A. PREAMBLE
Your Excellency the President,
Your Excellency the Vice President,
Right Honorable Speaker of Parliament,
His Lordship the Chief Justice,
His Lordship the Deputy Chief Justice,
Right Hon. Deputy Speaker of Parliament,
Right Hon. Prime Minister,
Right Hon. Leader of the Opposition
Honorable Ministers,
Honorable Members of Parliament,
Your Excellences, Ambassadors and Heads of Diplomatic Missions
Distinguished Guests,
Ladies and Gentlemen
B. INTRODUCTION
1. Madam Speaker, in accordance with Article 155(1) of the Constitution of the Republic of
Uganda and the Public Finance Management (PFM) Act 2015 as amended; and in
exercise of the power delegated to me by H.E the President of the Republic of Uganda,
I have the honour to present the budget statement for the Financial Year 2016/17.
Section 14(1) of the Public Finance Management Act 2015, requires that Parliament
shall, by 31 st May of each year, consider and approve the budget for the next financial
year. This being a year when general elections were held, the budget for Financial Year
2016/17 was approved by the 9 th Parliament on 3 rd May 2016. My presentation today is
therefore, a summary of the budget as approved by Parliament. I thank all the
Honourable Members of the 9 th Parliament, for the excellent cooperation in the
preparation and the approval of the Budget.
2. Madam Speaker, next year’s budget has been finalised and approved by Parliament
when Ugandans have once again renewed the mandate of the NRM Government. I
wish at this juncture to heartily congratulate H.E. the President upon his resounding
victory and thank him for entrusting me with the responsibility to deliver this landmark
Budget Statement. I also extend congratulations to you, Madam Speaker and your
Deputy, for your re-election to the high offices of Speaker and Deputy Speaker of
Parliament, and to you Honourable Members for your election to the 10 th Parliament.
Budget Speech Financial Year 2016/17
3. Madam Speaker, Government’s policy, priorities and programmes as well as resource
allocations are all aligned towards achieving the commitments in the Second National
Development Plan (NDPII), and the 2016 NRM Manifesto. In addition, the 2014 National
Population and Housing Census (NHPC) provided evidence that has informed a sound
basis for the formulation of the strategic policies and priorities spelt out in next financial
year’s budget. The overall national goal is to achieve a middle income status through
commercialization of agriculture, acceleration of industrialization, and increasing
production and productivity in all sectors of the economy. Accordingly, the theme for the
financial Year 2016/17 Budget is ‘Enhanced Productivity for Job Creation’.
4. Madam Speaker, in my presentation today I will:-
i). Report on the performance of the economy, and the challenges faced in the
financial year now ending, but also the future Prospects;
ii). Update Parliament on the Performance of the Financial Year 2015/16 Budget
and progress made in the key selected sectors, implementation of measures to
address challenges and priorities for the next financial year;
iii). Elaborate the medium term strategy underpinning the Financial Year 2016/17
budget, and
iv). Highlight the Financial Year 2016/17 revenue and expenditure framework and
measures for enhancing domestic revenue mobilization.
C. ECONOMIC PERFORMANCE AND OUTLOOK
ECONOMIC PERFORMANCE
Economic Growth
5. Madam Speaker, Uganda’s economy has remained resilient amidst a volatile global
environment. Total national economic output is estimated to have expanded by 4.6% in the
financial year ending, supported by robust growth in the services and construction
activities. Although this is lower than the growth target of 5.0%, it is significantly higher than
the projected growth for sub-Saharan Africa of 3% projected the same period.
6. Lower growth of the economy arose from three main factors:
i. the sharp fall in international commodity prices such as coffee, tea, minerals, which
form the bulk of our exports. For example, Tea prices have dropped from US Dollar
cents 403.03 per Kg in July 2015 to US Dollar cents 237.99 per Kg in April 2016; and
Copper from US$ 5,456.75 per tonne to US$ 4,872.74 per tonne. The shift to Services
Budget Speech Financial Year 2016/17
in China’s economy, has also contributed to the fall in global demand for minerals and
other commodities;
ii. the decline in private sector credit growth as a result of high interest rates, which have
constrained domestic activity; and
iii. the strengthening of the US Dollar as a result of the recovery in the US economy
which led to depreciation of our shilling. This caused domestic inflation. The strong
Dollar also made imports more expensive, constraining business cash flows.
7. Madam Speaker, despite these challenges, Services continued to grow strongly rising by
6.6% from 4.5% last financial year. Agriculture, which is the back-bone of our economy,
expanded by 3.2% in real terms compared to a growth rate of 2.3% the previous year.
Meanwhile Industry grew by 3.0% which is lower than the 7.8% recorded a year before.
8. Economic activity in sub-Saharan Africa, including Uganda, has been lower than
anticipated, primarily as a result of the sharp decline in commodity prices, which negatively
affected export earnings. Uganda, unlike other Sub Saharan African countries, was able to
mitigate these external shocks through investments in infrastructure and a lower import bill
resulting from the decline in international oil prices. Our Import bill for the 12 months ending
March 2016 was US$ 4,618 million compared to US$ 5,095 million a year before.
Balance of Payments
9. Madam Speaker, Uganda’s earnings from exports are far less than what we spend on
imports resulting in a large trade imbalance vis-à- vis our trading partners. In the 12 months
to March 2016, Uganda’s imports were worth US$ 5,647 million; compared to export
receipts of just US$ 2,669 million, less than 50% of our import bill.
10. Madam Speaker, a combination of factors including the strong US Dollar, the stagnation in
export receipts, and speculative tendencies in the run up to the 2016 General Elections led
to rapid weakening of the Uganda Shilling. The Shilling lost 39% of its value vis-à- vis the
US Dollar between September 2014 and September 2015. However, prudent fiscal and
monetary policy as well as the successful completion of the General Elections, have as we
speak now restored confidence in the economy, with the Shilling recovering its strength to
Shs. 3,326 per US Dollar by April 2016, a 10% improvement compared to the position in
September 2015. Government’s efforts to bolster exports will further strengthen the Shilling.
I will later elaborate specific actions to tackle this starting next financial year.
Budget Speech Financial Year 2016/17
11. Madam Speaker, the country’s foreign exchange reserves remain adequate, estimated at
US$ 2,925 billion representing 4.4 months of future imports of goods and services in April
2016. The target recommended in the East African Community is 4.5 months of imports.
Domestic Prices
12. Madam Speaker, inflation has remained stable and in single digit as planned. Annual
headline inflation was recorded at 5.4% in May 2016. However, in the first half of the year,
inflation peaked at 8.5% in December 2015, due to the pass-through effects of the sharp
weakening of the Uganda shilling against the US Dollar. This also caused an increase in
prices including electricity tariffs which adversely affected both manufacturers and domestic
consumers. However, Government implemented prudent fiscal and monetary policies that
reduced inflation and therefore restored, as I speak now, price stability in the economy.
Interest Rates and Private Sector Credit
13. Madam Speaker, commercial bank lending rates have remained high largely due to the
limited availability of long term capital, resulting in the mismatch between the commercial
bank financing products and the nature of the investments being undertaken.
14. The growth of credit to the private sector has also declined to about 8% in March 2016
compared to about 17% during the same period a year before. This is primarily on account
of constraints in private sector cash flows because of high debt service payments arising
from the consequences of increased inflation. The risk of higher interest rates has now
reduced as inflation is now around the policy target of 5%, following the Bank of Uganda’s
implementation of appropriate monetary policy.
15. Madam Speaker, while interest rates will continue to be determined by the market,
Government will ensure fiscal and monetary policies prevent a significant rise in interest
rates that crowd out the private sector. This will be complemented with strengthening
consumer protection measures to address any misconduct, such as the manner in which
collateral is sold in case of loan default, by some financial institutions.
