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Here is Finance Minister Kasaija’s Full Budget Speech for FY 2019/20

Finance Minister Matia Kasaija has on Thursday afternoon presented the Shs40.4trillion National Budget for Financial Year 2019/2020.

Kasaija presented the Budget on behalf of the President in accordance with Article 155(1) of the Constitution.

Below is Kasaija’s full speech:

Your Excellency the President

Your Excellency, the Vice President

The Right Honourable Speaker of Parliament

The Right Honourable Deputy Speaker

His Lordship the Chief Justice

His Lordship the Deputy Chief Justice

The Right Honourable Prime Minister and Leader of Government Business

Right Honourable Deputy Prime Ministers

Madam Leader of the Opposition

Honorable Ministers and Members of Parliament

Members of the Diplomatic Corps

Distinguished Guests, Ladies and Gentlemen.

1. In accordance with Article 155(1) of the 1995 Constitution of the

Republic of Uganda and Section 13(13) of the Public Finance Management

Act 2015, I presented the Budget proposals for Financial Year 2019/20 to

Parliament on 28th March 2019. I applaud Honourable Members of

Parliament for their dedication in the reviewing the proposals and the

approval of the Budget on 24th May 2019.

2. My statement today therefore presents the economic and

development context under which the Financial Year 2019/20 Budget was

prepared and highlight the priority actions that underpin the allocations

that have been appropriated by Parliament.

B. INTRODUCTION

Development Progress

3. Madam Speaker, in the Financial Year 2018/19 Budget Statement, I

reaffirmed the NRM Government’s commitment to attain our cherished

goal of a middle income status for the country through interventions

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targeted at inclusive growth and socio-economic transformation. Uganda

has made substantial progress towards this goal as demonstrated by the

following few examples:-

i) Uganda’s economy has recovered and picked momentum, growing

at over 6% per annum over the last two years.

ii) With the progress in economic growth, average incomes of

Ugandans have increased to US$ 825 per person in Financial Year

2018/19, compared to US$ 800 in 2017/18, notwithstanding increase

in the population size to 39 million Ugandans.

iii) The quality of Uganda’s labour force has dramatically improved,

with the proportion of labour force with tertiary education increasing

from 7.5% in 2013 to 13.6% in 2017. In addition, the annual growth in

formal employment has averaged 9.8% between 2010 and 2017,

higher than the average growth of the economy during the same

period.

iv) The structure of the economy has changed. The share of industry in

the economy is now 21% compared to 11.3% in 1986. Services have

increased to 48.7% from 32% over the same period. In contrast, the

share of agriculture has reduced from over 50% in 1986 to 22% in

financial year 2018/19.

v) Export performance has been excellent, with diversification leading

to non-traditional cash crops earning Uganda US$ 2.84 billion last

financial year, compared to the traditional cash crops, which

earned US$ 0.79 billion.

vi) Trade with our East Africa Community partners has significantly

improved generating a surplus of US$ 557 Million last year. The

composition of exports has also changed positively with exports of

light manufacturing products exceeding traditional merchandise.

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vii) National grid electricity connections have increased to 1.3 million

customers, and the rural electrification access rate rising from 1% in

2001 to over 13% in 2019.

viii) Many new factories have been opened in the course of FY2018/19

with the result that the proportion of Ugandan products in

supermarkets has increased from 15% to 45%. Our target is to reach

50% by the year 2020.

4. Madam Speaker, the few examples I have mentioned are a direct

outcome of the NRM Government’s deliberate policies over the years to

promote socioeconomic transformation.

Development Challenges

5. Madam Speaker, despite these positive milestones we, however, are

still faced with some major development challenges. Let me single out

three:- (i) Unemployment, (ii) Income Inequality, (iii) Malnutrition and

Unhealthy Life Styles.

(i) Unemployment

6. There are now approximately 600,000 entrants into the job market

every year, as a result of the universalization of health and education. This

has created the need for new jobs to meet this demand. Currently, 4 out of

10 young Ugandans are out of work.

7. Furthermore, the quality of jobs is of concern. The 2016 labour force

survey indicates that 50% of Ugandans work in the Services sector, 35.6% in

Agriculture, and 14.4% in Industry. The informality of the Agriculture and

Services sectors implies that about 80% of our labor force is in the informal

sector, and therefore not optimally employed. With most Ugandans

engaged in the rural economy, it is of paramount importance to increase

labour productivity in agriculture and aggressively promote agroPage

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processing which in the end will be the basis for Uganda’s industrialization

and further job creation.

(ii) Income Inequality

8. Secondly, Income Inequality has widened between rural and urban

areas, as wealth has not been created faster in rural communities in

comparison to urban areas. This is despite the country’s progress in

narrowing regional income inequality, for example, in Northern and Eastern

Uganda following Government’s affirmative action programmes. As a

consequence, rural-urban migration has increased with high urbanization

rates causing challenges of congestion, housing shortage and population

pressure on urban social services. These challenges have compromised the

potential of Uganda’s urban areas to serve as engines of growth and

structural transformation. World Bank studies estimate traffic congestion is

costing Uganda over US$800m in lost National Output.

(iii) Malnutrition and Unhealthy Life Styles

9. Thirdly, malnutrition adversely affects the quality of life of children and

mothers, despite the variety and quantity of foods that Uganda can

produce. 53% of children under five years are malnourished and hence

anemic, and 29% of them are stunted or wasted. Many women of

reproductive age are also malnourished, with 32% of them being anemic.

10. In addition, inappropriate feeding especially among the more

affluent, is also a major cause of a surge in chronic non-communicable

diseases including coronary heart disease, cancer, diabetes, high blood

pressure, and obesity. These maladies are largely attributable to unhealthy

life styles. Consequently, Uganda has been spending on average US$ 500

million on treatment of preventable diseases. Improving the nutrition status

of Ugandans accordingly requires (i) coordinated actions (ii) mass

sensitization and education, and (iii) life style awareness.

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11. Madam Speaker, the financial year 2019/20 Budget, therefore,

focuses on interventions aimed at increasing the wealth and improving the

livelihoods of all Ugandans. The NRM Government will continue to pursue a

growth strategy that aims to create jobs and ensure that growth benefits

every Ugandan. I will elaborate this strategy later in my statement.

12. So, the theme for the Financial Year 2019/20 Budget, accordingly,

remains ‘Industrialization for Job Creation and Shared Prosperity’.

13. Madam Speaker, the Budget Statement today will cover the

following:-

i) Economic Performance in Financial Year 2018/19;

ii) Economic Growth Strategy for Financial Year 2019/20 and the

Medium Term;

iii) Financial Year 2018/19 Sector Performance and Priorities for Financial

Year 2019/20; and,

iv) Financing Strategy for Financial Year 2019/20.

C. ECONOMIC PERFORMANCE IN FINANCIAL YEAR 2018/19

Global and Regional Economy

14. Madam Speaker, on the global scene, Africa’s economic

performance continues to recover. The EAC region is the fastest growing

economic bloc in Africa, with growth projected at 6.2% in 2019, increasing

from 5.9% in 2018. This performance is mainly accounted for by the growth

in the services and agriculture sectors as well as increased consumption

and investment. Rising incomes in Africa increases demand for exports

within African countries themselves.

