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A summary of the 2017-18
budget
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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.”
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Museveni launches more road equipment recently to support
the sector at district level. The country has made massive investments in roads
and electricity generation
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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.
amwenda@independent.co.ug
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