA.
73.The Committee urges the Ministry of Public Service to fast track the recruitment of workers forthe Ministry to enable effective performance.
Harmonisation and ratification of protocols
74.The Committee observed that while the Ugandan laws, policies and strategic frameworks to beharmonised into the EAC context were identified and indeed the first omnibus bill was prepared,
the process is still very slow. In addition, MEACA has a number of EAC protocols that require
ratification in Uganda; the process of ratification at cabinet level is not given sufficient priority.
75.The Committee recommends that Government gives sufficient priority to the ratification of theEAC protocols.
Dissemination of MEACA Outputs
76.MEACA generates a lot of output in form of Consultative and Dialogue reports; Engagementsupport reports; Research, Study and Technical papers; Progress and status reports; Countryposition papers and; Instruction and Education materials. These products need a wider
dissemination to reach as many stakeholders as possible, to ensure information sharing and
effective utilisation of the findings in the EAC integration. The Committee was informed of a
number of ways in which MEACA disseminates its outputs to the business community, EAC
clubs in schools, donor community and the general public. MEACA holds engagement meetings,
media campaigns, Umoja news letter, MEACA website and the MEACA resource centre but all
this is not sufficient. The Committee recommends that MEACA takes to disseminate its
information widely in order to deepen the EAC integration process.
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MINISTRYOFINFORMATIONCOMMUNICATIONTECHNOLOGYThe National ICT Policy
77.The ICT sector has been working without a National Information and CommunicationsTechnology Policy which has created a void and given rise to uncoordinated planning and
duplication of ICT programs/activities across Ministries, Departments and Agencies. However,
the Committee was informed that the Certificate of Financial Implication for the draft National
ICT Policy had been secured from MoFPED and had been submitted to cabinet for approval. A
copy of the Certificate was tabled to the Committee by the Minister.78.The Committee recommends that the Minister fast tracks the approval of the Policy by Cabinet at
least by the end of FY 2013/14.This will greatly guide the ICT sector and other MDAs in regard
to an overarching policy to guide formulation of other ICT related policies.
Analogue to Digital Migration
79.The Committee observed that there is lack of commitment in as far as the operationalization ofAnalogue to Digital migration is concerned. The country is at a risk of failing to meet the June
2015 the deadline that was set by the International Telecommunications Union (ITU). The
Committee notes that unbundling of UBC has not yet been done as earlier recommended and
that instead, the Ministry is pushing for a law, the Analogue to Digital Migration Bill to regulate
the process which may be too late given the deadline.
80.The Committee strongly recommends that all government Institutions concerned; that is UCC,UBC, MoICT and Ministry of Information and National Guidance urgently work together to fast
track the process.
The MoICT should consult on the law that should be amended to ensure unbundling of UBC as
soon as possible instead of coming up with the Analogue to Digital Migration Bill.81.The Committee further recommends that part of the 1% levy funds be allocated towards fast
tracking the Analogue to Digital Migration process in addition to the funds that UCC had
allocated to this process in their budget for FY2013/14.
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Extra 1% Levy from Telecom Companies (NTR)
82.The Committee expressed concern on the way the extra 1% from telecommunication companiesis being shared within the Sector. The Committee was informed that the 1% levy will be shared
as follows; Ministry of ICT 25%, NITA-U 45%, UCC and UICT 30%. The Committee observed
that this was done without substantive regulations to the UCC Act 2013 in place as yet.
83.The Committee further noted that these funds expected in form of NTR were largely allocated toconsumptive items like Workshops and consultancies in the case of the ministry yet they have
unfunded priorities.
84.The Committee recommends that the funds from the extra 1% levy should strictly be allocatedtowards development of ICT as clearly highlighted in the UCC Act 2013.
85.The Committee further recommends that the NTR from the 1% levy for FY2014/15 should beallocated towards fast tracking Analogue to Digital Migration, turning UICT into a Center of
Excellence and the construction of the ICT Park in Namanve that will house MoICT, NITA-U and
the BPO operators, hence saving on the exorbitant rent dues.
86.The Committee strongly recommends that allocation of the funds from the 1% levy be agreedupon with the Committee of ICT in order to ensure that its spent on activities that will benefit theICT sector as a whole.