15. Uganda’s trade with other Africa countries is increasing, and

amounted to 59% of total goods exported in 2018. During the same year,

the East African Community (EAC) continued to be the largest destination

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for Uganda’s exports. Total goods exported to the EAC amounted to US$

1,469 million compared to imports of US$ 911 million, thus registering a trade

surplus of US$ 557 million.

The Domestic Economy

Economic Growth

16. Madam Speaker, the economy has sustained the remarkable

recovery witnessed in Financial Year 2017/18. The economy is estimated to

have grown by 6.1% in the Financial Year 2018/19. The size of the economy

is now Shs. 109 trillion, equivalent to US$ 29.5 billion. The significant revival in

economic growth was a consequence of increased private and public

sector activity, improved weather conditions and a relatively stable global

economy.

17. The Agriculture sector maintained its recovery sustaining a 3.8%

growth rate in financial year 2018/19. Among other contributing factors let

me mention two:- (i) the strengthened enforcement of fishing activity has

resulted in recovery of fish captures (ii) provision of extension services and

control of pests and diseases has also led to a bumper harvest in crops such

as maize, beans, fruits, vegetables, and sim sim. I must say though that the

growth in the agriculture sector is still sub-optimal, given the natural

resources that we have.

18. During financial year 2018/19, the Services Sector grew at 7.2%, the

highest of all sectors. This good performance was largely driven by tourism

and hospitality.

19. The Industry sector grew at 5.8% this year, continuing the rebound

which started in financial year 2016/17. Manufacturing is also beginning to

pick up. It grew at 2.8% this year compared to 1.7% in the previous year. This

is partly because of the newly commissioned factories, as I will later

demonstrate.

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Domestic Prices

20. Madam Speaker, domestic prices remain stable. Average Inflation

was 3.4%, well within the policy target of 5% per annum. This is because of

increased food supplies in the markets, relatively stable exchange rate and

effective co-ordination of monetary and fiscal policies. Stable prices, we all

know, allow investment planning, improve investor confidence and

preserve the value of savings.

Exchange Rate

21. The Uganda Shilling has also largely been stable against major

currencies. It strengthened against the US dollar by an average of 0.6% for

the period between July 2018 and April 2019. The strengthening of the

shilling against the US Dollar was a result of higher export performance,

improved disbursement of external support for Government programmes,

continued Foreign Direct Investment (FDI) inflows, and robust remittances

from Ugandans’ abroad.

Financial Sector and Private Sector Credit

22. Madam Speaker, the financial sector has continued to strengthen.

Non-performing loans reduced to 3.4% at the end of December 2018

compared to 5.6% in December 2017. Private sector credit grew by 6.1%

between July and December 2018 with Trade and Construction sectors

receiving the largest share of credit, at 20.1% and 19.8%, respectively.

Credit to Agriculture has registered the highest growth, though it still remains

low, at only 12.9% of total credit extended as at December 2018.

Public Finance

23. Madam Speaker, domestic revenue collection too, has increased

significantly. It is projected at Shs. 16,711.66 billion in the financial year

2018/19, of which Shs. 16,181.66 billion is tax and Shs. 530 billion is non-tax

revenue. The surplus is Shs. 352.66 Billion over the target of Shs. 16,359 Billion.

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24. The ratio of domestic revenue to GDP is estimated at 15.2% this

financial year, compared to 14.6% achieved last year. This is an increment

of 0.6% of GDP in one financial year.

25. Madam Speaker, Government spending excluding domestic debt

refinancing this financial year is projected to be Shs. 24,297.85 billion, which

is equivalent to 22.1% of GDP.

D. ECONOMIC GROWTH STRATEGY FOR FINANCIAL YEAR 2019/20

26. Madam Speaker, the Economic Growth Strategy that underpins the

Financial Year 2019/20 Budget seeks to consolidate made interventions

towards the attainment of shared prosperity. Ensuring Shared Prosperity

requires that the benefits of economic growth reach all Ugandans. Our

people must be provided with opportunities to create wealth and earn

higher incomes. This strategy is built on the rapid industrialization of our

economy linked to high productivity and production in agriculture; while

nurturing the potential of the key growth sectors of tourism, minerals, oil and

gas. The growth of these sectors is what will provide gainful employment to

the majority of Ugandans. Entrepreneurs who have strong links with the

productive households, are the key to unlocking the potential of these key

sectors, leading to prosperity for us all.

27. The Economic Growth Strategy consists of three interlinked parts:-

i) Expanding the Industrial Base of the Economy;

ii) Exploiting Natural Resource Endowments with Environmental

Protection in mind; and

iii) Providing affordable Financing for Production and Business.

Expanding the Industrial Base of the Economy

28. Madam Speaker, the NRM Government has already successfully laid

the foundation for Uganda’s industrialization. The key bottlenecks such as

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inadequate electricity and transportation infrastructure, the lack of basic

education and health, have, to a large extent, been addressed.

Consequently, the manufacturing sector is now able to meet domestic

demand for basic products like cement, tiles, light steel products and

consumables such as sugar and soap. The next phase of manufacturing in

Uganda will be to produce goods for exports and also replace Uganda’s

imports.

29. Uganda’s industrialization process in the future has accordingly been

designed based on two strategic pillars. The first strategic pillar provides

developed and serviced areas, where industrial production for several

enterprises takes place. The plan involves building fully planned and

serviced Industrial Parks in 22 locations across the country. Industrial Parks

will house medium and large scale industries.

30. The second strategic pillar supports the development of Product

Value Chains which link nucleus entrepreneurs to out-grower farmers. These

Product Value Chains permit marketing of agricultural products, agroprocessing

for value addition, as well as the efficient provision of finance

and other inputs of production. It will also ensure the vast majority of

Ugandans are productively engaged. We have already successfully

established a few Product Value chains in agro-industry in Citrus Fruit,

Vegetable Oil and Dairy industries. The next move is to expand Product

Value Chains to other commodities across the country.

Exploiting Natural Resource Endowments with Environmental Protection in

Mind

31. Madam Speaker, exploiting Uganda’s natural resource endowments

provides opportunities for growth, and the provision of incomes and a

decent livelihood to the majority of Ugandans. The three natural resource

endowments Uganda has include vast arable land and fresh water

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resources; abundant wildlife and diverse environment, and plentiful

minerals, oil and gas deposits. Appropriately exploiting these natural

endowments requires being mindful of the adverse impact of overextraction,

over-utilization and wasteful use of benefits they provide.

Addressing Climate change aggressively is therefore key to appropriately

exploiting our natural resource endowments.

Commercializing Agriculture

32. Appropriate exploitation of Uganda’s arable land and fresh water

resources, requires climate-smart commercialization of agriculture.