FISCAL PERFORMANCE
Domestic Revenues
16. Madam Speaker, provisional outturn for domestic revenue for the financial year 2015/16 is
Shs. 11,598 billion equivalent to 13.2% of GDP. This is higher than the planned target of
Shs. 11,333 billion. The Shs. 11,598 billion is accounted for as follows: provisional outturn
Budget Speech Financial Year 2016/17
for tax revenue is Shs. 11,192 billion, non-tax revenue is Shs. 282 billion. Oil capital gains
tax revenue Shs. 124 billion.
External and Domestic financing
17. The provisional outturn for total external financing during the year is Shs. 5,602 billion, of
which project loan disbursements is Shs. 4,355.4 billion and grants Shs. 1,247 billion. The
provisional outturn for non-concessional loan disbursements is Shs. 3,041 billion while
concessional loan disbursements is Shs. 1,315 billion. The non-concessional loans are
financing major priority projects such as Karuma and Isimba Hydropower plants and other
projects in the transport and ICT areas. Budget support loans were Shs. 120 billion.
Government domestic borrowing is projected to be below the amount planned of Shs.
1,384 billion for the financial year.
Expenditures
18. Madam Speaker, provisional outturn for total Government expenditure excluding domestic
debt refinancing during the financial year will amount to Shs. 18,666 Billion equivalent of
21.2% of GDP. The increase in total expenditure compared to last year reflects a deliberate
commitment to improve our infrastructure in preparation for the take-off to the medium
income status. The development budget is estimated to account for 53% of total
expenditure largely to finance key infrastructure projects such as Karuma and Isimba
HPPs, and roads while the recurrent budget share of the budget balance of 47%. This
reflects good business management by investing more in long term assets than in
consumption.
Budget Deficit
19. Madam Speaker, the fiscal deficit is estimated at 6.4% of GDP in Financial Year 2015/16.
The deficit was largely financed by external borrowing both concessional and non-
concessional, and to a lesser extent by domestic borrowing equivalent to 1.6% of GDP.
Given our financing requirements for infrastructure development coupled with limited
availability of concessional loans, non-concessional borrowing has risen. Given that non-
concessional borrowing is a little more expensive, efficiency and effectiveness in the
utilization of these loans is paramount. I will announce measures to deal with efficiency in
resource allocation, use and monitoring later.
Public Debt
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20. Madam Speaker, gross nominal public debt is estimated to be Shs. 29,984 billion by 30th of
this June. Out of this Shs. 18,665.7 billion is external debt (equivalent to US$ 5,382.9
million) and domestic debt Shs. 11,319 billion. In nominal terms, our total public debt is
equivalent to 34% of total economic output (GDP). The corresponding Present Value of our
debt is 30.5% of GDP, after discounting for time value of money. This ratio is far below the
Public Debt Management Framework threshold for sustainability and the East African
Community Monetary Union convergence criteria requirement of 50%. These benchmarks
show that our public debt remains sustainable over a long period in the future.
21. The increase in public debt financed priority infrastructure investments like the Karuma and
Isimba Hydro power projects, Rehabilitation and expansion of Entebbe Airport and Phase
three of the National Transmission Back Bone Project, is meant to enhance productivity in
all sectors of the economy. Government will therefore borrow in future for highly productive
fixed capital investments that can generate financial and economic returns to ensure debt
sustainability.
ECONOMIC OUTLOOK
22. Madam Speaker, I now turn to the economic outlook. Uganda’s economy is projected to
grow by 5.5% next financial year. Over the medium term, GDP growth is projected to
average 6.3% per annum. This outlook is premised on the Government commitment to fast
track implementation of key public investments in infrastructure to facilitate private
investment.
23. Madam Speaker, in this regard, Government will continue to implement appropriate fiscal
and monetary policies to ensure macroeconomic stability. In the medium term, we will
prioritise the reduction of the trade deficit by increasing our revenue from exports by adding
value to our primary commodities, harnessing the largely untapped tourism potential, and
continuing to attract foreign direct investment. I will later explain the details of how we shall
achieve this later in my presentation.
D. SECTOR PERFORMANCE AND PRIORITIES
24. Madam Speaker, I now turn to the performance of selected key sectors during the Financial
Year 2015/16, and the planned interventions for next financial year.
I. ENHANCED PRODUCTION AND PRODUCTIVITY
Agriculture Production and Productivity
Budget Speech Financial Year 2016/17
25. Madam Speaker, I wish to remind the august House that agriculture is key to creating
wealth and employment. The 2014 Population and Housing Census indicates that
household reliance on subsistence farming has risen to 69% from 68% between 2002 and
2014. This represents a higher number of households reporting Agriculture as their main
source of livelihood, even as Agriculture’s contribution to the national output has declined to
only 26%. In addition, commercialisation in agriculture remains low, with only about
119,000 or 2.3 per cent of the 5.2 million farming households being engaged in commercial
farming.
26. Madam Speaker, declining productivity in this sector is therefore a major challenge. The
low productivity is caused by limited access to appropriate technologies, declining soil
fertility and poor farming methods. Farmers do not use high yield seed and animal inputs,
and there is limited use of fertilizer. Farmers also lack the requisite skills training, apply
ineffective land management practices and suffer from poor farm-to- market infrastructure.
All these render agriculture highly vulnerable to exogenous shocks including low prices and
climatic changes, which ultimately reduce the welfare of the households.
27. Notwithstanding challenges of declining productivity, the Agriculture sector achieved the
following progress through Government’s concerted interventions during the financial year
now ending:-
i. In the area of agricultural inputs provision; the following performance has been
recorded:-
1. Under Operation Wealth Creation, planting materials distributed include 65 million
coffee seedlings, 48 million tea seedlings in 16 districts, 4.4 million citrus seedlings
in 76 districts, 2.7 million cocoa seedlings in 13 districts, and 12 tons of rice seed to
establish 480 acres in four local governments of Koboko, Maracha, Nebbi and
Yumbe and 1,316 metric tons of de-linted and graded cotton planting seedlings in 59
districts in Eastern, Western, West Nile, Mid-West, Central and Western regions
2. The Animal Genetics Resource Centre and Data Bank (NAGRC&DB) has installed a
new hatchery with capacity of 13,000 chicks per week to support rearing poultry
including the resilient Kuroiler Chicken.
ii. In the areas of pest and disease control, the following performance has been
achieved: –
1. There has been a significant reduction in the Banana Bacterial Wilt, now estimated
at less than 5%. Surveillance also reveals reduced incidence of Coffee pests and
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diseases with the Black Coffee Twig Borer now standing at less than 7% in most
parts of affected areas.
2. In the livestock sub-sector, the outbreak of Foot and Mouth Disease was contained
in Apac, Kiryandongo, Nakasongola, Luwero, Nakaseke, Kyankwanzi, Wakiso,
Mpigi, Mukono, Sembabule, Isingiro, Rakai, Kapchorwa, Kween, Bukwo, Kampala
and Masaka.
iii. In order to increase the provision of water for production, 6 valley dams were
constructed in Karamoja sub-region; and 46 Valley Tanks in Rakai, Isingiro,
Lyantonde, Mubende, Kiboga, Kamuli, Kumi, Apac and Kitgum.
28. Madam Speaker, the Agriculture sector requires total overhaul and re-organisation. This
will involve reforming land ownership and use, farmer training, input delivery, extension
service provision, irrigation financing and marketing. These reforms are absolutely
necessary if we are to ultimately commercialise agriculture.
