CSBAG presentation to the Finance committee on the

NBFP FY 2015/16
P.O Box 660, Ntinda
Plot 11 Vubya, Close|Nakawa Ntinda stretcher Road
Tel: 0755202154|web: www.csbag.org

About CSBAG

A coalition of
72
Organization
s

Vision:

Mission:

Established in 2004 to
influence Government
decisions on resource
mobilization and
utilization for equitable
and sustainable
development.

To have a
Uganda with a
People Centered
Budget that
dignifies
humanity

To work towards ensuring

that budgets at local and
national levels are
financed, designed,
implemented and
monitored to promote
prudent and transparent of
national resources for the
benefit of marginalized
groups.

Context

Headline
inflation- 6.9% in
February 2014
to 1.4% in
February 2015.

4/22/15

Average
exchange rate
(UGX per USD)
depreciated
from 2,523.7 in
December 213
to UGX 2,726.99
in December
2014

Civil Society Budget Advocacy Group

Context
The value of
exports
reduced from
USD 233.3
million in
January 2014
to USD
229.82
million in
January
2015.
4/22/15

The value of
imports
increased
from USD
396 million
(fob) in
January 2014
to USD
415.85
million (fob)
in December
2014.

Civil Society Budget Advocacy Group

Central Bank
Rate at 11%12% since
June 2014,
while the
commercial
banks
lending rates
have
averaged at
21% since
June 2014.

Commendable efforts in public

finance management

4/22/15

Civil Society Budget Advocacy Group

Positive developments in public finance

management for improved service delivery

Enhanced
Enacting the
Ministry of
Public
Finance
Finance
partnership
Management
with NonAct, 2015
State Actors
4/22/15

Civil Society Budget Advocacy Group

Positive developments in public finance

management for improved service delivery

4/22/15

y nd
l
e a
m e to
i
T as s
t
s
e e e on
l
g
c
e
r ac ud at i
B rm
o
f
in

S
Tr in
e
g
a
Ac s le
c o ur
un er
t

Civil Society Budget Advocacy Group

Positive developments in public finance

management for improved service delivery

Management of inflation
Review the fiscal decentralization
strategy
Collaborative efforts to enhance
Tax:GDP ratio
4/22/15

Civil Society Budget Advocacy Group

Macro Economic challenges

4/22/15

Civil Society Budget Advocacy Group

Prevalen
t High
Interest
rates

25.00

18.38% difference btn lending and saving rates

Recommendation
12.20
12.00

20.00

11.80
11.60

15.00
11.40
11.20
10.00

11.00
10.80

5.00

Increase regulation in the

financial sector, particularly on
the commercial banks not to
exceed 7 percentage points
above or below the CBR

10.60
0.00

41579
41640
41699
41760
41821
41883
41944
41548
41609
41671
41730
41791
41852
41913
Central Bank Rate (CBR) 4/

10.40

Deposit Rates (WARD)

Lending Rates

4/22/15

Civil Society Budget Advocacy Group

10

Figure 3: Trends between NPL to Lending rates

30.00

27
25

25.00

27

26
24

24

22
20.00

20

24

23

22

22

22

21

6.17

5.80

5.26

20

22

15.00

10.00

5.00

2.47
0.00
40605

1.61
40697

1.81
40789

2.21
40878

3.40

40969

3.92

41061

4.65

41153

4.23

41244

NPLs to total gross loans

4.66

41334

5.97
4.36

3.97

41426

41518

41609

41699

41791

41883

4.13

41974

Lending Rates

Source: CSBAG calculations and computations

4/22/15

Civil Society Budget Advocacy Group

11

Exchange rate
depreciation

3,500.0

Shift away from

full liberalization
of the currency
market in next
FY 2015/16.

3,000.0

2,500.0

2,000.0

1,500.0

1,000.0

500.0

Period Average Rate

4/22/15

Linear (Period Average Rate )

The Government
should enhance
exports through
funding to the
value
addition
initiatives.

Enforce that
transactions
carried out
locally are in
Uganda
shillings.

Civil Society Budget Advocacy Group

12

Supplementary
Budgeting
1,982,038,519,000

910,869,811,880

638,455,051,000
552,033,911,000
479,929,569,000
332,477,675,000
254,221,096,000

4/22/15

MoFPED should
ensure critical
sector functions
are budget for
as a matter of
priority.

Civil Society Budget Advocacy Group

Government
should expedite
full
implementation
of the Public
Finance and
Management
Act, 2015.

13

Tax to GDP ratio: EAC Monetary

UNION -25%
T/GDP
country Ratio
Uganda
11.70%
Kenya
19.30%
Tanzania 12.60%
4/22/15

MoFPED should in
partnership with the URA,
develop its capacity to
forecast revenues for
individual tax heads using
information on the
macroeconomic and
administrative factors
affecting collection.

Civil Society Budget Advocacy Group

14

Taxation is the price we pay for

civilization
Government should revisit the double taxation stance with a view of taxing
multilateral companies whose subsidiary companies operate locally. We envision
that this will bring in UGX 100 billion per year.

Government should pain stakingly re introduce the Graduated Tax (GT).