Because the majority of Ugandans are part of rural households, achieving

inclusive growth requires that we use modern farming practices, advanced

agricultural inputs and technology, post-harvest storage, and improve

product market access. This will positively change the livelihoods of over

68% of Uganda’s households who are currently engaged in subsistence

agriculture.

33. Commercializing agriculture has the greatest potential for increasing

household productivity and incomes, while addressing unemployment in

the rural communities. The use of Product Value Chains based on the

National Agricultural Zoning Strategy will also facilitate agricultural

commercialization. Successful agro-processors will be engaged to serve as

a nucleus linked to farmers who sell their produce to the processor. IN

addition, Product Value Chains permit inputs such as extension services and

finance to be delivered. This approach will lead to an increase in

sustainable production at the farmer household level, while increasing

productivity and incomes. In addition, the approach will nurture agrobased

industries across the country, employing labour that will have been

released from primary agriculture.

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Addressing Climate Change

34. Madam Speaker, deforestation and destruction of wetlands

adversely impacts the welfare of our people in the following way:-

(i) water shortage, or no water at all, for domestic use and

production;

(ii) increased temperatures and severe long droughts;

(iii) over-flooding and/or increasing landslides in highlands, and

(iv) destructive winds due to lack of windbreakers.

35. Re-forestation and restoration of wetlands must be undertaken as a

matter of urgency, and the destruction of wetlands and forest cover will be

penalized through the enforcement of environmental laws and regulations.

Local Governments must enact and enforce ordinances on tree planting,

efficient waste management and wetland conservation. The ban on use of

harmful materials such as environmentally destructive polythene bags,

among others, will also be unequivocally enforced. I appeal to the Private

sector to adopt climate-smart technologies.

Tourism

36. Madam Speaker, Uganda’s natural and cultural heritage are critical

to tourism. Utilizing our natural heritage endowment by realizing its tourism

potential will provide Uganda significant benefits. Notwithstanding its

current level of development, the Tourism sector has made dramatic

progress and now ranks as the highest foreign exchange earning sector. In

2018, foreign receipts from tourism reached US$ 1.02 billion, with 1.6 million

international tourist arrivals being recorded. Uganda is now a known

international touristic destination of choice, which strongly justifies

developing its tourism potential for benefits it will provide to Ugandans in

particular and the economy in general.

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37. Sustained growth of Uganda’s tourism therefore requires conservation

of our natural and cultural heritage. Appropriate legislation will be enacted

and vigorously enforced to preserve cultural sites and monuments and

deter illicit trafficking of protected wildlife and antiquities. Tourist hubs and

circuits will be developed for product development and the marketing of

Uganda as touristic destinations of choice based on religious, natural and

cultural heritage. Infrastructure, including road and air transport, electricity

and hospitality facilities, will be developed to enable efficient access to

tourist destinations, and adequate hospitality. World-class skills will be built

in hospitality and tourists handling, wildlife conservation, tour and travel

management, food and beverage services.

Minerals, Oil and Gas

38. Madam Speaker, extracting minerals, oil and gas will contribute to

building a solid resource base for the economy, while providing jobs to

many more Ugandans. The priority Minerals to be exploited include:- Iron

Ore, Limestone, Phosphates, Oil and Gas, Dimension Stones, Gold, and rare

earth metals.

39. The key strategic actions required to commercialize this sector

include minimizing speculation and hoarding of mineral licenses;

enforcement of mining regulations; the airborne geo-physical mapping of

Karamoja, and provision of key road and energy infrastructure.

40. Madam Speaker, in order to avoid wasting and leakage of the

benefits from minerals, oil and gas resources, proceeds of extraction will be

invested for both the current and future generations. In this regard, a

Petroleum Revenue Investment Advisory Committee has been appointed

to guide this process in line within a clear and transparent policy. Uganda

has also joined the Extractive Industries Transparency Initiative (EITI) to

publicly account for all proceeds of minerals, oil and gas sectors.

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Affordable Financing for the Private Sector

41. Madam Speaker, access to affordable finance is an important

catalyst for the growth of viable private sector enterprises. Affordable long

term finance from development financing, pensions, and capital markets

sources, facilitate Private Sector investment. Commercial bank lending

rates remain high. This calls for Government interventions.

42. In this regard, the Uganda Development Bank (UDB) will be further

capitalized. I have allocated Shs. 103.5 Billion next Financial Year for this

purpose. In additions, to support private companies raise equity capital, the

Capital Markets Authority will establish a center to facilitate access to long

term domestic and foreign capital on the stock exchange. The necessary

legal and regulatory framework for the operation of Private Equity funds will

also be designed to attract more investment into Uganda’s private sector.

43. Madam Speaker, financial sector reforms including agency banking,

bancassurance, Islamic banking, and enhanced access to Credit

Reference Bureau services, will reduce operational costs of commercial

banks. The use of movable assets as collateral for loans has also been

facilitated with the enactment of the Security Interest in Movable Property

Act, 2019.

44. In addition, the Uganda Microfinance Regulatory Authority is now

fully operational. This will enhance consumer and investor confidence in the

microfinance industry and money lending business. The electronic chattels

register will be also be operationalized to ease access to credit.

Furthermore, business clinics will be run by the Uganda Registration Services

Bureau to enhance registration of informal businesses.

45. Madam Speaker, Small and Medium Enterprises require affordable

credit. I have provided an additional Shs. 40 Billion to the Microfinance

Support Centre for on lending at affordable interest rates, not exceeding

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12% per annum. Special programmes to enhance access to credit for youth

and women entrepreneurs will also continue to be implemented. The skills

programme for Youth and the Uganda Women’s Entrepreneurship

Programme have been allocated Shs. 130 billion and Shs 32 billion

respectively.

46. Madam Speaker, to de-risk lending to agriculture, the Uganda

Agriculture Insurance Scheme (UAIS) subsidizes agriculture insurance

premiums paid by farmers. Agriculture insurance protects farmers against

key agricultural risks, such as those resulting from natural disasters. This

ultimately attracts affordable credit to agriculture. By March 2019, 77,000

farmers had accessed Agriculture Insurance, across all regions of Uganda.

47. Madam Speaker, in order to develop a sound financial sector that

supports sustainable and inclusive economic growth, we recently

developed the Medium Term Financial Sector Development Strategy.

Enablers of the Growth Strategy

48. Madam Speaker, effective implementation of the Economic Growth

Strategy I have just talked about requires that certain pre-conditions are in

place. These pre-conditions include Peace and Security, Good

Governance and an efficient judicial system, together with macroeconomic

stability. Additional enablers required for economic growth

include (i) reliable, efficient and affordable electricity supply; (ii) water,

transport and communications infrastructure, (iii) a healthy, well-educated

and skilled workforce and (iv) an effective government machinery. The

NRM Government has since 1986 striven to provide these pre-conditions,

which have, to a large extent, been met.

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E. FINANCIAL YEAR 2018/19 SECTOR PERFORMANCE AND FINANCIAL YEAR 2019/20

PRIORITY INTERVENTIONS

49. Madam Speaker, I now turn to the specific priority interventions that

will be implemented in the forthcoming year in furtherance of the

Economic Growth Strategy, while reporting respective developments that

have been recorded during the financial year now ending. These

interventions include:-

i) Enhancing Key Primary Growth Sectors

ii) Increasing Infrastructure Access and Reliability;

iii) Human Capital Development; and

iv) Maintaining Peace and Security, and Good Governance.