29. Madam Speaker, Government will next financial year continue its thrust to transform the
agriculture sector by facilitating mechanization, efficient access to inputs and appropriate
technologies, increased storage and market access. Specifically, Government will continue
to implement the following:-
i. Provision of improved breeding and planting materials, and pesticides;
ii. Intensification of regulation through increased disease surveillance, improved disease
diagnostics and enforcement of animal laws and regulations at both central and local
government levels;
iii. Conducting agricultural research and development;
iv. Construction of irrigation infrastructure including on-farm valley tanks, valley dams
and medium to large scale irrigation schemes for communities. The cumulative water
storage will be increased from the current 29.1 million cubic metres to 55 million cubic
meters.
v. Financing post-harvest handling facilities for commodity storage through the
Agricultural Credit Facility.
vi. Developing and implementation of a comprehensive National Agriculture Finance
Policy and Strategy to support private sector investment in agriculture; and
vii. Establishing an Agriculture Insurance Scheme to reduce farm risks and attract
investment in agriculture.
30. To this effect Madam Speaker, Ì have increased the Agricultural Sector’s budget by Shs.
343.46 billion to Shs. 823.42 billion, an increase of 65% compared to the Financial Year
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2015/16. Together with funding to rural development interventions including rural
electrification and feeder roads, funding to Agriculture and Rural Development is now Shs.
1,985 billion, equivalent to 9.6% of the non-debt, non-discretionary budget.
31. Madam Speaker, the medium term goals in Agriculture aim to ultimately increase
production and productivity, improve household food security, increase farmers’ income
and increase the value of exports. Consequently, coffee production is targeted to rise from
3.6 million bags today to 20 million bags by the year 2020, valued at approximately USD
2.4 billion; for Tea, 135,000 Metric Tonnes valued at approximately USD 190 million; Rice
680,000 Metric Tonnes, valued at approximately USD 376 million; Milk exports at USD 300
million and Fish at USD 300 million.
Unlocking Uganda’s Tourism Potential
32. Madam Speaker, Uganda as we should be aware, offers a highly compelling combination
of wildlife safaris and primate tracking, combined with the continent’s highest mountain
range, the source of the Nile, and African Great Lakes. Tourism adds US$ 2.5 billion to our
GDP and approximately USD 1.5 billion in foreign exchange earnings annually. This
translates to 9% of national output and 26% of export earnings. In the recent past, Uganda
has hosted several tourism promoting events including the visit of His Holiness Pope
Francis last November, and the Barcelona Football Club legends to Bwindi Impenetrable
Forest and Murchison Falls National Parks. These events, among others, have for sure
boosted Uganda’s international image.
33. Madam Speaker, despite these developments, the Tourism sector still faces serious
challenges. Uganda ranks low in terms of leisure and holiday visitors, as a result of weak
targeted destination marketing. At a regional level, security threats and disease outbreaks
such as Marbug, lead to negative media and adverse travel advisories. Other challenges
include poor air transport and inadequate hospitality industry skills. Consequently, tourist
visitors to key tourism locations has declined. For instance, despite the increase in
visitations to National Parks from about 203,000 visitors in 2014 to 216,000 visitors in 2015,
there has been a 13% decline in the number of foreign non-residents over the same period.
34. Madam Speaker, Government will continue to implement the 2015-19 Tourism
Development Plan. The Plan aims to diversify tourism products, aggressive promotion,
nature conservation, skills development, infrastructure development and the regulation of
the sector. Key interventions next year include the following:-
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i. Participating in international tourism fairs and expos, and implementing the single East
Africa Tourist visa;
ii. Upgrading heritage sites such as the Namugongo Martyrs Shrine; promoting cultural
theme events, and developing regional tourists circuits in Buganda, Bunyoro, Toro,
Ankole and Kigezi, Busoga, West Nile, Acholi, Rwenzori, Ssese Islands, Teso and
Karamoja.
iii. Skilling tour operators, hoteliers and tourism industry workers to deliver world class
hospitality services;
iv. Grading of an additional 200 hotels and restaurants, and increasing inspection of
tourism enterprises in Wakiso, Kabarole, Jinja, Mbale, Kabale, Mbarara, Masindi,
Jinja, Gulu and Lira; and
v. Developing strategic tourism infrastructure with emphasis on tourism roads to
improve visitor experience, and attract private investment in tourism.
35. I have allocated Shs. 188.8 billion to the sector next financial year up from Shs. 158.5
billion in Financial Year 2015/16.
II. DEVELOPMENT AND MAINTENANCE OF STRATEGIC INFRASTRUCTURE
36. Madam Speaker, funding strategic transport, energy and Information Communications
Technology (ICT) infrastructure has been a key priority of Government. Infrastructure
development contributes immensely to increased productivity by facilitating efficient
connectivity; and eases the movement of goods and the provision of services. It ultimately
leads to the creation of jobs. As a result of Government’s prioritisation of these sectors,
their funding currently constitute about 32.8% of the total Government expenditure every
year. For instance, in the Financial Year 2015/16 alone, the total budget allocation to
Works, Energy and ICT amounted to Shs. 6,287.66 billion. With these resources, we have
made significant progress towards improving the stock and quality of our physical
infrastructure.
Transport Infrastructure
Roads and Bridges
37. Madam Speaker, to this end, Government has upgraded numerous gravel national roads to
bitumen standard, and rehabilitated, reconstructed and maintained roads throughout the
country. Consequently the proportion of national paved roads in fair to good condition
increased from 64 per cent in 2011 to 70 per cent in 2015. The share of unpaved National
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road network in fair to good condition improved from 74 per cent in 2011 to 80 per cent in
the same period.
38. Madam Speaker, during the year, the following road projects have been substantially
completed:- Atiak-Nimule (35Km), Maracha and Koboko town roads (6.9Km), Kamwenge-
Fortportal (65Km), Kafu-Kiryandongo(43Km), Bundibugyo Town roads(6Km), Rwentobo-
Kabala-Katuna road(65Km), Ishaka-Kagamba (35Km), Seeta-Namugongo (7.2Km),
Kyaliwajala-Kira(3.5Km), Naalya-Kyaliwajala(2.5Km), Namugongo ring road(1.8Km) and
Shrine Access(1.8Km).
39. In addition, there has been good progress completion of construction of the following roads:
Kampala-Entebbe express way with a spur to Munyonyo (51Km)–68%; Mpigi-
Kanoni(65Km) – 68%; Kampala Northern by-pass(17Km)- 37%; Kanoni-Sembabule- Villa
Maria (110Km) – 33%; Mukono-Kayunga- Njeru (94Km) – 23%; Pakwach-Nebbi (54Km) –
68%; Karuma-Kamudini Road– 93%; Olwiyo(Anaka)-Gulu (70Km) – 96%; Kiryandongo-
Karuma – 93%; Ntungamo-Mirama Hills (37Km) – 60%; Musita-Mayuge- Lumino-
Busia/Majanji (104Km) – 40%; and Namunsi-Sironko- Muyembe (32Km) – 27%.
40. Madam Speaker, urban road infrastructure and traffic congestion has also been addressed
with the reconstruction of road networks in Kampala City, Mbale, Arua, Jinja, Hoima,
Masaka, Entebbe, Soroti, and Kabale Municipalities. Government appreciates the support
of our development partners especially the World Bank for this programme. However,
implementation of this programme has encountered a few challenges in contract
management leading to unnecessary delays.
41. Next financial year, Government has maintained financing of ongoing road projects, with
special focus on those that directly boost value addition and exports. The objective is to
complete these projects in time and also provide sufficient resources for proper
maintenance of completed ones. An additional Shs. 494 billion has been allocated,
increasing the allocation to the Works and Transport sector to Shs. 3,827.54 billion. Details
of roads for which construction will commence next year are provided in the Background to
the Budget.
42. Madam Speaker, the construction industry in Uganda is largely dominated by foreign
owned companies, mainly on account of a weak domestic construction industry. This is
because of capacity constraints, limited access to adequate financing and weak
coordination among the local contractors. Government will work closely with the private
sector to support the development of local contractors through capacity building and
facilitate increased local content in the road construction industry.