To collect more revenue, imposition of an environmental tax on the firms and

companies that have a carbon foot print on the environment is very critical. We
envision that government will collect UGX 100bn.
4/22/15

Civil Society Budget Advocacy Group

15

Taxation is the price we pay for

civilization
Re-introduction of road tolls on the new infrastructure transport projects. We
envision that this measure will yield about UGX 150bn per year.
Taxing cash withdrawals. We propose that a 1% tax for any cash withdrawal
above UGX 5 million.
Property tax. This measure can generate not less than UGX 50bn per year.
Special taxes for infrastructure projects. This is what revolution is all about!!!
Tax on unprocessed exports. This will not only create employment but also
promote value addition and subsequent taxes paid at various levels in the
different value chains.
4/22/15

Civil Society Budget Advocacy Group

16

Winners and
losers
678.40
286.74
155.30
122.30
74.70
34.43
0.201.001.203.9013.40
(22.00)
(30.20)
(42.10)
(45.30)
(56.70)
(317.40)
(466.50)

Change in Allocation (Billions)

4/22/15

(1,013.90)

Civil Society Budget Advocacy Group

17

Specific
Budgetary
concerns
4/22/15

Civil Society Budget Advocacy Group

18

Wasteful Expenditure
Amount wasted
(Ugsh)
Ministry of Works And Transport

726,882,420

Uganda National Roads Authority

2,464,934,174

Ministry of Health

2,143,173,980

Uganda Aids Commission

12,766,000

Uganda Cancer institute

448,408,158

China-Uganda Friendship Hospital,

Naguru
Ministry of Water and Environment

8,054,900

Uganda Embassy,ABU DHABI

2,048,822

Ministry of Local Govermnet

404,788,822

Mbale Regional Referral Hospital

146,883,559

Total

7,478,849,806

4/22/15

Amount Wasted
(USD)
3,663,761

According to the
Auditor
Generals report
FY 2013/14, UGX
7.4bn and USD
3.6mn
was
considered
wasteful

1,120,908,971

3,663,761

Civil Society Budget Advocacy Group

19

Poor reporting on NTR

We note with concern that the
component of NTR outturn is
not reported on every year.
From the BFP it is evident that
in FY 2013/14 every sector has
zero outturn recorded and yet
ministries and agencies of
government collect NTR .

Govt should ensure that every sector records NTR outturn so

that citizens can appreciate the contribution of funds
collected under the category to fund the sector.

Govt should initiate reforms aimed at enhancing NTR as well

revising rates applicable to make more relevant to the current
economic situation.

This omission creates are false

impression on the figures that
are presented.
4/22/15

Civil Society Budget Advocacy Group

20

Poor Absorption Capacity

In the FY 2013/14,
Government entities
returned unspent
balances of
UGX.9,412,704,745 to the
consolidated Fund
Projects failed to absorb
funds totaling to
UGX.217,393,823,773
indicating partial service
delivery.
4/22/15

Government should refine the procurement system better to

improve the absorption of the development budget.

Punitive action should be taken against the institutions that

do not absorb their development budgets by the end of the
FY.

Civil Society Budget Advocacy Group

21

Late release of funds to

spending agencies
Quarter 1 FY 2014/15

Quarter 2 FY 2014/15

A total of 11 districts and 24 sub-counties were sampled during the

study covering 37 UPE schools and 11 Health Centers visited.

Findings

A total of 12 districts and 32 sub-counties were sampled during

the study with 22 schools and 28 Health Centers visited.

Out of the 14 schools verified to

exist, 9 had discrepancies in the
enrollment.
Only 25% of the service delivery
points sampled received funds
from the consolidated fund by 24th
July 2014
50% of the spending agencies
received funds by 4th August 2014
4/22/15

Findings

There was a 36% shortage of

staff in the Health Centres
10% staffing gap in the
schools that were monitored.
25%
of
the
institution
monitored had not received
funds for Q2 FY 2014/15 by
1/12/2014

Civil Society Budget Advocacy Group

22

Unfulfilled promises for the FY

2014/15
In the FY 2014/15 Budget Speech two major
proposals were made and have never been fulfilled;
The establishment of the cooperative bank, which
has now become an unfunded priority under the
Trade sector, requires Ugshs 35bn for its revival.
The establishment of the salary review commission
which has never taken off and its not even
mentioned anywhere in the budget framework
paper.
4/22/15

Civil Society Budget Advocacy Group

23

Other observations and

recommendations
we need a definite
deadline when all
the
documents
needed under the
MoFPED should
PFMA for Parliament
provide guidelines
to
be
able
to
for the
approval the budget
implementation of
will
be
tabled
the PFMA for CSO
Section 13(9-10)
input
Section
10
We understand rush meeting the PFMAand
deadlines
but level
of
compliance is so low.
4/22/15

Civil Society Budget Advocacy Group

24

Other observations and

recommendations

MOFPED inability to provide

project budget codes and
counterpart funds yet they
are in charge on signing
loans and grants

4/22/15

Civil Society Budget Advocacy Group

Action on not
appointing
Accounting
officer based on
the PFMA
recommendation
Section 11 sub
section 2 (g)

25

Conclusion

The strategic
goal of the
2015/16 Budget
is Promotion of
Excellence in
Public Service
Provision.

4/22/15

In order to
achieve this
strategy, the
issues and
concerns that
have been
highlighted
above by the
citizens should
be given the
much needed
attention by both
the executive
and the
legislature.
Civil Society
Budget Advocacy Group

We seek a
people centered
national budget
that dignifies
humanity,
because Every
Shilling
Counts.

26

4/22/15

Civil Society Budget Advocacy Group

27