National Backbone Infrastructure (NBI)
87.The Committee observed that NITA-U had been authorized by MoFPED to spend the NTRcollected from the commercialization of the NBI at source; however as at half year, NITA-U
hadnot generated any NTR. NITA-U handed over to the Commercial Manager on 31stMay 2013
and as per the contract the manager was given 6 months to mobilize. The projection for next FY
2014/15 is UGX 11.3 BN.
88.The Committee recommends that NITA-U makes efforts to actualize its projections as far asgetting NTR from the commercialization of the NBI is concerned. Projected NTR for FY2014/15
is UGX 11.3bn and would go a long way in funding the IT infrastructural projects in NITA-U.
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Country Code Top-Level Domain (ccTLD)
89.The Committee also noted that the ccTLD (.ug) is still managed by an individual whichcompromises governments cyber security efforts. The Government needs to urgently take on
the management of its domain or execute a PPP. The Committee was informed by NITA-U that
the process to re-delegate the domain had already started and the process would take between
9-18 months to be complete.
90.The Committee recommends that government urgently harmonizes the management of theCCTLD if cyber security undertakings are to be realized. The period 9 18 months affirmed to
the Committee should be adhered to and any developments to that effect should be shared with
the Members of the Committee.
Expenditure on Consultancies by the Sector
91.The Committee noted the high NITA-U expenditure on consultancies. NITA-U attributed this tothe fact that the Authority is under staffed with the approved staffing level filled to only
25%,hence most of the work being hired out to consultants.
92.The Committee recommends that MoICT, NITA-U and MoFPED work out modalities ofaddressing the issue of the wage ceiling in FY2014/15 and that affirmative action be sought for
the MoICT in terms of remuneration if it is to recruit the competent and skilled top management
personnel it needs.
93.The Committee further recommends that UGX 0.150bn be availed to MoICT to cater for the wagefunding gap and UGX 2.5bn be availed to NITA-U to cater for its wage shortfall and vacant posts
as this will greatly reduce the sectors expenditure on hiring consultants.
National Post Code and Addressing System
94.The Committee noted that the Pilot National Post Code and Addressing System in Entebbe thatcommenced in June 2011 and should have ended in June 2012 has not yet been concluded up
to now.
95.The Committee strongly recommends that implementation of the project should be carried out byUPL with support from UCC and that the Ministry of ICT supervises and formulates the
necessary laws and policies to guide the project.
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96.The Committee further recommends that Government urgently embraces this project and availsthe Ministry with UGX 1.065bn needed to complete the pilot project in Entebbe Municipality as it
will greatly enhance revenue collection by easing URAs work among other benefits of
numbering and addressing.
Procurement o f the Intelligent Network System
97.The Committee observed the delay in the procurement of the Intelligent Network System whichhas dragged on for some time. The INS was intended to assist UCC to enhance its monitoring
capabilities of the telecom companies in terms of revenue generated and quality of service in
order to increase its regulatory efficiency.
98.The Committee strongly recommends that the evaluation process for the procurement of the INSbe expedited and that the Minister follows up its procurement to ensure that the INS is in place in
FY2014/15 as this will go a long way in addressing revenue shortfalls and Quality of Service.
Quality of Service by Telecom companies
99.The Committee noted that consumers continue to experience problems of dropped calls andunsolicited message from telecom companies that are charged off the consumers airtime. The
Committee was also informed that the penalties to address the issue of quality of service will be
stipulated in the regulations of the UCC Act 2013 that will be brought to Parliament soon.
100. The Committee recommends that the MoFPED urgently revisits the taxes levied on the telecomcompanies, as they seem to be the highest in the region and are in turn passed on to the
consumers. These are mainly manifested in the incoming international calls terminating in
Uganda.
101. The Committee also recommends that Government clearly highlights its stake in UTL and explainwhy UTL is not meeting its obligations like other telecom companies.
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102. The Committee further recommends that the regulations containing the penalties meant toaddress issues of vandalism and unsolicited messages be finalized and tabled before the
Committee by the end of FY2013/14.
The Ban on used Computers
103. The Committee noted that its earlier recommendation on the ban on importation of usedcomputers has not been adhered to and they are still being imported, packaged and disguised as
new ones in order to exploit the unsuspecting consumers. With the evolution of technology,
importing second hand computers only serves the purpose of making Uganda a dumping ground.