I. Enhancing Key Primary Growth Sectors

(i) Industrialization

50. Madam Speaker, Government has already commenced the

establishment of an industrial base. The Iron and Steel industry now has 24

steel industries and its installed capacity has doubled to 1.7 million tons per

annum from 866,000 tons five years ago. The Cement industry has

expanded to five cement factories more than doubling annual production

to 4.43 million tons, from 2 million tons five years ago.

51. Agro-processing factories have been commissioned in Teso and

Luweero for Citrus fruits, Dairy in Ankole, Vegetable Oil in Kalangala, and

Tea in Toro and the Kigezi sub-regions. The Uganda Development

Corporation (UDC) has acquired a 32% stake in Atiak Sugar Factory, which

will serve as a nucleus facility for an out-grower scheme in Atiak and

Lamwo. UDC has also extended ten-year equipment lease financing

arrangements to tea factories in Western Uganda, namely:- the Kigezi

Highland Tea Company Limited, Kayonza Growers Tea Factory and

Mabale Growers Tea Factory Limited.

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52. Madam Speaker, one private and three public industrial parks are

already operational at Kapeeka, Namanve, Luzira and Bweyogerere. The

Kampala (Namanve) Industrial Business Park is 40% complete, and will be

fully serviced in the medium term. The Park already boasts of 33 operational

factories with an estimated 15,000 jobs created. 87 factories are under

construction and 120 are at pre-investment stage. During the year, the

following strategic factories were commissioned at Namanve Industrial and

Business Park:- Orion Transformers and Electric Ltd which manufactures

electricity transformers, switch gears, and smart meters; Alfasan Company

Ltd which manufactures veterinary and human medicines, and Steel and

Tube which produces steel products.

53. At the Luzira Industrial and Business Park, 9 industrial plants are

operational with 7,000 employees. The Bweyogerere Industrial Park has 4

operational industrial plants in agro-processing and other manufacturing

with 5,000 employees. At the Soroti Industrial Park, the Soroti Fruit Factory

was commissioned during the year.

54. In addition to the above public industrial parks, Lio Shen Industrial Park

at Kapeeka where Government is providing infrastructure, 5 factories out

of the targeted 10 are operational now. These include Ho and Mu Food

Technology (U) Ltd which dries fruits for exports and Goodwill Ceramics (U)

Co. Ltd which manufactures tiles using more than 90% of local inputs.

55. Development of the Mbale, Soroti, Iganga, Mbarara and Jinja

Industrial Parks is on-going. Other industrial parks will also be developed by

providing basic infrastructure including roads, electricity, water and

information technology and communications infrastructure. 14 Free Zones

to promote exports have also been licensed in Arua, Jinja; Kalungu, Mpigi,

Mukono, Wakiso, Tororo, Kampala, and Buikwe.

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56. Madam Speaker, in order to speed up industrial growth, the budget

for FY 2019/20 will undertake the following priority actions:-

i) Fast-track feasibility studies, including engineering designs, for all the

proposed industrial parks;

ii) Develop serviced industrial parks and workspaces;

iii) Reform Technical and Vocational Education and Training (TVET) to

provide the skills required in the job market;

iv) Establish the Industrial Skills Production Center at Kampala Industrial

Area (Namanve) to provide skills development, innovation and

knowledge transfer critical for researchers, industrialists, innovators

and youth in particular. The Center will also address technology gaps

in Uganda while boosting value addition.

v) Promote and expand the Uganda Industrial Research Institute’s (UIRI)

Industrial and Technological Incubation Center. In addition UIRI will

establish Regional and Model Value Addition Centers

vi) Provide an additional Shs.10 billion to the Soroti Fruit Factory for

working Capital requirements to purchase required raw materials

vii) Support applied research, innovation and industrial development at

the Presidential Initiative on Banana Industrial Development (PIBID),

the Presidential Initiative on Science and Technology (PIST), and the

Kiira Electric Vehicle Project among others. In addition, preparatory

work to establish Regional Science and Technology Parks, Municipal

Innovation Hubs, Value Addition and Technology Transfer Centers,

Material Science program and Petrochemical Industry will be

commenced.

viii) Reduce the minimum investment threshold that allows developers of

free zones and industrial parks to be eligible for tax incentive from US$

100 million to US$ 50 million

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ix) Reduce the minimum investment threshold that allows operators

within industrial parks to be eligible for tax incentives to US$ 10 million

for foreigners and US$ 1million for local investors.

57. Madam Speaker, I have provided Shs. 428.68 Billion next financial

year for:- (i) electrification of industrial parks (Shs. 147 Billion), (ii) the

development of supportive export infrastructure in export processing zones

and industrial parks (Shs. 103 Billion) and (iii) science technology and

innovation (Shs. 178 billion).

(ii) Commercializing Agriculture

58. Madam Speaker, Government’s efforts to modernize and

commercialize Agriculture, are bearing positive outcomes. For instance,

the volumes and value of export of strategic commodities has registered

notable improvements.

59. Coffee export volumes in 2018 increased by 6% to 4.5 million bags

valued at US$ 492 million compared to 4.2 million valued at US$ 490 million

exported in 2017. Oil palm production in Kalangala in 2018 increased by

55% to 37,800 Tons valued at Shs. 21.4 billion compared to the 2016

production of 24,300 Tons valued at Shs. 13.4 Billion. Milk production in 2018

increased by 19% from 2.1 billion litres in 2015 to 2.5 billion litres in 2018. The

volume of fish exports has also increased by 27%. The support to fisheries

enforcement interventions by the UPDF has led to the opening of four (4)

fish factories – Gomba in Jinja, Iftra in Kampala, Marine and Agro in Jinja

and Ngege in Kampala. The established production capacity of all these

factories is 330 tons per day.

60. The actions that Government has taken to support the significant

outcomes I have illustrated include the following:-

i) Distribution of key planting, breeding and stocking materials including

the establishment of almost 110,000 acres of citrus orange and about

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144,000 acres of mango; 22,000 acres of tea in Kigezi, Ankole,

Rwenzori, Mubende, West Nile and Bunyoro sub zones; and 16,500

acres of cocoa. Breeding and genetic development continued with

the multiplication of beef and dairy cattle, goats, pigs and poultry.

ii) Construction of four (04) medium sized irrigation schemes have been

completed at Agoro (650ha) in Lamwo, Doho I (1000ha) in Butaleja,

Mubuku I (516ha) in Kasese and Olweny (600ha) in Lira district.