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43. Madam Speaker, as regards bridges during the financial year ending the following were
completed: Goli-Nyagak-3 (Nebbi), Apak bridge on Lira-Moroto road, Ntungwe Bridge on
Ishasha-Katunguru road (Kanungu), Mitano Bridge Rukungiri-Kanungu road. The
construction of the New Nile Bridge at Jinja that commenced in the last year is 21%
complete. Details on the additional bridges across the country that are either under design
or procurement next financial year are contained in the Background to the Budget.
Railway Transport
44. Madam Speaker, in the financial year ending, Government proceeded with the
development of the railway network, in order to reduce damage to our roads, lower cost of
freight especially for bulky cargo, and increase competitiveness of the economy.
Construction of the Eastern Standard Gauge railway will commence during coming financial
year with target completion in 2018. In addition, designs for the Kampala Light Rail Train
(LRT) covering Eastern, Sothern and Northern Kampala Metropolitan areas will be
completed, with a view to commence construction in 2019. I have provided Shs. 118 billion
for acquiring land for the construction of the Malaba – Kampala Eastern Standard Gauge
Railway.
45. Madam Speaker, we congratulate of our brotherly Government of Kenya for the progress
on construction of the Mombasa – Nairobi Standard Gauge railway now at 75% completion,
and welcome plans to start construction of the Narobi-Kisumu- Malaba section. Our desire
is to synchronise the completion of Malaba – Kampala Standard Gauge railway with the
completion of the Kenya sections, in order to gain maximum benefits from these heavy
investments. As a continuation of the Northern Corridor Standard Gauge railway, the
preparatory work for the development of the section up to Mirama Hills will also
continuenext financial year.
Water Transport
46. Madam Speaker, in order to improve water transport, new ferries were commissioned to ply
the Wanseko-Panyamur, Namasale-Lwampanga routes and Sigulu Islands in Bugiri district.
Currently, the designing of landing sites at Buvuma, Bule and Gaba are underway. An
investment Plan for interconnectivity of islands in Lake Victoria has been formulated and is
due for implementation.
47. Government will also improve existing marine infrastructure so as to reduce the cost of
transportation and increase connectivity. Construction of the Bukasa Port will commence
next year. New ferries will also be commissioned to serve Amuru-Rhino Camp, Lake
Bisina, Lake Bunyonyi, Bukungu-Muntu. The previously ferry plying the Bukakata-Bugala
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route will be rehabilitated and redeployed on the Buvuma Island-Mainland route. In order to
make water transport safe and environmentally friendly, there will be increased
enforcement of regulations.
Air Transport
48. Madam Speaker, Government is developing air transportation infrastructure in order to
enhance inter-modal transportation of people and goods. The upgrade of Entebbe
International Airport has commenced. Works will include remodelling of the existing
passenger terminal building, and the construction of a new cargo centre complex. In
addition, several regional aerodromes are being improved including construction of Watch
Towers, the community access road and the perimeter fence at Kasese Airport. Works for
improvement of Arua, Pakuba, Masindi, Kidepo, Moroto, Lira, Tororo, Jinja, Mbarara,
Kisoro, Soroti and Gulu aerodromes were either completed or are on-going.
49. Other interventions include the construction of Kabaale airport in Hoima, which will support
Oil Refinery development. Extensive maintenance works on Arua, Pakuba, Masindi,
Kidepo, Moroto, Lira, Tororo, Jinja, Mbarara, Kisoro, Kasese, Soroti and Gulu aerodromes
are programmed and in other cases ongoing.
Electricity Infrastructure
50. Madam Speaker, the 2014 National Population Census reveals that access to electricity
has more than doubled from 7.8% to 20.4% since 2002, and the use of local paraffin
candles reduced by nearly 20 per cent. Government’s objective is to increase the
availability of reliable and affordable electricity for both domestic and industrial use, in order
for access to double to 40% by 2040.
51. Progress towards this goal includes the increase in hydro power generation capacity to 830
Mega Watts from 596 Mega Watts in 2010. The number of distribution connections
increased by 143,000 to 790,000, an annual increase of 13%. Energy losses have also
been reduced from 21.3% to 19.5 per cent. In addition, the Karuma HEP is 27% complete
with project completion scheduled for 2019. Construction works at the Isimba hydro power
project are 25% complete, scheduled for commissioning by August 2018. Institutional
arrangements for supervision of these projects have also been streamlined.
52. In the transmission and distribution segments, construction of about 1,900 Km of Medium
Voltage lines and 1,600 Km of Low Voltage distribution lines were completed. A total of 108
of the 112 of district headquarters are now connected to the national grid. An additional 150
rural electrification schemes are almost complete in 50 districts.
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53. Madam Speaker, next financial year, works will commence for the connection to the
national grid of Nwoya, Kaboong and Kotido districts. The feasibility study to connect
Buvuma district to the national grid is also underway, with support from the Islamic
Development Bank (IDB). This will bring to 100% coverage of district headquarters. Works
will also continue on 2,000 Km of transmission lines, 8,000 Km of Medium Voltage and
4,000 Km of Low Voltage networks located in over 98 districts. In addition, works at four (4)
new substations will also commence at the Namanve South, Luzira, Mukono and Iganga
Industrial parks. Details of power sector projects underway and programmed to be
implemented next financial year are contained in the Background to the Budget.
Oil, Gas and Mineral Development
54. Madam Speaker, the commercialization of oil and gas resources is one of the key
objectives of Government. To this end, negotiations with the Lead Investor for the Oil
Refinery project are expected to be concluded by September 2016. Land acquisition for the
Refinery Development is 97% complete and 533 acres of land have been acquired in
Kyakaboga, Buseruka sub-county, Hoima district for the physical resettlement of the
Project Affected Persons who opted for resettlement. In addition, the Hoima-Tanga crude
oil pipeline will be developed as a private investment, for transporting Uganda’s crude oil to
the East African Coast.
55. Madam Speaker, I have allocated Shs. 188.2 billion to implement programmes for oil and
gas development, and institutional and skills development including operationalizing the
National Petroleum Authority and establishment of the National Oil Company.
56. Madam Speaker, with respect to mineral development, the Sukulu Phosphate and Steel
Project commenced, which will manufacture both fertilizer and steel when complete in
2020. In terms of developing other mineral prospects, exploration for Uranium was
undertaken in Ndale, Fort Portal and Rusekere; and for rare earth metals such as cobalt,
nickel and chromium in Karamoja; Iron ore in Kabale, and gold in Busia.
Information Communication Technology
57. Madam Speaker, Information and Telecommunications Technology (ICT) supports
development of the financial services sector, telecommunications, public financial
management and scientific research and innovation and e-Government. ICT contributes
2.5% of GDP (2015), employs approximately 1.3 million Ugandans and raised Shs. 484.4
billion in tax revenue collection in 2015. Telephone subscribers have increased from 19.5
million in 2013 to 23 million in 2015, while internet users grew from 8.5 million to 13 million
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in the same period. In further support for ICT development, land for construction of the ICT
Park at Namanve Industrial Park has been secured and the feasibility study completed. In
addition, larger land space has been acquired in Entebbe where a mega ICT park will be
set up starting next financial year.
58. Madam Speaker, starting with next financial year, the sector will improve access to high
speed broadband services from 512 Kilobytes per second to 4 Megabytes per second and
30Mbps for rural and urban households respectively. This will support business productivity
and facilitate communication. The National Backbone Infrastructure (NBI) will be extended
to cover West Nile and Karamoja Regions under the Regional Communication
Infrastructure Project, with support from the World Bank. The Backbone will also be
extended to neighbouring countries (Kenya via Malaba and Busia, Tanzania via Mutukula,
Rwanda via Katuna, South Sudan via Nimule and Democratic Republic of Congo via
Mpondwe to further improve regional interconnectivity.