104. The Committee strongly recommends that Government upholds the ban on used computerssince technology is fast changing to mobile handsets and second hand computers will only be a
serious environmental hazard to the country.The Committee further recommends that the
capacity of the UNBS staff be enhanced in order to ably identify a used computer from a new one
before it gets into the country.
Rural Communications Development Fund (RCDF)
105. The Rural Communications Development Project under Uganda Communications Commission(UCC) has registered some success especially in the education sector but the telemedicine
project has failed to take off despite the huge sums of money invested in procuring the
equipment. The Committee noted that most of the regional referral hospitals visited during its
oversight work like Arua, Mbarara and Kabale, lacked full sensitization and training on how to use
the equipment and there was no internet.
106. The Committee recommends that the entire RCDF project should be re-strategized in line withthe needs of the communities its intended to serve.
107. The Mandate of UCC should be clearly defined since this is a multi-sectoral project that alsoinvolves Ministry of Education and Ministry of Health.
108. UCC should consider hiring a consultant in rolling out the Telemedicine project to ensure thatequipment is fixed and working in coordination with the Ministry of Health as it will go a long way
in addressing the problem of doctor to patient ratio especially in hard to reach areas.
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EDUCATION&SPORTSSECTORSectorBudgetAllocationforFY2014/15
109. The Committee observed that the Sectors overall budget is projected to decline by 2.7% (Ushs54.3Billion). This is on account of external financing that has reduced by 71.59 bn in the FY
2014/15 as result of completion of ADB APLI program. The reduction leads to the allocation of
Ush 1,952.02bn in the FY 2014/15 from Ushs 2,006.3bn inclusive of the Non Tax Revenue
collections by the Public Universities. The Sectors MTEF Budgetary allocation will account for
12% of the National Budget resource envelop in the FY 2014/15 down from 13.5% in the FY
2013/14 allocations.
Sector funding
110. The sectors share of the National Budget has declined from 13.5% to 12% of the NationalBudget in the FY 2014/15 despite the Dakar-Senegal declaration that called for at least 20% for
the Member States to attain the millennium goal of universal access to education. The proportion
of the sector budget that will be invested in key sector output for service delivery is projected to
decline as a share of the sector budget to 52% from 54% which implies increasingly more
resources will be devoted to capital development rather than actual teaching.
Development Budget
111. The Sectors Development Budget will account for 19% of the sector resources with externalfinancing contributing 11% on backdrop of a reduction by ushs 71.59 billion in the sectors
financing.
112. The Committee noted with concern the continued congestion in classrooms with some districtslike Agago, Amudat and Amuria reporting an oversubscribed classes of 100:1 pupil classroom
ratio as compared to the national average of 55:1.
113. The Committee recommends rational allocation of the available development resources todistricts to support schools that are oversubscribed in classrooms.
UPE & USE Program
114. The NBFP provides for continuity of the two programs though with a reduction in the capitationgrant for UPE from ushs 7000 to ushs 6860 per annum on account of increased enrolment
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against a static budget allocation. This is contrary to previous recommendation of Parliament to
be revised to Ushs 10,000 to provide for inflationary tendencies for which the funds are supposed
to be applied.
115. The USE capitation remains at Ushs 41,000 and ushs 47,000 for the public schools and thoseunder partnership respectively per term.The Committee was informed that there was a funding
gap of ushs 22.745 billion to raise UPE capitation to Ushs 10,000.
116. The Committee strongly recommends the reinstating of UPE caption grant to Ushs 7000 and thereview of the grant to Ushs 10,000 as previously recommended. The Committee furtherrecommends that USE caption grant be reviewed to at least Ushs 100,000 per term per child
Capitation grant shortfall
117. The Committee established that despite results from the 2013 head count exercise reflecting anenrolment increase of 58,078 students from 753,960 (2012) to 795,234 (2013) in USE and
29,682 students from 38,411 (2012) to 66,261 (2013) under UPOLET; the capitation grant
allocation remained static in the FY translating into a Ushs.14,356bn deficit.
118. The Committee observed the need for an urgent solution to this situation which was likely toaffect the performance of the program as many children may be denied chance to study under
the program. The Committee recommends that resources be found to support these programs.
Emergency classroom construct ion
119. The Ministry has planned to undertake classroom construction and rehabilitation of primaryschools despite it being a decentralized function under the pretext of emergency construction.