Construction of the major irrigation schemes have progressed and

are at different stages of completion- Doho II in Butaleja (48.6%);

Mubuku II in Kasese (22.5%); Wadelai in Nebbi District (18.2%); Torchi

in Oyam District (57%); Ngenge in Kween District (54.1%); and

Rwengaaju in Kabarole district (50%).

iii) Completed construction of ten (10) Small scale Irrigation systems at

Zonal Agricultural Research and Development Institutes (ZARDIs) at

Pallisa, Bukedea, Katakwi, Tororo, Kamuli, Bugiri, Soroti, Abim,

Kaabong and Mayuge Districts. The demonstration will benefit 300

registered farmer groups.

iv) Construction of solar-powered irrigation systems at seven (7) more

Zonal Agricultural Research and Development Institutes (ZARDIs) at

Bulindi, Rwebitaba, Abi, Buginyanya, Nabiun, Mukono and Ngetta

are being finalised. In addition, 15 solar water pump systems for small

scale irrigation were established in 13 districts of Katakwi, Kamuli,

Bukedea, Buikwe, Kayunga, Mpigi, Lyantonde, Kiruhura, Mbarara,

Kamwenge, Rubirizi and Mukono.

v) Regional mechanization centers were opened in South Western

Region, at Buwama, and North Eastern Region, at Agwata. In

addition, several valley tanks were constructed/rehabilitated in the

drought-prone and cattle corridor districts countrywide. The number

of valley tanks increased by 83 from 155 in December 2017 to 238 in

December 2018, with total holding capacity increasing from 8 million,

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to 9 million cubic meters during the same period. This has improved

the number of farmers accessing and utilizing water for irrigation,

aquaculture and livestock from 5% to 8%. Two hundred and eighty

(280) tractors were distributed to farmers to further boost

mechanization.

vi) The Agriculture Credit Facility cumulatively disbursed Shs. 332 billion

by 31st March, 2019, to finance 551 eligible projects. This enabled

borrowers to establish large capacity agro-processing facilities,

expand grain trade and investment in warehousing and expanding

farm infrastructure.

61. Madam Speaker, in order to further support commercialization of

Agriculture, the following key priority actions will be implemented in the

forthcoming budget:-

i) Provision of storage facilities and linking farmers to agro-processing

facilities to support agro-industrialisation. Post-harvest facilities will be

built in Bunyangabu, Kibuku, Kumi, Kyenjojo, Ntoroko and Nakaseke

districts.

ii) Delivery of quality inputs and services including seed and planting

materials, mechanization, fertilizer, agricultural credit and extension

services.

iii) Provision of irrigation infrastructure, both at large scale such as the

Wadelai, Torchi, Mobuku ll, Doho ll and Ngenge projects;

iv) Providing small-scale solar powered irrigation systems for last mile

irrigation.

v) Construct five micro irrigation schemes in Alebtong, Kabarole,

Katakwi, Ntoroko and Gomba, under the Local Economic Growth

Support (LEGS) project.

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vi) Strengthen inputs and product standards certification to improve

production and enhance the quality of products to enable market

access both regionally and internationally.

vii) Continue enforcement of rules and regulations on major water bodies

to prevent overfishing and promote sustainable capture fishing and

aquaculture.

viii) Enhance agricultural research and development in new crop

varieties for national strategic commodities including coffee, maize,

beans, cassava, rice, cotton, oilseed and cocoa.

ix) Undertake research in pest and disease control, including efficacy

trials for three new acaricides namely Vectoclor, Bantick, and

Eprinometim.

62. Madam Speaker, I have provided Shs. 1,054.6 Billon to the Agriculture

Sector next financial year.

(iii) Tourism Development and Promotion

63. Madam Speaker, during the financial year now ending, the key

interventions that the sector has implemented include the following :-

i) Two domestic tourism promotion drives (Tulambule) were conducted

in Western and Eastern Uganda with enhanced focus on popularising

tourism sites and encouraging Ugandans to visit and experience

Uganda’s beauty.

ii) Museums at Kabale, Wedelai, Soroti, Fort Lugard, Bweyogerere,

Nyero, Kapir, Mukongoro and Moroto have been maintained.

iii) Uganda Tourism Board participated in 8 expos and 14 events in the

international, regional and domestic markets.

iv) Breeding programmes for various bird species such as the shoebill

and peafowl were conducted.

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64. Madam Speaker, next financial year the following actions will be

prioritized in the sector:-

i) Aggressive marketing of Uganda’s tourism in key markets, e.g. South

Asia and Europe.

ii) Tourist product development, e.g. religious, historical, cultural, natural

heritage and agro-tourism including farm visits, etc.

iii) Destination marketing to identify and sell key tourist circuits such as

Kidepo, Bwindi, Kibale and products including Historical sites like Fort

Patiko, and Bigo Byamugenyi.

iv) Reduce the minimum investment threshold that allows investors in

hotels and tourist facilities operators to be eligible for tax incentives

from US$ 15 million to US$ 10 million.

v) Upgrade and renovate key tourism infrastructure including airfields

and priority roads to improve accessibility; electricity and internet

infrastructure, and highway stopovers along the tourism routes.

65. Madam Speaker, I have allocated Shs. 193.7 Billion to the Tourism

sector next financial year.

(iv) Development and Commercialization of Minerals, Oil and Gas

66. Madam Speaker, in the Minerals, Oil and Gas sector, preparations for

the commercialization of Oil and Gas resources continued during the year.

The Lead Investor for the Oil Refinery commenced detailed designs that will

inform the Final Investment Decision (FID) to be taken in September 2019.

The detailed designs for the East African Crude Oil Pipeline (EACOP) were

completed and First Investment Decision is due to be taken after

negotiations of final agreements.

67. With respect to Mineral Development substantial progress has been

recorded. Three gold refineries have been set up to refine gold to 99.9%.

These are the African, Simba and Bullion Gold Refineries. The Sukulu

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Phosphate and Steel Project first phase to process fertilizers was

commissioned in October 2018. The Sukulu Project’s steel, glass sheet, brick

and cement plants are due for commissioning in July 2019.

68. Several new cement factories were built during the year while others

have been expanded, including Simba, Tororo, Hima and Kampala

cement plants. Total production capacity of cement now stands at 6.8

million tons compared to only 2.3 million tons in 2015 and 1.6 million tons in

2011. This has resulted in increased jobs, lowered cement prices, reduced

construction costs, and consequently reduced cement imports.

69. Madam Speaker, during next financial year, the following

interventions will be undertaken:-

i) The airborne geophysical survey of Karamoja region.

ii) The divestiture of Kilembe Mines on a fast-track basis with an emphasis

on prospective investors with capacity to carry out further

exploration, following repossession by Government from the previous

Investor.

iii) The exploration of the 18 priority mineral target areas for rare earth,

and metallic minerals to a level of certified mineral resource

iv) The review of the licensing rules and regulations to eliminate

speculative and non-performing licenses and allow opening up the

sector for reputable exploration and mining companies.

v) The establishment of a certified mineral assy laboratory to test

samples for exploration and mining companies affordably and in a

timely manner; and

vi) The development of a Mineral Sector strategy emphasizing the

marketing of Uganda’s mineral potential to prospective investors.

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II. Increasing Infrastructure Access and Reliability

70. Madam Speaker, His Excellency the President extensively elaborated

during the State of the Nation Address, the progress we have made and

the way forward in the transport and energy infrastructure, and I will

therefore present highlights in this area.

