Uganda’s budget: Opportunities for the coming year

Uganda’s Finance Minister Maria Kiwanuka unveiled the country’s budget for the financial year 2012/2013 earlier this month, disclosing an allocation of UGX 10,710.6 billion or $4.284 billion for government expenditures.  The government’s top three areas of focus are Works and Transport, Education, and Energy and Minerals, with the sectors commanding 15.3%, 15.2% and 13.5% of the budget, respectively.

The areas of focus bode well for BRAC Uganda’s staff, clients, and beneficiaries.  Given the increase in funding for Works & Transport to UGX 1,637 billion ($654.8 million) from UGX 1,291 billion ($516.4 million) previously, we expect the nation’s road and railway network to improve in the coming year, helping to reduce transportation costs and commuting time for our staff, farmers, and clients.

With the increase in allocation for Education to UGX 1,625 billion ($650 million) from UGX 1,416 billion ($566.4 million) last year, the government will place greater emphasis on ‘learning outcomes’ by intensifying the monitoring and supervision of schools, investing in technical and vocational training, and facilitating the revamping of curricula to focus on the skills required in the market.  In addition, the budget allows for an increase in salary for teachers in government schools. We are hopeful that with better-motivated teachers, the over 4,000 children that BRAC’s Second Chance schools have mainstreamed into government schools will receive a better quality education than before.

The emphasis on education and training is in line with BRAC Uganda’s focus on youth development programmes including our Empowerment and Livelihood for Adolescents (ELA) programme, and the Karamoja initiative.  Through these programmes, BRAC is providing vocational and livelihood training for youth. BRAC’s ELA programme has already trained 4,354 girls in various livelihood skills such as tailoring, hair dressing, and poultry keeping through short training courses, and the Karamoja initiative has trained 1,976 girls. We have provided vocational training, a series of three to six month training courses conducted through vocational training institutes, and which include mentoring for graduates. The ELA programme has sponsored 278 boys through this initiative and the Karamoja initiative has sponsored 51 boys. In the coming year, BRAC will train 750 boys and girls in various trades as part of our vocational training component.

Recognizing that access to electricity is crucial for economic development, the government prioritized power generation as another area of focus in the coming financial year. The largest intervention is a 600 MW hydro power project planned for Karuma Falls on the Victoria Nile. We are hopeful that our offices can finally put away their generators, reducing noise and operating costs.

Perhaps most welcomed is news the government is targeting a reduction in inflation to single digits this financial year.  Inflation had been rising steadily across the whole of sub-Saharan Africa last year, but East Africa was most affected due to the drought conditions experienced in parts of the region.  In Uganda, inflation rose to a peak of 30.5% in October 2011, a level not seen since 1993, and has declined gradually, to 18.6% last month.

Unbridled inflation has negatively affected the welfare of Ugandans, with rising food and fuel prices putting a large share of the population at risk of falling into poverty. BRAC welcomes the government’s campaign against inflation, as a moderation in inflation should boost our targeted clients’ businesses and reduce our operating costs.

Lastly, the government reduced Employment Income Tax in its 2012/2013 budget, a move cheered by workers grouped in the low-income earners bracket, as they anticipate an increase in their take-home pay. A sizeable part of our staff will pay no income tax and others will experience a reduction in income tax under the progressive tax scheme. BRAC expects this change to boost staff morale and encourage high performance.