This has been characterised by delayed works and underperformance of the programme as
allocated funds are never fully utilised within the financial year.
120. The Committee reiterates its earlier stand on this program and calls for the strengthening of theDistrict Local Governments to undertake this program and funds be channelled to the schools for
better and timely response to disasters.
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Skilling Uganda Program
121. The Committee established that the Ministry has prioritised the implementation of skilling Ugandaprogram through the existing structures of vocational and business training. The ministry has
instituted a Task Force to review Vocational training curriculum so as to reorient the program to
suit the demands of the current job market. The Committee observed that the modality for the
program implementation does not come out clearly in the BFP in terms of funding, responsibility
centres and accountability among others.
122. The committee therefore recommends a systemic appraisal of the program to provide for a clearresponsibility centres and accountability taking into consideration its programming and
accessibility.
Early Childhood Development Program
123. The Committee notes the immense benefits of Early Childhood Development Programs to theindividual and the nation at large. However, its disappointing to learn that this is purely a private
led initiative with little government intervention. The committee finds this situation unfortunate in
the era of universal education.
124. The Committee therefore recommends that Government seriously considers the uptake of thissegment with the amendment of the Education Act 2008 to provide for this segment rather than
just simply regulating but should include facilitating of the learning of children.
Establishment of Public Universities
125. The Committee established that the Ministry plans and has allocated funds for the establishmentand support of Task Forces for the operationalization of Muni and Soroti Universities to a tune of
Ushs 12 billion. The Committee was assured during the consideration of the Ministerial Policy
Statement for the FY 2013/14 that Muni University will have a Vote status this has not yet been
realised. This has an implication on the functioning of the university that has planned to admit its
first cohort during this academic year as funds are accessed through ministry of Education and
Sports.
126. The Committee recommends that Muni University be supported to start its program during thisacademic year 2014/15 with the provision of a vote status without any further delay as they have
already put in place the necessary infrastructure and systems to conduct lecturing.
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Support to Private Universities
127. The Committee notes continued government support to private universities and yet publicuniversities are struggling with hosts of challenges.
128. The Committee urges government to prioritise the funding of public universities to enable themfunction normally before taking on extra responsibilities under private universities.
129. Further the Committee recommendations rationalisation and adoption of a proper criterion forselecting and supporting private universities with a one-off financial support.
Increase in unit cost of service delivery
130. The Committee noted that the cost of a number of services and goods has doubled in terms ofunit cost. For example the construction of a 3 classroom block has risen from Ushs 35 million in
FY 2013/14 to Ushs 106m in FY 2014/15; an increment of two folds 202%. Likewise an
administrative block has risen from ushs 62m to ushs 112m. The indicative planning figures can
easily tie up sector resources or lead to misallocation without proper costing.
131. The Committee recommends an observance of the market prices and where possible provisionsbe made for a review of the contract sums as some projects in the sector have previously failed
to be completed due to under costing by the Ministry.
Karamoja Development Program
132. The Committee established that the Ministry under project number 1232 Karamoja PrimaryEducation Project plans to construct classrooms in the sub region with a budget provision of ushs
15.6 billion.
133. The Committee welcomes the affirmative action for the region and strongly recommends theexpeditious implementation of the program.
Student Loan Scheme
134. Parliament passed into law the Higher Education Financing Bill to provide for the student loanscheme with an initial budgetary allocation of ushs 6 billion. In the proposals for the FY 2014/15,
the sector plans to avail the same level of funding despite the policy proposal and the publicity to
incrementally provide budgetary resources to cater for more qualifying students.
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135. Further the Committee established that the students Loan Board is set to its first cohort ofstudents following approval by Parliament. The scheme is set to give loans to 5000 students to
pursue science courses at unit cost of 4,000,000 which translates into Ushs. 16bn needed for this
exercise.
This leads to a budget deficit of Ushs 10 billion as only Ushs. 6bn was allocated towards the
students loan scheme this academic year.
136. The Committee recommends adequate funding of the Loan scheme with the additional 10 billionto enable the scheme take off and afford needy but bright students access higher education.
137. The Committee recommends the phasing out of State House scholarship and the redirecting ofthe resources previously appropriated under state house to the loan scheme.
