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Kassaija's Five-Focus Budget Plan for Industrialization

Wednesday, 25th September 2019
Minister of Finance, Planning and Economic Development Addressing BFP meeting

Speaking to a hall packed with central and local government officials, ambassadors, parliamentarians, private sector leaders as well as local and international media representatives, Matia Kasaija has offered five solutions to Uganda's drive to accelerate the attainment of middle-income status as stipulated in Vision 2040. The theme of the Budget Conference was   'Industrialization for Job Creation and Shared Prosperity'. The Minister spelt out the following key five areas for her industrialization drive which mark the cornerstones of Uganda's budget strategy 2020/2021.

First and foremost, he singled out the focus on efficient and sustained exploitation of the productive sectors. Secondly, he stressed the critical importance of consolidating and increasing the stock and quality of productive infrastructure to support trade, industrialization, exports and efficient urbanization. Following from this would be the deliberate effort to increasing the productivity, inclusiveness and well-being of the population. The fourth aim is the strengthening of the country's private sector to drive growth. All these four areas are foreseen to yield maximum results through a tight sharpening of the focus on the fifth area namely: enhancing the effectiveness of both fiscal and administrative governance.

To get these areas to propel the levels of socioeconomic growth which usher in middle income status, the Minister said that Uganda needs to address the following five key constraints. The first is the low level of productivity in agriculture. He observed that over 68% of the population is in the subsistence economy, with little or no commercial enterprise. This subsistence non-commercial subsistence economy is additionally threatened by climate change. Looking into other sectors of the economy, low productivity is not only in agriculture: it is also found in  the minerals and tourism sectors of the economy. As a result of the low productivity, job creation in the economy has not kept pace with the surge in the number of youths joining the labor force.

 Among the five constraints to growth in the Ugandan economy, the second is the noncompetitive private sector which suffers from the  high cost of electricity, the high cost of transport and the high cost of financial capital. Due to its highly encumbered infrastructure, Uganda has not been able to benefit fully from the abundant regional and international trade opportunities. The third constraint he identified are the existing gaps in social service delivery; and widening regional inequality coupled with increase in poverty from 19.7% in 2013 to 21.4% in 2017. Most alarmingly, 56% of Uganda's children suffer from multidimensional poverty. Busoga, Bukedi and Bugisu - which, along with Karamoja, Teso, Acholi and West Nile rank amongst the poorest sub-regions in the country - and are very densely populated. They together account for one-third of Uganda's child population. 

The Minister decried the low levels of private investment in the economy; calling it the fourth constraint to the country's aspirations for accelerated growth. Uganda's private sector is hit hard by the cost of borrowing or credit; undermining both the quantum and level of private sector investments. Other constraints relate to trade barriers and business regulatory gaps.

The Minister spoke candidly, citing as a national constraint, the inefficiency which abounds in fiscal, monetary and administrative governance which minimizes the expected returns from public investments. He also decried the increase in administrative units which exacerbate the levels of unplanned expenditures. Also to blame, he said, were supplementary budgets, such as those to cover unexpected elections, the cost of democracy, which undermine effective fiscal operations.

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