Final Financial Year 2016-17 Budget Speech

Final Financial Year 2016-17 Budget Speech



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


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.



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

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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.

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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.


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

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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.


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


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



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


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.


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.


Agriculture Production and Productivity

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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


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


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


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


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.


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


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


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.


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


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

Budget Speech Financial Year 2016/17

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


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


Skills Development

Budget Speech Financial Year 2016/17

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



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.

Budget Speech Financial Year 2016/17

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


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



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.

Budget Speech Financial Year 2016/17

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


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


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


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,

Budget Speech Financial Year 2016/17

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.


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.


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.


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.

Budget Speech Financial Year 2016/17

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


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.



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


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.

Budget Speech Financial Year 2016/17

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


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.


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.