Office accommodation for the Ministry Headquarters
138. The Committee established that the Ministry of Education and Sports office accommodation hasa funding gap of Ushs 10 billion for the construction of its headquarters at Kyambogo Hill. The
Ministry has recently reallocated from Development House to Regency House where they are
currently renting.
139. The Committee recommends that the Ministry explores the Public Private Partnership frameworkto identify a potential developer to construct an office block on BOT (Build operate and Transfer)
basis as they await the PPP Bill that is before Parliament.
Special Needs Education (SNE)
140. The Committee notes with concern the failure by the ministry to provide a separate vote functionfor SNE for the last 8 years and the ministry has not fully embraced the rolling out of SNE project
country wide
The Committee recommends as follows:
141. A separate budget function for SNE be created before the Ministries budget for next financialyear is presented.
142. The Ministry of Education & Sports should follow up with the Ministry of Finance on the fundingrequest amounting to 4bn shillings for the project to roll out SNE countrywide.
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Health training Institutions
143. The Committee noted with concern the deteriorating education standards of health traininginstitutions since they were transferred to the Ministry of Education and Sports. This has been
attributed to the fact that the Ministry lacks the technical capacity to adequately supervise and
support these institutions
144. The Committee recommends that Government considers a policy shift by reverting HealthTraining Institutions back to the Ministry of Health.
Key unfunded budget priorities for FY 2014/15
Counterpart funding obligations145. Ushs. 16.2bn is needed as counterpart for the development of BTVET project (Saudi, OPEC, S.
Korea, BADEA) which cannot be accommodated under the Sector MTEF ceiling although Ushs.
8.06bn has been provided leaving a shortfall of Ushs. 10.14bn. In addition, ADB V project meant
for higher education, science and technology requires an additional Ushs. 6.02bn as counterpart
funding.
UNEB shortfall in the unit cost
146. UNEB presented a proposal for revision of Unit Costs from 17,524; 85,360 and 95,072 for PLE;UCE and UACE respectively to 19,000; 100,000 and 103,000 respectively. Based on the UNEB
Act, the Ministry has to approve the unit costs of all examination boards and currently, this
proposal cannot be catered for in the current budget for the education sector. Ushs. 8.49bn is
the additional funding needed to achieve the proposed new unit costs by UNEB.
Other examination boards
147. These include UAHEB; UBTEB and UNMEB. Additional resource of Ushs. 3.1bn was allocatedto the boards but this is still inadequate with a deficit of Ushs. 4.32bn remaining as a funding gap.
MoES submitted supplementary requests to MoFPED for this FY 2013/14 and this has not been
granted. These boards are under skilling Uganda therefore they are very key.
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University Staffing
148. The Committee notes with concern that most of the public universities have continued to operateon an average of 40% of their staff establishments which has impacted negatively on their
performance. MoES proposed that all public university staffing levels be increased to at least
50% (o/w Busitema 5.52bn; Mbarara University 3.326bn; Gulu University 1.640bn; Kyambogo
university 7.29bn and Makerere University 9.87bn) therefore, Ushs. 27.646bn is critically required
to improve staffing levels of universities.
Rollout of the Kiswahili curr iculum and training of sub math teachers
149. Ushs. 4.5bn is required to orient teachers in Kiswahili and Ushs. 1.2bn is also needed to orientteachers in sub math which is now a subsidiary subject at A-level. In addition, 0.5bn will also be
needed to print the P4 syllabus and teachers guide needed to facilitate the process.
Presidential pledges:
150. The Committee learnt that the Ministry has a data base in place to capture both pledgesimplemented since FY 2009/10 and outstanding pledges due in the education sector. Currently;
the sector has outstanding presidential pledges worth ushs. 71.6bn and this amount is projected
to grow over the medium term. The sector was initially allocated ushs. 11.115bn for
implementation of the presidential commitments but this allocation has dwindled over the years
and is currently constant at ushs. 4.5bn which is too insufficient.
151. THE Budget committee recommended that HE should scale down his pledges by honoring theprevious pledges to avoid piling pressure on the sector budgets
Grant Aiding
152. The Committee noted the lack of funding to schools grant aiding for secondary schools andprimary. The Committee accordingly recommends that government finds resources for grant
aiding of schools in sub counties without any government secondary schools.
