About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Monday, July 3, 2017

The incongruence of the incongruence

A summary of the 2017-18 budget                                  
How Ugandans get angrier as government does the right thing when it comes to spending money
Two contradictory things are happening in Uganda. First, large sections of the public, especially the elite public, are angry, very angry with government. They accuse it of ruling without leading and stealing without serving.

Meanwhile, government is going through its most intense transformation – from being a cash and carry regime doing small things to being an investment government that does big things on an unprecedented scale  – dams, electricity transmission and distribution lines, roads, railways, expressways, airports, water treatment plants and pipes across the country.

Why are people so angry when government has shifted to the very priorities that we have always demanded? It is easy to claim that people are just tired of President Yoweri Museveni who has been in power forever. This is true but it is not all.

Longevity alone does not explain the anger I see in Ugandans. Some leaders have stayed long and wrecked their economies (think of Fidel Castrol in Cuba, the Kims in North Korea, Julius Nyerere in Tanzania) or transformed them like Lee Kuan Yew in Singapore and Chiang Kai Shek in Taiwan. But I am not sure these nations reached the fever pitch anger I see on our social media.

In November 2006, I wrote a research paper for the Advocates Coalition for Development and Environment (ACODE) titled ‘Anatomy of Government Consumption; The Political Economy of Public Administration Expenditure in Uganda’. I argued that the government of Uganda budget tends to concentrate on consumption (largely political patronage) as opposed to investment. Museveni had also set up a committee to study this problem in 2002. The committee wrote a report on how Public Administration budgeting can be made more effective.

“There has been a proliferation of expenditures on activities that escape the full rigors of discipline through the annual budgeting exercise,” the report noted, “Whereas spending on the core civil service has been restrained, there has been an undisciplined growth in spending on commissions, semi-autonomous agencies and political appointments.

“By 2000/01, Public Administration accounted for 20.2 percent of the total budget outturn (excluding donor aid). This was considerably more than health (7.3 percent)… Government expenditure on Public Administration as a percentage of GDP rose from 2.7 percent in 1998/99 to 3.2 percent in 2000/01. If real spending on Public Administration from 1997/98 had been kept in line with population growth (3 percent per year), then more than Shs 50 billion would have been available in 2000/01 alone for additional spending on economic and social activities.

On May 21, 2002, the Minister of Finance, Planning and Economic Development, Gerald Sendaula, gave a spirited appeal at a Public Expenditure Review workshop in Kampala to put in place “stronger controls over the expenditures of Public Administration.” Later that day, the Permanent Secretary in the ministry of finance, also Secretary to the Treasury, Chris Kasami presented a paper in which he argued that two trends characterize the sector from a budgetary perspective: its “rapid growth” and its “persistent and substantial overspending relative to its budget”.

“The Public Administration sector is currently the second largest sector in the government budget, at Shs 320 billion this financial year,” Kasami said, “This is equivalent to a fifth of total government spending. The budget for Public Administration has grown rapidly over the years at an average annual rate of 16 percent. This means that this sector has claimed an increasing share of GDP, rising from 2.7 percent of GDP in 1997/98 to 3.6 percent of GDP in 2001/02.

“Over the last four to five years, Public Administration spending has consistently exceeded its budget allocation. Of all the sectors in the MTEF [Medium Term Expenditure Framework], Public Administration has been the one with the largest overspending. Public Administration persistently claims the lion’s share of supplementary expenditures approved by government, averaging 70 percent of all supplementary expenditures over the past few years.”

Museveni launches more road equipment recently to support the sector at district level. The country has made massive investments in roads and electricity generation
This problem remained persistent as I wrote my ACODE paper in November 2006. For example, in the 2006/07 Financial Year, the government budget was Shs4.4 trillion. Domestic revenue was Shs2.5 trillion (56%) while donor aid was Shs1.9 trillion (44%). Of this, Shs2.9 trillion (more than total government revenue or 65%) was allocated to recurrent expenses while Shs1.5 trillion (34%) was allocated for development expenditure. This provided considerable grist to my anti-government mill, and I used it.

Now in that budget Shs690 billion (or 15%) went into Public Administration i.e. political patronage. Here I have added the budget for Public Sector Management as well. The budget for roads funded by government own revenue was Shs176 billion or 4% of the budget. My ACODE research paper sought to hit this focus on patronage on its head and make a passionate call for investment spending.

So we organised three workshops beginning November 2006 and two others in the first half of 2007. We invited officials of the ministry of finance all of whom attended – from the minister, Permanent Secretary, directors to commissioners – practically everyone who mattered attended. All leading donor agencies and ambassadors attended the two workshops where I presented my research findings. We also had heads of semi autonomous government agencies and people from civil society and the private sector.

My research paper argued that the government should shift emphasis from political patronage to investment in infrastructure. In the 2007/08 budget, government made its move. It created the Energy Fund and Road Fund and threw money at these two sectors. In all the consequent budgets it has shifted spending emphasis to investment in these infrastructures. Our dream came true.

In the 2015/16 Budget, development (investment) spending took 60%, recurrent (consumption) 40%. Transport and energy sectors took 33.6% of the budget while public administration had grown from Shs700 billion to 1.7 trillion against a budget of 18.3 trillion. Thus, although patronage had more than doubled, as a share of the total budget it had fallen from 20.6% in 2002 to 9% in 2015/16. The budget for roads had grown from 4% to 18.2% of total spending.

Thus, even with its alleged corruption, Uganda National Roads Authority (UNRA) did a great job. From independence in 1962 to 2008 when UNRA began its work, Uganda had built 2,200km of tarmac of which only 700km was in good condition, 1,000km in fair condition and 500km in a bad condition.

By the time the old guard at UNRA was disbanded, they had built 2,000km of new tarmac roads and rehabilitated 1,000km, giving our country 4,000km of good tarmac. There were 1,900km of tarmac roads under construction and 1,000km to commence construction in the 2016/17 Budget.

 When it comes to electricity, current installed capacity is 850MW of which only 650 is effective supply. Today demand is about 600MW and growing at about 10% per year. However, government has poured money into generation and in the next three years, Uganda will add 1,200MW on the grid, 150% more than it did in its first 55 years since independence.

Indeed, UETCL is going to invest over $1billion in transmission infrastructure to carry this electricity while Umeme will invest between $1.5 and $2 billion in distribution infrastructure. The challenge for Uganda now is going to be one of excess capacity – whether we can be able to consume all this power or find someone to buy it.

Thus over the last 15 years, transmission lines have grown from 1,400km to 3,000km. From independence to 2006, Uganda had built only 6,000km of medium voltage distribution lines. Rural Electrification Agency (REA) alone has added 8,000km of low voltage distribution lines. In the next two years it will add another 10,000km.Umeme has increased distribution lines from 8,700km to 13,000 and increased low voltage lines from 13,000 to 19,000 in ten years.

The biggest growth has been in the water sector. Only three years ago, National Water and Sewerage Corporation (NWSC) was serving 23 towns. Now it is in 179 towns and growing; and by end of July they shall be in 202 towns. Its assets have grown from Shs600 billion to Shs1.25 trillion in three years. Kilometers of water pipes have grown 6,500km to 10,200 over the same period.

One can argue that people are angry because they do not eat these infrastructures. But these investments are critical for our country, as they will give our economy future productivity gains.
I put Uganda among countries with similar per capita income, per capita revenue and per capita spending. And then I compared their investment in different infrastructures and the economic viability plus sound management. In almost all indicators – water, electricity, roads, etc. – Uganda comes among the top three performers.

It is, therefore, ironic that people are angry at government at this moment in time when it is actually doing the right thing.


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