(i) Transport Infrastructure:

71. The paved road network now is 5,111 kilometers equivalent to 25% of

the national road network, exceeding the NDP II target of 5,000km. 97% of

the national paved road network and 83% of unpaved roads were

reported to be in fair to good condition. This was above the NDP II target of

85% for paved roads and 70% for unpaved roads.

72. Madam Speaker, next financial year, the target for completed

national paved roads is 6,000 km. Rural roads connectivity and low-cost

sealing of district roads will be prioritized. Road maintenance and

rehabilitation of District, Urban and Community Access Roads (DUCAR) and

National roads will be undertaken using the Force Account approach to

cut on costs. The rehabilitation of the national airport, the meter gauge

railway in the short-term and the revamping of water transport facilities,

including the navigational capacity on Lake Victoria, will also be

undertaken. The construction of the Kabaale International Airport in Hoima

District, and the operationalization of the Uganda National Airline, and the

acquisition of two more Bombardier regional aircrafts, have been prioritized

next Financial Year.

73. Land acquisition and counterpart funding has also been given priority

in the budget, particularly for the new Kampala Port at Bukasa, the

completion of Katuna One Stop Border Post (OSBP) and development of

upcountry aerodromes. Land acquisition for three Oil Roads namely Hoima

– Butiaba – Wanseko; Masindi – Biiso, Masindi – Bugungu and Buhimba –

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Kakumiro – Mubende has been fully provided for in the Budget, while loan

negotiations for the Construction Works are being soon concluded.

74. Madam Speaker, to enhance access to tourism sites, an additional

Shs. 57.8 billion has been provided to UNRA to embark on the South-West

tourism circuit. The other tourism roads will be sequenced over the short and

medium term. In addition, support will be provided for rehabilitation of

aerodromes to facilitate domestic flights.

75. Madam Speaker, Shs. 6.4 Trillion has been provided to the works and

transport sector next financial year.

(ii) Energy Infrastructure:

76. Madam Speaker, total installed electricity generation capacity is now

1,200MW, with the completion of several hydropower generation projects

including Isimba Hydropower dam. High Voltage Electricity transmission grid

infrastructure now totals 2,258km. Detailed progress of specific energy

infrastructure projects was well-elaborated in His Excellency, the President’s

State of the Nation Address.

77. With respect to electricity infrastructure in industrial parks, substations

in Iganga, Luzira, Mukono and Namanve have been completed, which will

enable increased consumption of electricity. With respect to power

distribution, the Distribution Concession with Umeme Limited will be renegotiated

and extended to ensure further investment, and also lower

electricity tariffs.

78. With the rate at which we are industrializing including the increase in

demand for power by the population for various uses, we plan to have

more power production to avoid entering into a shortage. The Ayago

(840MW), the Oriang (392MW), the Kiba (330MW) and the Uhuru (600MW)

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hydropower projects will be developed in the medium to long term, in

partnership with the Private Sector.

79. In line with our strategy to ensure power access, the Electricity

Connection Policy will continue to subsidize the cost of electricity

connections. Over 300,000 connections are targeted annually. This initiative

will realize growth in access to electricity to 30% by end of 2020, and 60%

by 2026. Furthermore, the use of renewable energy such as solar system for

lighting rural homes and for the national grid is being implemented.

Currently, 40MW of solar power has been installed nationwide, and feeds

into the national fgid.

80. Madam Speaker, Shs. 3 Trillion has been provided to the energy

sector next financial year.

(iii) Information and Communication Technology

81. Madam Speaker, in the Information and Communications

Technology sector, the total optical fibre network covers 49% of all districts

and 24% of sub counties; and all the border points. The number of internet

users has increased from 13 million in 2015 to 18.8 million in 2017 translating

to a penetration rate of 45.4%. 297 Government services have been

automated, 71 of these being provided online. The automation of

Government services has led to a reduction in processing times and an

improvement in service delivery.

82. Madam Speaker, the National Backbone Infrastructure for ICT will be

eventually extended to cover all districts. In addition, internet costs will be

reduced through the implementation of the new national broad band

policy. The policy will compel Telecommunication Companies to provide

services to people countrywide. This will enhance improved service delivery

both in Government and the Private Sector.

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83. Madam Speaker, Shs. 146.2 Billion has been provided next financial

year to the ICT sector.

III. HUMAN CAPITAL DEVELOPMENT

(i) Education, Skills Training and Sports

84. Madam Speaker, the provision of universal primary and post primary

education has led to 92% of all parishes and 71% of all sub-countries having

a Government aided primary and secondary school respectively. All major

regions of the country have a public university. Consequently, the literacy

rate of persons aged 10 years and above currently stands at 74%.

85. During financial year 2018/19, scholastic materials were distributed to

all public primary schools, improving pupil to book ratio from 14:1 to 2:1.

Traditional secondary schools of Kyenjojo, St. Balikudembe Mitala Maria,

Kigezi College, Sir Samuel Baker and Ntare School were extensively

rehabilitated. Teacher absenteeism at UPE Schools in 20 pilot districts has

reduced from about 15% in 2015 to 4% in 2019 with the use of biometric

finger print readers.

86. In terms of skills training, critical infrastructure for technical and

vocational training has been built. Currently, 55% of all districts have

technical and vocational institutions. Consequently, enrolment into

Business, Technical and Vocational Training (BTVET) institutions now stands

at 129,000. Centers of excellence have also been built at Uganda

Technical Colleges at Elgon – for civil works and building technology; Lira –

for drainage, bridges and road construction; Bushenyi – for food

manufacturing and food processing; and Bukalasa Agricultural College –

for crop and animal husbandry. Technology incubation centers where fresh

graduates can translate business ideas into viable business enterprises,

have been established at Mbarara, Gulu and Makerere public universities

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87. In Sports, the construction of the national high altitude centre in

Kapchorwa is 68% complete and the Nakivubu stadium is undergoing reconstruction.

I congratulate the Uganda Cranes for qualifying to the

African Cup of Nations for the second time running.

88. During the next year the following interventions in formal education

will be undertaken:-

i) Improve instructional practice, especially for early grades, in the use

of reading materials, to enhance early grade numeracy and literacy;

ii) Improve teacher monitoring and inspection by rolling out biometric

finger print readers to improve school teacher attendance and

eliminate absenteeism;

iii) Enhance school management, accountability and learning

conditions including school classrooms, offices, water and sanitation

facilities, and teacher housing;

iv) Establish and enforce minimum standards on teacher numbers,

instructional materials, classrooms and sanitary facilities across

schools.

v) Operationalize seed secondary schools currently under construction

with adequate staffing and other necessities.

vi) Provide Technical institutions with adequate instructors and

instructional materials and guided curriculum to meet market

demands.

89. Madam Speaker, Shs. 3.4 Trillion has been provided to the Education

sector next financial year.