III. HUMAN CAPITAL AND SKILLS DEVELOPMENT
59. Madam Speaker, as we all know, human capital development is core to any country socio-
economic transformation Uganda included. A healthy population, equipped with relevant
skills for innovation and entrepreneurship is necessary towards this end. Government’s
approach to human capital development has been to ensure access to quality social
services that improve the wellbeing, knowledge and skills of the population. Improving
access to quality Education and Skills Development, Health, Water and Sanitation is central
to this objective.
Education and Skills Development
60. Madam Speaker, the education sector seeks to increase access to quality primary,
secondary and tertiary education, with better learning and skills outcomes. This will ensure
proficiency in numeracy and literacy of the entire population and enhance productivity of
the labour force. The 2014 Census revealed that 72% of the population were reported to be
literate.
61. During the year now ending, access to basic and secondary education increased with
enrolment rising from 8.5 million to 8.8 million pupils at primary school level; and from 1.36
million to 1.39 million students at secondary school level. Primary school level pass rates
were recorded at 88.3%, and pass rates at secondary at 91% in the 2015. From a gender
equity perspective, the ratio of girls to boys at the primary school level reached 100 per
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cent. However, at the secondary and tertiary levels, there is still some work to be done, as
the ratio of girls to boys stands at 88.3% and 79.1% respectively.
62. In order to enhance tertiary level education, salaries of teaching staff in Public Universities
have been increased with a Shs. 50 billion allocation during the financial year now ending,
in line with His Excellency’s pledge to increase wages in a phased manner. I have provided
a further Shs. 78 billion in next year’s budget for this purpose, including increases for
salaries of Non-Teaching Staff in public universities.
63. Madam Speaker, the education sector still faces challenges in delivering quality education
in an efficient manner. At Primary level proficiency in numeracy has declined from 45.2% to
40.8% between 2012 and 2013. Proficiency in literacy have as also declined from to 39.4%
and 38.3% in the same period. The survival rate from Primary 1 to Primary 5 declined
marginally from 60.6% to 59.9% per cent between 2014 and 2015, and that from Primary 5
to Primary 7 declined from 32.9% to 30% in the same period. At secondary level, the
proficiency level of Senior 2 student in mathematics has declined from 46.9% in 2013 to
41.5% in 2014. This calls for concerted action if improved learning outcomes are to be
realised.
64. Madam Speaker, during next year, priorities for implementation in the formal education
sector will include the following:
i. Recruitment of tutors for the 20 Technical Institutes started this financial year. I have
provided Shs. 6.672 billion for this purpose;
ii. Operationalising three Public Universities in Soroti, Kabale and Lira which are to offer
Science related programmes which are critical to the Economic Development of the
Country. For this, a total of Shs.14.09 billion has been allocated;
iii. Expand the Student Loan Scheme to cater for the Second Cohort of 1,000 University
students and 200 students of Diploma courses to improve access to higher education.
An additional Shs. 6 billion has been provided for this purpose;
iv. Increase of salaries of Primary teachers by 15% which will be the last instalment in
Government’s commitment to increase teachers’ salaries by 50% in a phased manner.
For this, an additional Shs. 122 billion has been provided.
65. Madam Speaker, in order to justify these salary increases, school teachers, including head
teachers must forthwith desist from absenteeism, late reporting and early departure from
work.
Skills Development
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66. Madam Speaker, improving the employability of graduates from the education system is a
key aspect for Government. Business and Technical and Vocational and Education and
Training (BTVET) institutions play a critical role in the development of employable skills and
competencies in the labour market. The following interventions were undertaken during the
financial year now ending to improve access to vocational skills training and education:-
i. Construction, equipping and operationalising of 12 new technical institutes in Amuria,
Hoima, Kamuli, Masaka-Lwengo, Mukono, Nakasongola, Namutumba, Pader, Yumbe,
Kyenjojo, Lyantonde and Kiboga districts have been completed. Nakaseke technical
institute was also completed, but is awaiting handed over to the district officially;
ii. The rehabilitation, expansion and equipping Uganda Technical Colleges at Lira and
Elgon, and the National Teachers College at Unyama in Gulu district, has been
completed. Civil works are still ongoing at the Uganda Technical Colleges at Bushenyi,
Kichwamba and Kyema. Civil works also commenced at four Technical Institutes:-
Ahmed Seguya in Kayunga, Tororo, Kalongo and Kibatsi in Ntungamo.
67. Madam Speaker, Government will continue to strengthen institutional capacity of BTVET
institutions to narrow the gap between the formal education and the labour market. This will
enable skills development to be streamlined towards private sector labour market
requirements. Government will also increase awareness of BTVET career opportunities. In
the forthcoming year, Government will undertake the following interventions:-
i. Finalize the update of national curriculum for Business, Technical Vocational and
Education and Training courses;
ii. Complete six technical and vocational national certificate assessment guides;
iii. Complete orientation manuals for 6 technical and vocational programmes; and
iv. Train 237 instructors on the 6 technical and Vocational national Certificate
programmes.
Health
68. Madam Speaker, access to inclusive quality healthcare services is key to ensuring the
wellbeing of Ugandans. During the financial year now ending, Government has sought to
improve quality access to health by constructing and equipping hospitals and health
centres. Consequently, health outcomes have improved resulting in a decrease in the
disease burden. Reported cases of Malaria have reduced from 460 per 1,000 persons in
2013 to 367 per 1,000 persons in 2015. There has been a decline in the risk of a mother
dying in the health facility while giving birth. Facility-based Maternal Mortality has reduced
from 168 per 100,000 live births in 2013 to 146 per 100,000 live births in 2015. Similarly
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infant mortality declined from 87 deaths per 1,000 live births in 2002 to 53 deaths per 1,000
live births in 2014. The proportion of deliveries in health facilities stood at 44.4 per cent in
2014 and is expected to reach 56 per cent in 2017. New HIV infections have also reduced
from 137,000 in 2014 to 87,000 in 2015.
69. Madam Speaker, key achievements in the financial year now ending in terms of health
infrastructure include commencement of the rehabilitation and expansion of Mulago
Hospital, completion of which is scheduled for December 2016. Its construction will include
a specialized Maternal, Neonatal and Women’s Hospital scheduled for completion in June
2017. The reconstruction and equipping of nine regional referral hospitals was also
completed in Moroto, Mityana, Nakaseke, Kiryandongo, Nebbi, Anaka, Entebbe and Iganga
and Mubende. The expansion of Hoima and Kabale Hospitals and construction of
Kawempe and Kiruddu hospitals in Kampala will be completed by end June 2016.
70. Madam Speaker, Government has also prioritised development of centres of excellence in
order to increase local access to specialised medical treatment, reduce the cost of travel
abroad for healthcare and enhance medical tourism. The Aga Khan Development Network
will complete establishment of a teaching hospital by 2020 at Nakawa, and construction of
an International Specialized Hospital at Lubowa by Italian developers will be operational by
2018. To enhance national capacity to handle specialised ailments, the Uganda Heart
Institute [UHI] installed cardiac catheterization facility that can handle at least 1000
operations per year when fully operational. The capacity of Uganda Virus Research
Institute (UVRI) has also been enhanced to enable detection of new viruses that cause
endemic outbreaks of diseases such as Ebola and Marburg.
71. Madam Speaker, in the next financial year, focus will be placed on accelerating
interventions to improve availability of healthcare workers at health centres, and enhancing
Maternal, New born and Child health in order to reduce the high number of deaths.