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WORKS & TRANSPORT & LANDS, HOUSING & UBARN DEVELOPMENT SECTORS
WORKS&TRANSPORTSECTORInfrastructure Planning and Financing
153. The Committee applauds Government and UNRA in particular for having many national roadsdesigned ahead of time making them ready to compete for financing. However, the Committee
notes that the number of ready designs has far out stripped the availability of funds to have them
implemented. This is likely to increase the risk for budgetary waste as designs become outdated
necessitating to have them reviewed to align them to the current situation which take into accountincrease in traffic volumes among others.
154. In addition, when projects are designed but their actual implementation is delayed, there is atendency for unscrupulous people rushing to have new developments along the passage of the
proposed road in the end government is forced to incur huge costs to have them compensated
when the project eventually starts. No wonder, the cost of road construction has remained high.
As a result, Government has resorted to spreading the available resources thinly on many road
projects with very minimal impacts.
155. The Committee further notes that several road projects have been designed without taking intoaccount future trends in infrastructural developments needs of the Country as well as future
economic growth trends and projections resulting into budgetary wastage and unprecedented
delays as road designs have to undergo revisions mid-way into their implementations yet this
could have been foreseen during the preliminary designs.
156. For example Tororo Mbale Soroti Road which is under rehabilitation but the Committee wasinformed that the same road is currently being redesigned for reconstruction, strengthening and
widening to take into account heavy traffic plying from Kenya and Eastern Uganda to Juba inSouthern Sudan. Although this is a good gesture, the Committee notes it could have been
undertaken at the time of designing for the current on-going works.
157. The Committee was concerned about the haphazard way in which the Sector undertakes itsplanning for road infrastructure developments in the Country which has cost Government
colossal sums of money and time. Many times, the Ministry comes up with Short-term plans
which are not linked to the overall long-term National Plan. As a result, road construction projects
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have been undertaken with huge financial implications but shortly after their completion, the
same roads are redesigned for upgrading with new specifications which could have been
foreseen at the time of undertaking the initial preliminary designs.
158. The Committee recommends that road construction designs incorporate future developmentssuch as installation for utilities such as water pipes, telecommunication fiber cables, and
electricity poles to avoid the costs resulting road damage by Companies having to cut through the
road after it has been completed.
159. The Committee further recommends that the Ministry of Works and Transport should adopt aComprehensive Multi-sectoral long-term perspective planning modality in order to tap into
economies of scale. In addition, the Ministry of Works & Transport should liaise with otherMinistries such as Agriculture Animal Industries & Fisheries, Water & Environment, Energy &
Minerals, Lands, Housing & Urban Development and ICT to ensure proper coordination and
harmonization during planning phase.
Funding for Water, Air & Railway Transport
160. The Committee notes that Water, Air & Railway transport sub-sectors have not been accordedenough attention as compared to the road sub-sector. In FY 2013-14, UGX 28bn, 1.9bn & 15.8bn
was allocated to the Water, Air & Railway transport sub-sector respectively. In total, Water, Air &
Transport sub-sectors are programmed to receive UGX 44.78bn in FY 2014-14, a reduction from
UGX 45.63bn earmarked in FY 2013-14.
161. It is this gross underfunding which has overstretched the road sub-sector by increasing roadmaintenance backlog with minimal funds for road maintenance each year. The Committee was
further concerned that despite Parliaments previous recommendation to Government there is
need to re-instate Passenger Services within Kampala and along Kampala Jinja Railway line,
this has not been done to date.
162. The Committee recommends that Government should actualize its commitment and implementits strategy of revamping Water, Rail & Air transport sub-sectors by providing adequate budgetary
allocation to develop the railway network, rehabilitate and construct modern landing sites for
Ferries, upgrade all existing Aerodromes across the country and expedite the process of
compensation to pave way for the upgrading of Kesese Aerodrome to International Airport Status
which has dragged on since 2008.
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163. The Committee further recommends that Government should consider re-instating passengerTrain Services that are not included in the Concession with Rift Valley Railways as earlier
recommended by Parliament.