(ii) Health

90. Madam Speaker, in the Health sector continued progress has been

registered in disease prevention and treatment; provision of essential

medical supplies and the development of critical health infrastructure. For

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instance, malaria prevalence among children under five has reduced

significantly from 30% in 2015 to 17% in 2018, majorly as a result of the

distribution of 26.5 million Long Lasting Insecticide Nets and indoor residual

spraying undertaken in 26 districts in east and northern regions. Antiretroviral

Therapy coverage has improved from 73% in 2016/17 to 86% this year,

contributing significantly to treatment of HIV and reduced mother to child

transmission. Preventive interventions including immunizations have

improved, with measles immunization coverage, for example, increasing to

88%.

91. Madam Speaker, as a result of equipping and improved staffing at

health facilities, health service provision has improved at all levels. For

instance, 81 Health Center IVs offer Caesarean Section and blood

transfusion out of a total 186 centers. In addition, the number of maternal

deaths recorded at health facilities has also reduced by 30% from 148 per

100,000 in financial year 2016/17, to 104 per 100,000 deliveries this year.

Health worker staff attendance has improved from 51% in June 2016 to 93%

in February 2019 in 20 pilot districts where biometric finger print readers are

used to monitor staff attendance.

92. In terms of regional and national health infrastructure, the

construction, expansion, rehabilitation and equipping of Mulago National

Referral Hospital and its transition into a super- specialized facility is at 97%

completion and will be commissioned in December, 2019. The construction

of a 320-bed Specialized Women and Neonatal Hospital at Mulago

National Referral Hospital was completed and commissioned in November,

2018. It is functional and offers first class services to Women and new borns.

The specialized Regional Centre for Pediatric Surgery Hospital is under

construction in Entebbe and will be commissioned by December, 2019.

Kawolo General Hospital has been rehabilitated and will be commissioned

in July, 2019, while the rehabilitation of Busolwe Hospital will commence

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next financial year. These projects will also address reproductive health, in

addition to provision of Emergency care.

93. Madam Speaker, in the next financial year, the following interventions

will be prioritized:-

i) Improve the functionality of Lower level health facilities by providing

additional resources for operations and upgrading 124 Health Centre

Twos (HC IIs) to Health Centre Three (HCIIIs) in 99 Local Governments.

This is in line with the NRM Manifesto of having a Health Centre III in all

the sub-counties.

ii) Streamline the health referral system to reduce pressure on superspecialized

Mulago National Referral Hospital.

iii) Construct staff houses and maternity wards in 81 health centers

supported by the World Bank Reproductive Maternal Child Health

Services Improvement programme.

iv) Improve supply of medicines and health supplies and strengthen

controls for more efficient Drug Management across the country.

v) Improve human resources for health by training local health

professionals, and strengthening Village Health Teams (VHT).

94. Madam Speaker, Shs. 2.6 Trillion has been provided to the Health

sector next financial year.

(iii) Nutrition

95. Madam Speaker, to address malnutrition and the significant

prevalence of stunting in children and anemia among expectant mothers,

the Education, Health, Agriculture, Gender and Social Development

ministries will be jointly tasked to implement the following measures starting

next financial year:

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i) Ensure industrial food fortification with vital nutrients for major staples

and cooking oils consumed in public institutions such as schools,

hospitals and the country’s security forces.

ii) Require all schools to establish and maintain vegetable gardens for

both educational purposes and as a source of vital nutrients in school

diets.

iii) Revitalize nutritional education conducted by Village Health Teams;

Community Development Workers and the public and private media.

iv) Train and support small-scale millers with appropriate technologies to

enable food fortification; as well as enforce regulatory food

fortification standards

96. These interventions will require the revision of the Uganda Nutrition

Action Plan, and the prioritization of Food and Nutrition Security in the NDP

III.

(iv) Safe Water and Sanitation:

97. Madam Speaker, the following progress was registered in safe water

provision and sanitation during the financial year now ending:-

i) Rural water coverage is now at 71%, while the urban water coverage

stands at 80%.

ii) 38,200 villages representing 66% of the total villages in the country

have been served with clean water

iii) Rural sanitation coverage stands at 79%, while sanitation coverage in

urban areas is at 87.4 %.

98. Madam Speaker, during next financial year, the following

interventions will be undertaken in safe water provision and access to

sanitation:

i) Extending piped water systems and environmentally friendly

waterborne toilet facilities.

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ii) Construct sewerage treatment plants and ecofriendly toilet facilities

in rural growth centers.

iii) Undertake countrywide rehabilitation of water facilities including

wells, valley tanks/dams, shallow wells and boreholes, and

iv) Strengthen the operation and maintenance of water facilities in

collaboration with water user committees.

99. Madam Speaker, Shs. 1.1 Trillion has been provided to the Water and

Environment sector next financial year. The allocation will be spent mainly

on:- (i) provision of water for production (Shs. 218.5 Billion); (ii) Access to

safe water in rural communities (Shs.100.9 Billion), and (iii) Access to safe

water in urban areas (Shs. 463.1 Billion).

IV. Maintaining Peace Security and Improving Governance

100. Madam Speaker, the maintenance of Peace, Security, law and order

has laid a strong foundation for economic growth and development in

Uganda over several decades. Improved Governance and Public

Administration Management has been registered, notwithstanding

challenges such as regional global threats including terrorism, money

laundering and corruption particularly in the public service; and

constrained effectiveness of our judicial system that faces case backlog.

101. In order to maintain Peace and Security, and Good Governance, the

following interventions will be implemented by Government over next

financial year and the medium term:-

i) Continue to professionalize the UPDF through equipment and

training. To this effect, security has been allocated an additional Shs.

1,500 Billion to enhance its capacity.

ii) Commence the implementation of the Electoral Roadmap for the

2021 General Elections in pursuit of democracy and good

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governance for which Shs.223 billion has been allocated through the

responsible institutions.

iii) Continue to strengthen anti-corruption institutions, policies and

systems in order to crackdown on corruption in public service,

minimize fraud and money laundering and financing of terrorism in

the country.

iv) Enhance efficiency in justice system by addressing case backlog by,

among others, through: automation of case management, roll-out

plea-bargaining, mediation, and small claim procedures. I have

provided the Judiciary with an additional Shs. 53 billion.

v) Commence construction of the Supreme Court, for which Shs. 20

billion has been provided, as a start.

vi) Enhance pay for judicial officers, state attorneys and prosecutors for

which Shs. 22 billion has been provided.

vii) Fast track implementation of Safe City infrastructure by rolling out

installation of CCTV to municipalities and urban centers.

viii) Reduce Prison congestion by operationalizing Kitalya mini-max prison;

and 5 other reception centers. The National Community service

programme will also serve as an alternative to incarceration, and

ix) Install electronic gates and kiosks at major border points, including

Malaba, Busia, Katuna, Mutukula, Atiak and Mirama Hills.

Improving Public Investment Management and Public Sector Effectiveness

102. Madam Speaker, in order to strengthen the Public Investment

Management System (PIMS) in the country, Government has adopted the

following measures:-

i) Require all projects under preparation to adhere to the Public

Investment Management System (PIMS) framework, to ensure

alignment to the National Development Plan and are socially and

economically viable.