Government will also continue to prioritise implementation of the National Prevention
Strategy of HIV/AIDS and also expand Anti-Retroviral Treatment (ART) coverage to 80%,
with an emphasis on testing and treatment of the ‘most-at- risk’ population, and elimination
of Mother to Child Transmission.
72. Madam Speaker, adequate financing healthcare provision is an important facet to achieving
our ultimate goal of a healthy population. The National Health Insurance Bill 2016 which
aims to improve financing of healthcare through mandatory contributions of monthly salary
deductions by both employers and employees, is awaiting consideration of Parliament.
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Water, Sanitation and Environment
73. Madam Speaker, access to safe water and sanitation is critical for maintaining hygiene at
the household level, and impacts on health and ultimately labour productivity. Adequate
safe water and sanitation is therefore a major determinant of the health status of the entire
population.
74. To improve access to safe water and sanitation, Government’s priority has been to improve
key water and sanitation infrastructure by expanding piped water schemes, urban
sanitation facilities, and facilities to improve rural water access facilities including
boreholes, protected wells and gravity flow. The 2014 National Population and Housing
Census indicates that 71% of the population has access to an improved water source. 85%
of the urban population has that access while this is true for67% in rural areas.
75. During the year, 6 solar mini powered piped water supply Systems and 6 toilet facilities
were constructed in 6 Rural Growth Centres (RGCs). Piped water systems in 19 towns
were also constructed to improve urban water supply. Details can be found in the
Background to the Budget.
76. Madam Speaker, in the next financial year, the target is to increase access to safe water to
79% in rural areas and reach 100% coverage in urban areas. Construction of 33 town
water supply schemes and 147 sewerage and sanitation facilities (public and household) in
various towns will also be started. This will increase functionality of water supply systems,
and raise sanitation and hygiene levels in both rural and urban sanitation to only 30%.
77. Madam Speaker declining environment and climatic conditions require special focus to
protect, restore and maintain the integrity of the increasingly fragile ecosystem.
Government shall protect 20 Km of banks of the River Nile, restore 50 Hectares of the
degraded section of River Nile protection zone, and complete the demarcation of 150 Km of
wetland boundaries of five districts in Eastern Western and Southern Uganda. Government
will also strengthen compliance with environmental standards and improve enforcement.
We shall strengthen overall coordination of climate change related activities across
Government.
IV. IMPROVING GOOD GOVERNANCE
78. Madam Speaker, promoting good governance in all aspects including peace stability and
national security, the rule of law, improving the efficiency and accountability of the public
institutions, and tackling corruption, are essential for national building. Government has
made progress on all these fronts over several years of reform and concerted action.
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Peace and National Security
79. Madam Speaker, peace, stability and national security are the bed-rock for socio-economic
transformation. The achievements, Uganda has witnessed over the last 30 years is due to
the NRM Government’s understanding and effort to strengthen national defence and
security and re-establish the rule of law.
80. Madam Speaker, during the last financial year, there was continued modernisation of
defence and security forces to maintain peace and security. Interventions include the
procurement of modern equipment, the recruitment and training of armed and other
security forces, and improvement in the welfare for the armed forces. The Uganda Peoples
Defence Force (UPDF) participated and is still participating in community service
programmes and national development projects such as Operation Wealth Creation
(OWC).
81. Madam Speaker, Ugandans continually appreciate the sacrifices made by our gallant sons
and daughters to safeguard national and territorial integrity. The forces have and continue
to protect Uganda from insecurity and acts of terrorism, so that we can all peacefully
engage in economic activities and enjoy life. We commend their patriotism.
82. Madam Speaker, in the forthcoming year and the medium term, Government will continue
to build the capacity of the security forces to enable maintain security both national and
across the region. I have allocated a total of Shs. 1,588.023 billion in the next year’s budget
to the sector to continue with the on-going interventions.
Law and Order
83. Madam Speaker, the Justice, Law and Order sector (JLOS) plays a critical role in the rule
of law. Over the year, there was increased access to justice. Today 75% of people traverse
shorter distances to access Justice Law and Order services, and institutional coverage has
improved with 84 districts out of 112 each having a complete chain of service points.
Recruitment in the Uganda Police Force, Uganda Prisons Service, and the Directorate of
Public Prosecution and other major institutions, resulted in improved investigations and
growth in conviction rates that now stand at 64 per cent. Police Human Rights Desks were
also established in 16 of the 26 Police Regions, a coverage of 62%. In addition, functional
complaints handling mechanisms, have been established. The sector recorded a 13.7%
reduction in the rate of adult reoffending as a result of strong rehabilitation and correctional
programs, as opposed to a punitive prison approach.
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84. Madam Speaker, in the forthcoming year and over the medium term, Government will
continue to strengthen the legal reforms, ensure harmonization of justice delivery
standards. In support for productivity the judiciary will enhance efficiency to reduce
commercial case backlog by introducing new technology. Plea bargaining makes legal
progress procedures faster including instituting small claims procedures. The sector will
also reduce regulatory requirements for starting a business, including expediting of
business licensing reform. I have allocated Shs. 1,159.77 billion to the sector to carry out its
mandate.
Improving Government Effectiveness in Service Delivery
85. Madam Speaker, the effectiveness of the public sector in delivery of public services
depends on the efficacy of the systems and processes of public institutions. In addition
public servants are supposed to facilitate private sector entrepreneurship and deliver
quality services to the public. Government has over the years’ implemented legal,
institutional and administrative reforms to increase efficiency in Government operations.
These include, among others, fiscal decentralisation to bring services nearer to the people.
Strengthening public financial management, budget transparency and accountability to fight
corruption, performance contracting of Accounting Officers and salary enhancement of
frontline service delivery workers are now being entrenched into the system.
86. Over the last three financial years, public financial management reforms have been
implemented including the introduction of Treasury Single Account that eliminated over
3,000 bank accounts and allowed savings to be made from unnecessary borrowing when
some accounts had balances. In the fight to eliminate graft, the Auditor General reports
have shown a remarkable improvement with a remarkable decrease in qualified audits. The
decentralisation of payroll and pensions management has enabled salaries, pensions and
gratuities to be paid on time. This reform has led to an estimated Shs. 300 billion annual
saving on the Government wage and pensions bill. I would like to commend all the
Ministers of State, the Secretary to the Treasury and staff at the Ministry of Finance,
Planning and Economic Development for this tremendous achievement.
87. Madam Speaker, in order to enhance efficiency E-Government has progressed with the
completion of the second phase of the National Backbone Infrastructure (NBI) and an
additional 14 Ministries, Departments and Agencies (MDAs) connected, bringing the total
number of agencies connected to 72. The integration of the National Identity Card System,
the Integrated Financial Management System, the Integrated Personnel and Payroll
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System and the Computerised Education Management System (CEMAS) also commenced
and a comprehensive national database will be ready by September 2016. The National
Identity Card Project was also used to update the Voters Register in the recently concluded
General Elections.
88. Madam Speaker, however, further effort is still required in order to improve the efficiency of
Government operations. The abilities, capacity and work ethic and attitudes of public
officials must also be seriously addressed. The following measures will be implemented
next financial year:-
i. Government will restructure Ministries, Departments and local governments to enhance
the efficiency and effectiveness of their systems and processes;
ii. Further consolidate the decentralized payroll and pensions’ management system by
integrating payroll system with the Budgeting System and strengthening the Human
Resource Management function;
iii. Deepen Fiscal Decentralisation by devolving more financial decisions closer to the
frontline service delivery units including consolidating the decentralised budgeting and
payment of salaries, pension and gratuity;
iv. Cross payment of allowances between Ministries, Departments Agencies and Local
Government will not be permitted forthwith, with the exception of Local Government
officials required to attend Central Government organised workshops; and
v. In an effort to save public funds on workshops and seminars, these must be held in
Government facilities, unless not to do so is absolutely unavoidable. In addition,
benchmarking trips abroad should be limited and conducted under respective Votes.