National Road Reserves
164. The Committee appreciates efforts by UNRA to demarcate and protect road reserves againstencroachment. However, the Committee notes that this is being done at a very high cost. Next
FY 2014-15, a total of UGX 2.3bn and UGX 1bn has been earmarked for the demarcation of a
stretch of 450km and for protection of Road Reserves respectively. The Committee notes that the
cost of protection could be avoided or minimized if Government adopted a sector wide approach
in planning, for example National Forest Authority (NFA) can be mandated to plant trees along allacquitted national road reserves which can serve a duo-purpose, that is to protect the
environment and the road reserves from encroachment.
165. In addition, the Committee was concerned that road reserves have remained very narrowrendering future road expansion costly and cumbersome.
166. The Committee strongly recommended that Government should amend the existing legislation sothat road reserve requirements is increased from the current width of 30m to 50m to provide for
enough room for road expansion with less strain.
167. In addition, the Ministry should intensify its efforts to ensure security of all Road reserves and tosecure Land Titles for the all road reserves. Government should explore the possibility of
incorporation road reserve demarcation and tree planning into the costs of road construction
whenever a new road is being opened or rehabilitated. The Ministry of Works and Transport
should ensure that all illegal structures erected in the Road reserves should be demolished at
owners expense.
Bridges and Drainage Structures
168. The Committee appreciates the proposed increase in the budget for bridges from UGX39.486bnapproved in FY 2013-14 to UGX 54bn in FY 2014-15 (an increase of UGX 14.514bn) but given
the magnitude of the problem this is still inadequate. The Committee was informed that a total of
66 bridges which need urgent repair and or construction require a total budget of UGX 350bn if
implemented in a phased manner (4 years), however this funding is not available even in the
medium term.
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169. Due to inadequate funding, construction works for a number of bridges has remained on paperrendering many parts of the country cut-off. It should be noted that absence of bridges in many
parts of the country renders accessibility to essential services such as education, medical care
and markets very difficult as these are cut-off. At the current rate when new roads are being
opened and rehabilitated, it is likely that demand for bridges, culverts, gabions will increases this
necessitates increasing funding in this area.
170. The Committee noted that the current arrangement of having funds for Bridges for DUCAR underthe Ministry while funding for bridges on National roads is under UNRA does not only breed
inefficiency in monitoring and supervision but also is recipe for budgetary waste, since it
increases the cost for administration.171. The Committee recommends that Bridges should be housed under UNRA where there is
capacity and the Ministry should not be involved in implementation but should instead remain to
provide policy direction and political supervision. In addition, the allocation to bridge repair and
construction should be increased in a phased manner to avoid accumulation of bridge backlog
like the case for roads.
Kampala City Council Traffic Management Plan/Transport Master Plan
172. The Committee appreciates the current efforts by the management of KCCA in trying to de-congest the City. The Committee however notes that the solution to the current congestion in the
City lies squarely in the successful implementation of the Greater Kampala Transport Master
Plan as outlined in the Greater Kampala Metropolitan Plan (GKMP).
173. Although, there are efforts to ensure that this Plan is actualized, there is no indication that this isbeing done in consultation with other key-stakeholders. The Committee noted that despite the
fact that several roads are being designed for dualling Kampala Entebbe, Kibuye Maya,
Kampala - Jinja roads among others, there is no plan to gazette and stop further development
along these roads. These continued developments will inevitably push the cost of compensation
beyond manageable levels.
174. The Committee recommends that the Ministry of Works & Transport to liaise with, Lands,Housing & Urban Development, Local government, Energy & Minerals, ICT, and Water &
Environment among others to ensure harmony in planning for the Greater Kampala as envisaged
in the GKMP.
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175. The Committee further recommends that implementation of the Greater Kampala TransportMaster Plan should be expedited as this is the only solution to the problem of congestion
currently experienced in Kampala city. The Committee further recommended that in the
meantime, all bus stops and or stages for omnibuses should be demarcated clearly to curb
overcrowding and traffic jam resulting from Taxis stopping anywhere any time. In addition, Police
should maintain its stance on the road to completely eliminate bad driving and ensure full
compliance to traffic regulation without compromise.
Road Maintenance Backlog
176. Although it had been anticipated that the Road Fund would be ring fenced to provide readyfinancing for road maintenance, it is not clear whether this is to be achieved. Despite Parliaments
continued demand that the URA and URF acts be amended to allow Road User Charges be
remitted directly on URF account, the process has been very slow. The Committee was informed
that the Draft Amendment Bill was before Cabinet. In addition, the