Statement at National Budget Conference

Acknowledgements:

• Right Honourable Prime Minister
• Honourable Minister of Finance, Planning and Economic Development and all your colleagues from the Ministry
• Recognizing also other sectoral ministers
• Honourable Members of Parliament
• Representatives of Civil Society Organizations and the Private Sector
• Members of the Diplomatic and development Community
• All participants

On behalf of the Local Development Partners Group, I wish to thank you, Honorable Minister of Finance, Planning and Economic Development, for inviting us today to the National Budget Conference for Fiscal Year 2024/2025. This is an important event, which sets the tone for key policy and spending discussions and decisions, over the next budget cycle.

As Development Partners, we would like to use this opportunity to reconfirm our partnership in sustaining and accelerating development outcomes in Uganda. Official Development Assistance to Uganda – which amounted to USD 2.72 billion in 2021 or 8% of Uganda’s Gross National Income - is fully aligned with the National Development Plan III and has contributed to achieving tangible results in key sectors.

We must recommit and renew our partnership if we are to realize the ambitions of the Sustainable Development Goals, in Uganda by 2030. (And just to remind the audience that these goals are largely mainstreamed into the National Development Plan III and I assume all National Development Plans going forward).   We can only achieve our collective aims and tackle the big challenges of our age, when we work together, based on mutual accountability and co-creation.

It is important to also acknowledge that these are challenging times for the development partnership between the Government of Uganda and her international development partners.  While we respect the sovereignty of Uganda to pass and enforce laws, we do believe that many provisions of the Anti-Homosexuality Act 2023 are incompatible with some fundamental human rights principles and may run counter to the normative agenda for promoting equality and non-discrimination. We appreciate Government of Uganda including some additional safeguards in the recent Budget Execution Circular for FY 2023/14 in which all projects (whether funded by Government of Uganda or externally) will be implemented with emphasis on equality of all persons without prejudice and discrimination on the ground of sex, race, color, ethnic origin, tribe, birth, creed or religion, social or economic standing, political opinion or disability.

We congratulate the Government of Uganda for maintaining macro stability in the face of shocks. The decision to tighten the monetary policy to contain inflation and the decision not to succumb to pressures and introduce untargeted subsidies dampened the pass through into broader inflation and enabled demand adjustments while preserving fiscal resources. We also commend the Government’s fiscal consolidation efforts that are helping preserve the fiscal space amid the high-interest global financing environment. We encourage the Government to continue with ambitious fiscal consolidation and structural reforms to eliminate obstacles to scaling up private lending by commercial banks. We also urge the Government to persevere in the implementation of the IMF Extended Credit Facility-supported program which provides concessional financing and fosters growth-supportive reforms while strengthening governance, which has the potential for unlocking further financing at lower cost. Efforts to raise other concessional financing should be pursued.

We encourage the Government to expeditiously implement the recommendations of NDP III mid-term review to accelerate attainment of the set targets beyond the 17% that were achieved by end of the second year of NDP III implementation. This will require alignment of the annual budget to the NDP III, improving planning and budgeting for core projects, and strengthening monitoring and evaluation systems. We stand ready to assist on the latter if needed.

Given that we are here to consult on the budget, the DPs would like to emphasize a few priorities for 2024/25 budget:

1. Domestic Revenue Mobilization: Effective implementation of the Domestic Revenue Mobilization Strategy (DRMS) presents an opportunity to secure low-cost financing for development. The ambitious targets in the Domestic Revenue Mobilization Strategy (DRMS) can be achieved at least in part by rationalizing tax expenditures that have grown substantially over recent years and have eroded the tax base. We encourage the Government to press forward decisively with these plans while data collation, evaluation and cost-benefit analysis are undertaken by tackling “low hanging fruit” expeditiously. We also encourage the Government to implement the recently adopted Public Investment Financing Strategy, which provides a framework for widening the range of financial resources raised from domestic and external sources, and through innovative vehicles.
2. Human Capital Development: Human capital development is key to boosting Uganda’s growth prospects. Uganda’s population is projected to increase by 60% in the next twenty (20) years to around 74 million from an estimated 45.5 million in 2023. This presents an enormous opportunity if investment in human capital (especially education, health and social protection) are adequate for preparing the working age population for the labor market which requires skilling and health protection for productivity. While spending composition has improved recently, needs are large and budget execution is inadequate mainly due to capacity constraints of the Ministries, Departments and Agencies and Local Governments. There are also inefficiencies within the human capital development sub-programmes. We encourage the Government to continue allocating adequate resources for human capital development and work to address inefficiency and boost budget execution. We stand ready to assist with capacity development if needed.
3. Agricultural Productivity and value addition: In order to move households from the subsistence to the market economy in a sustainable manner it will be necessary to increase agricultural productivity through additional investment in “public” goods such as extension, access to affordable finance, research (especially into drought and disease-resistant seeds varieties), the promotion of climate-smart farming practices, the control of pests and diseases in an environmentally-friendly manner, the development of produce marketing networks, and strengthened inspection and certification services. There is also a need to encourage smallholder farmers to become more involved in the value-addition of produce.
4. Green Growth and Climate Change Adaption and Mitigation: Green growth requires accelerating support to green industries including by expanding renewable energy projects, including climate smart food production value chains, climate change adaptation initiatives in the design of infrastructure projects, and safeguarding water resources. Any new infrastructure should be climate-resilient, so that production is not disrupted by extreme weather events. More investments are still needed to ensure industries have access to stable and low-cost electricity; and all Ugandans have access to sustainable electricity. Since public funds are limited, mobilization of private investment and finance will be crucial to achieving the objectives of Uganda’s NDC. We encourage the Government to create an enabling environment for green investments, and work with the private sector and financial institutions to leverage additional investments in renewable energy and climate adaptation.

Right Honorable Prime Minister, let me conclude by thanking you again on behalf of the Local Development Partner Group, for inviting us to participate in this important conference and to reiterate our commitment to the development of Uganda,  including the continued support towards Uganda’s internationally acclaimed progressive refugee policy. We wish you successful deliberations in designing a budget that will address current economic challenges. We look forward to further discussions on how we, the Development Partners, can best engage to support sustainable and inclusive growth in Uganda.

Thank you!