Any Accounting Officer funding benchmarking trips outside their institutions will be held
responsible for mischarging expenditure.
89. Madam Speaker, in order to improve the entire Government project cycle, the processes
including identification, design, appraisal, and approval of Government projects will be
revamped with special focus on major projects in sectors like transport, energy, water and
agriculture. Continued poor absorption of funds, particularly borrowed resources, which
lead to suspension or cancellation of loans will not be entertained. Accounting Officers will
forthwith be penalised for unsatisfactory performance of externally funded projects under
their charge. The most affected sectors in terms of poor absorption have been Education
and Water sectors where the proportion of projects with unsatisfactory performance was at
100%, followed by the Energy Sector at 92%, Health Sector at 86%, Agriculture at 80%,
and Public Sector Management at 77%. In order for expeditious Parliamentary approval of
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externally funded projects, I appeal to you, Madam Speaker, under your new mandate, to
have Parliamentary approvals for projects within 45 days.
90. Madam Speaker, enhanced supervision and monitoring of Government programmes is
necessary to strengthen accountability for public service delivery. The Strategic Result
Matrix will be used to monitor the implementation of the strategic interventions presented in
the budget. The Matrix will be used to hold Accounting Officers responsible for the
achievement of results under their mandates. Across Government enhanced political and
technical inspection especially for key service delivery sectors including education and
health facilities will also be undertaken in order to address challenges such as shoddy
works, staff absenteeism, and late coming. Parish and Sub-County Chiefs, and Chief
Administrative Officers will be required to show what actions they have taken for poor
service delivery in their areas. Increased accountability for service delivery will also be
achieved by implementing mechanisms that use citizen feedback to report poor service
delivery and corruption.
Domestic Arrears
91. Madam Speaker, Domestic arrears comprise pensions and gratuity liabilities, unpaid
sundry suppliers’ bills and water, electricity and telephone utilities that remain outstanding
at the end of a financial year. Domestic arrears owed by Government agencies to private
sector entrepreneurs are causing financial distress and increased indebtedness of several
companies to their financier. In order to eliminate outstanding salary and pension arrears
and in accordance with His Excellency’s directive in the State of the Nation Address,
verified domestic arrears owed to suppliers of goods and services will have the first call on
the resources starting with the first quarter of FY 2016/17. In addition, Accounting Officers
should migrate all energy and telephone utilities from the post-paid to the prepaid systems
by 30 th June 2016. Thereafter, no funds will be released to non-compliant Ministries and
Agencies and Accounting Officers will face disciplinary action including termination of their
appointments.
Anti-Corruption Measures
92. Madam Speaker, corruption is multifaceted and appears in both grand and petty forms,
impacting our people and country differently. Government is committed to combating
corruption in all its forms. Government’s approach to Anti-corruption has been to put in
place institutional, administrative and legal measures to enhance its prevention, detection,
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investigation and deterrence. In order to improve service delivery, Government will in the
next financial year adopt the following measures to fight corruption:
i. Strengthen the capacity for prevention and detection of corruption through implementing
risk management and enhancing internal controls across Government in accordance
with the PFM Act 2015. All Accounting Officers are required to implement effective
systems of internal controls, risk management and internal audit;
ii. Enhance Multi-Sectoral collaboration consisting of the Inspectorate of Government,
PPDA, Office of the Auditor General, Internal Auditor General’s Office (Under MoFPED),
DPP, CID, Financial Intelligence Authority (FIA), Anti-Corruption Court, OPM, Public
Service Commission (PSC) and the Ministry of Public Service has been put in place to
strengthen Anti-Corruption measures. This will enhance capacity to detect, investigate
and successfully prosecute cases of corruption;
iii. Accounting Officers who do not account in full and in time for funds provided under
their respective Ministries, Agencies and Local Governments will be recommended for
removal in public interest.
iv. Deterrence of corruption will be enhanced through increased support to the Judiciary
and other similar organisations for custodial sentences, plea bargain and asset recovery
of ill-gotten wealth.
E. MEDIUM TERM ECONOMIC STRATEGY
93. Madam Speaker the priority interventions I have enumerated are anchored on a Medium
term Strategy that is built on three pillars: (i) a sound Macroeconomic policy framework; (ii)
Productivity Enhancement Programme and Employment; and (iii) Employment and Job
Creation interventions. These will enable the attainment of a middle income status for
Ugandans by 2020.
94. Madam Speaker, the Macroeconomic Policy Framework seeks to deliver sustained
average GDP growth rate of at least 6% per annum. The Framework will also maintain
single digit inflation, a stable and competitive exchange rate, adequate foreign exchange
reserves, and prudent debt levels. These objectives are consistent with the requirements of
the East African Monetary Union Protocol.
95. As highlighted in His Excellency the President’s State of the Nation address, Government is
committed to increasing Uganda’s export earnings through increasing export volumes,
industrial production and value addition in agriculture and minerals. Government is also
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developing energy infrastructure to reduce the cost of electricity in the medium term to
facilitate manufacturing and value addition. In addition, Government will implement the local
content policy, and strengthen institutions responsible for promotion and quality standards
of our export products.
Productivity Enhancement Programme
96. Madam Speaker, consistent with next year’s budget theme, Government will enhance
productivity in primary growth sectors of the economy. Primary growth sectors include
agriculture, tourism, manufacturing and the mining sectors. Enhancing productivity will be
achieved through the following three broad strategies:- First, Increased Commercialisation,
Secondly through Enhanced Private Sector Capacity, and thirdly by Improving Public
Institutional response to private sector needs.
97. Enhancing commercialization of primary growth sectors will be achieved by addressing
constraints in the entire value chain. This will involve conduct of research and development,
providing business advice including industrial incubation and provision of extension
services. In addition, improving product quality by enforcing standards, and building storage
and marketing infrastructure will be supported. Private Sector capacity will be achieved by
increasing access to affordable long-term capital financing, provision of work space and
building industrial parks and operationalizing Free Trade Zones. Finally, an improved Public
Sector institutional response to private sector entrepreneurs will be undertaken by
reorienting public sector agencies including Investment and Export Promotion agencies,
such as Uganda Investment Authority, Export Promotion Board, and Uganda Registration
Services Bureau, and Missions Abroad, among others.
Employment and Job Creation Strategy
98. Madam Speaker, evidence from the 2014 Population and Housing Census reveals that
households relying on employment income as the main source of livelihood have declined
from 22% in 2002 to 16%. In addition, only 10% of households reported that commercial
activities such as business, commercial farming and cottage industry, are their main source
of livelihood.
99. Madam Speaker, increased employment and jobs will be achieved by creating
opportunities for self-employment, skills development and promotion of Value addition. This
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will not be achieved overnight. The employment strategy will involve skills development
including apprenticeship, together with the promotion of Value addition to projects that
ultimately absorb excess labour. Government will:
i. continue with affirmative action with the Youth Livelihood Programme. To date, the
Programme has developed skills of 83,000 youth and provided financial support to
implement almost 6,500 projects worth Shs. 45.5 billion. The programme builds the
capacity of Youth to invest in their own innovative projects, and eventually develops
them into entrepreneurs
ii. economically empower women by rolling out the Uganda Women Enterprise Programme
(UWEP). This already been piloted in 20 Local Governments
iii. Value addition through Micro, Small, and Medium sized enterprises;
100. These interventions will bring more households into employment and the money economy,
by economically empowering the Labour Force, especially the Youth and Women.
F. FINANCIAL YEAR 2016/17 REVENUE AND EXPENDITURE FRAMEWORK
101. Madam Speaker, I now turn to the revenue and expenditure framework that will finance the
budget priorities for financial year 2016/17. As we all should be aware, demands on the
budget remain much higher than our revenue effort which calls for careful prioritization of
Government interventions before new initiatives are taken on. It is therefore critical that a
coordinated approach is undertaken in the implementation of the budget priorities.
102. Madam Speaker, the total approved budget for the FY 2016/17 is Shs. 26,361 billion. Out
of this, Shs. 18,407.7 billion is allocated for spending by Ministries, Departments,
Agencies and Local Governments. Shs. 4,977.7 billion is domestic debt refinancing for
maturing domestic debt; Shs. 169.18 billion for external debt repayments; Shs. 2,022.9
billion for interest payments; Shs. 111 billion for settlement of domestic arrears; and Shs.
672 billion is Appropriation-in- Aid (AIA), which is the amount of funds generated by MDAs
and authorized to be spent by the same institutions.
Revenues
103. Madam Speaker, domestic revenues are projected to increase to Shs. 12,914.3 billion up
from this fiscal year’s projected outturn of Shs. 11,598 billion. This will be achieved by
improving efficiency in tax administration including enforcement of collections; increasing
the tax base by reducing the size of the informal sector; and increasing investment in tax
collection infrastructure.
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Domestic Financing
104. Madam Speaker, in Financial Year 2015/16, it was projected that the budget would be
partly financed by issuing Government securities worth Shs. 1,384 billion. In the Financial
Year 2016/17, Government domestic borrowing will be significantly reduced and will
amount to Shs. 612 billion. This is meant to provide more space for private sector credit
growth.
External Financing
105. Madam Speaker, total external financing of the budget will amount to Shs. 6,524.5 billion
in loans and grants, equivalent to 24.8 per cent of the total budget. This will comprise of
Shs. 2,520.8 billion in concessional loans, Shs. 2,513.7 billion in non-concessional loans
and Shs. 1,490 billion in grants. A significant proportion of these funds are for financing
Government’s critical infrastructure investment projects. Implementing agencies should
ensure that the country gets value for money for every shilling spent.
G. DOMESTIC RESOURCE MOBILIZATION
REVENUE MOBILIZATION
106. Madam Speaker, the strategy for Domestic Revenue Mobilization in the Financial Year
2016/17 is to expand the tax base by gradually formalizing the large informal sector,
improving efficiency in tax collection and compliance. Government will aggressively
mobilize additional sources of revenue by raising the revenue effort from the current ratio of
13% of GDP to 16% by Financial Year 2019/20. Madam Speaker, This will be done through
implementing tax policy reforms that align the tax regime with best practice, both in the
regional and global context, in order to generate necessary resources to finance the budget
and also promote private sector investment. In the forthcoming year, Government will
continue to simplify the tax regime, enhance compliance and eliminate tax avoidance and
evasion.
107. Madam Speaker, the Financial Year 2016/17 tax measures approved by the 9th Parliament
will facilitate investment, including emerging industries, particularly in the petroleum, mining
and construction sectors. These measures include the following:-
i. taxpayers who merge or acquire loss-making businesses and continue to operate this
same business after this transaction, will be allowed tax relief for such losses in order
to promote Uganda’s investment climate and facilitate mergers and acquisitions.
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ii. VAT relief will be granted in respect of supplies procured from the domestic market for
aid-funded projects, in order to cure the imbalance suffered by domestic suppliers and
producers.
iii. Producers of solar, wind and geothermal energy will be allowed relief on VAT
incurred on their business inputs, in order to reduce the cost of production of alternative
sources of energy.
iv. VAT imposed on imported services used by Business Process Outsourcing (BPO)
companies will be refunded at the time of export or offset if the services are consumed
in Uganda.
108. Madam Speaker, additional tax measures approved by Parliament include the following:-
i. Increase in Excise duties on:-
1. diesel and petrol by Shs.100/=;
2. soft cup cigarettes to Shs. 50,000/= per 1000 sticks and Hinge Lid cigarettes to
Shs. 80,000/= per 1000 sticks;
3. sweets and confectionaries to 20%
ii. Increase from 1% to 1.5% in Stamp duty on transfer of property.
109. Increase from Shs. 5,000,000/= to Shs. 20,000,000/= Registration Fees for personalized
number plates. Details of the new tax measures can be found in the respective amendment
acts that will become effective on 1st July 2016.
110. Madam Speaker, the performance of non-tax revenue remains low, accounting for only 1 to
2% of total revenue collection, despite concerted reforms over the last five years. This
compares poorly with other developing countries in Latin America, where NTR collections
are as high as 10% of total government revenues. Non-Tax Revenue is mainly fees and
other payments for government services charged by state-owned enterprises. All
Accounting Officers with the responsibility for collecting levies and fees will be held
accountable for collection and accountability of Non-Tax Revenue in accordance with the
Public Finance Management Act 2015.
111. Madam Speaker, furthermore measures to enhance capacity for tax administration will be
implemented. These include the completion of establishment of One Stop Border posts
(OSBPs) at Malaba, Mutukula, Busia, and Mirama Hills border points to facilitate faster and
simplified clearance of goods at border posts. Next year the Uganda National Single
Window which allows lodging standardized documents at a single point to fulfil all import,
export and transit related regulated requirements, will be fully operationalised. This will
reduce the cost of doing business, create transparency in the supply chain and increase
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Government revenue. Electronic Fiscal Devices (EFDs) which record business transactions
and share this information with the tax authority will also be rolled out in a phased manner.
112. Madam Speaker, I have provided Shs. 8 billion to implement the Taxpayer Registration
Expansion Project (TREP) to enhance coordination between institutions such as the
Uganda Revenue Authority (URA), Uganda Registration Service Bureau (URSB), Kampala
Capital City Authority (KCCA) and other local authorities. The program will help businesses
to formalize their operations through business licensing and registration. I have also
increased the budget of the Uganda Revenue Authority by Shs. 40 billion to rollout taxpayer
education programs to increase tax awareness, compliance and remedial mechanisms, as
well as cover other operational activities. The scope for revenue improvements are detailed
in the Background to the Budget.
113. Madam Speaker, pre-Budget Consultations of the East African Community Ministers of
Finance were held on 7th May 2016. Among the issues considered at the Consultations
was implementation of the EAC Summit directive on industrialization with a focus on the
development of the Motor Vehicles, Textiles and Leather industries in the Community. The
Consultations also agreed to adjustments in Common External Tariff (CET) rates, details of
which will be gazette by the EAC Secretariat.
114. Madam Speaker, Government has also developed a new policy to guide Double Taxation
agreements. We will forthwith be commencing the process of re-negotiating Double
Taxation Agreements that do not comply with this policy.
H. CONCLUSION
115. Madam Speaker, in conclusion, I wish to commend this budget to all Ugandans in our quest
for the country to attain middle income status. The strategic choices we have made in the
budget for next year concretize the foundation for the prosperity of future generations.
Uganda’s Vision 2040 aspires for “A transformed Ugandan Society from a Peasant to
Modern and Prosperous Country by 2040”. This budget represents yet another milestone
towards this goal.
116. For Ugandan households, next year’s budget seeks to make you all healthy and wealthy.
117. To school teachers and university staff, together with health workers, His Excellency the
President has fulfilled his pledge, and the Uganda people now demand a quid-pro quo in
service delivery.
118. To the youth I implore you to engage in production, as activities like sports betting have no
future for you and the country.
Budget Speech Financial Year 2016/17
119. To private sector entrepreneurs, seize the vast opportunities that abound in agriculture,
agro-processing, tourism, mining and other sectors in Uganda. Please invest, make profits,
expand your businesses, become millionaires, multi-millionaires and multi-billionaires; while
creating jobs and ultimately making a significant contribution to the growth of our economy.
Madam Speaker, I beg to submit.
FOR GOD AND MY COUNRY
ANNEXES