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ii) Fully roll out implementation of the online Integrated Bank of Projects

(IBP) system, and

iii) Prioritize allocation to ongoing projects to ensure their completion on

time, within budget and scope.

103. Madam Speaker, we will continue to undertake joint portfolio reviews

on all ongoing projects with development partners and civil society to

assess project implementation. These reviews enable identification of

reasons for slow implementation, and development of remedial actions.

104. Madam Speaker, the following measures to enhance the

effectiveness of public sector will also be implemented:-

i) Introduce the Electronic Government Procurement (e-GP) System to

improve efficiency, transparency and accountability in public

procurement.

ii) Launch the Resource Enhancement and Accountability Programme

(REAP) which requires strengthening of transparency and

accountability in Public Finance, among others.

iii) Complete the rollout of the Integrated Financial Management

System (IFMS), Treasury Single Account Framework and the e-cash

solution to all Government departments, at Local Government levels,

to enhance efficiency, transparency and accountability.

iv) Enhance asset management in Government for greater economy

and efficiency.

F. FINANCING STRATEGY FOR FINANCIAL YEAR 2019/20 AND THE MEDIUM TERM

105. Madam Speaker, the Financing Strategy for the next financial year

and the medium term, is underpinned by the recently developed Domestic

Revenue Mobilization Strategy that seeks to enhance Uganda’s revenue.

The Financing Strategy is also anchored on a prudent Debt Financing

Strategy consistent with a sound fiscal and monetary policy framework.

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Domestic Revenue Mobilization Strategy

106. Madam Speaker, the Domestic Revenue Mobilization Strategy will

strengthen tax administration and restore public confidence in the tax

system. The strategy aims to raise the ratio of revenue to GDP ratio to 18%

over a five year period. Therefore, the following interventions will be

implemented over the next five fiscal years:-

i) Review tax policies for greater simplicity, efficiency and sustainable

revenues, taking into account citizens welfare and regional

integration, bilateral and multilateral commitments.

ii) Involve taxpayers more fully into the tax policy formulation process, to

restore public confidence in the tax system.

iii) Promote an attractive business environment to potential investors,

including the provision of a business-friendly tax environment, and

eliminating distortions to private sector investment decisions

iv) Support investment in human capital by granting incentives to

businesses which provide apprenticeship in priority sectors,

accredited training and education based at the workplace

v) Eliminate revenue leakages and enforce tax obligations by reexamining

rules and restricting tax exemptions to those that have

significant public good.

vi) Enhance Uganda Revenue Authority’s administrative efficiency

through additional staff recruitment, better training, and

modernization and expansion of ICT capacity.

vii) Enhance compliance through registration, improved taxpayer

services and education.

viii) Develop a simplified tax regime for small and medium enterprises,

including informal sector businesses to encourage tax compliance,

while preserving Uganda’s entrepreneurial spirit; and

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ix) Strengthen the revenue-raising capacity of Local Governments by

broadening the range of revenue instruments available to them, and

make them less dependent on Central Government transfers.

Revenue Projections

107. Madam Speaker, domestic revenue projections for next financial

year amount to Shs. 20,449 billion. Of this, tax revenues amount to Shs.

18,877 Billion, while Non-Tax revenues (NTR) to Shs. 1,571 Billion.

108. Madam Speaker, next financial year, URA will collect all Government

revenues including Appropriation in Aid (AIA). For Government

departments that have been collecting Appropriation in Aid, appropriate

budget should be undertaken and resources shall be dully allocated. The

revenue target for next financial year, including AIA, therefore translates

into a revenue effort of 16.8% of GDP, in the NDPII target of 16% for financial

year 2019/2020.

109. Madam Speaker, Parliament approved tax measures for financial

year 2019/20 which will come into effect from 1st July 2019. Modest

adjustments to tax legislation have been made to streamline incentives

and protect viable and competitive sectors. Tax laws have also been

amended to support compliance, enhance competitiveness in the region,

while closing loopholes that may lead to revenue leakage. The details of

these measures are contained in the respective Tax Amendment Acts.

110. Madam Speaker, the following are some of the highlights of the tax

measures:-

i) The Excise Duty Act was amended to provide for registration of

manufacturers, importers and providers of excisable goods and

services. This will also reinforce other tax reforms like digital tax stamps.

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ii) Income derived from leasing or letting facilities in industrial parks has

been exempted from income tax for 10 years from the date of

commencement of construction.

iii) Withholding tax on long term bonds has been reduced from 20% to

10% to encourage investment in long term Government securities but

at the same time reduce financing costs to Government.

iv) The Stamp Duty Act was amended to provide for a uniform stamp

duty payable on bank guarantees, insurance performance bonds,

indemnity bonds and similar debt instruments in order to reduce the

cost of debt financing and ease tax compliance and administration.

v) In addition to VAT exemption on agro-processing, rice mills and

agricultural sprayers have also been exempted from VAT.

vi) Introduction of a 6% withholding rate for VAT.

vii) To promote investment and industrialization, import tariffs on products

which are locally manufactured have been increased.

Tax Administrative Reforms

111. Madam Speaker, effective tax administration is necessary for

sustainable revenue collection. The Uganda Revenue Authority will

therefore strengthen its capacity to effectively collect taxes. This will involve

recruitment of additional staff, skills development in specialized areas such

as audit, investigations and risk analysis; and the modernization and

expansion of ICT capability.

112. Madam Speaker, the following interventions in tax administration will

be implemented next financial year:-

i) Use of Electronic Fiscal Devices (EFDs) to improve compliance in VAT;

ii) Use of a digital tax stamps solution to avert under-declaration of

excise and customs duties;

iii) Enhance rental income tax collection;

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iv) Purchase and deploy Scanners at major ports of entry into Uganda,

to facilitate faster clearance of goods and curb mis-declaration;

v) Expand deployment of the Electronic Cargo Tracking system to

eliminate dumping of imports in the Ugandan market.

Resource Envelope for FY2019/20

113. Madam Speaker, the Resource Envelope of Financial year 2019/20

totals Shs.40,487.9 Billion of which Tax and Non-Tax revenue amounts to

Shs.20,895.6 Billion. Domestic Financing amounts to Shs 2,829.8 Billion; while

External Financing consists of Project Support of Shs. 9,433.6 Billion and

General Budget Support Shs. 675.2 Billion. Domestic re-financing amounts

to Shs. 6,452.6 Billion and Appropriation in Aid is Shs. 201.1 Billion.

Budget Deficit and its Financing

114. Rt. Hon Speaker, next financial year, the budget deficit as a ratio of

GDP is projected at 8.7% compared to 5.8% this year. This is a result of

increased in spending on infrastructure projects such as oil and tourism

roads, the National Airline and power transmission lines. This deficit, as usual,

will be financed largely through external borrowing, and to a lesser extent

through domestic borrowing.

Public Debt

115. Madam Speaker, the stock of Government debt rose to Shs. 42,760

Billion (equivalent to US$ 11.5 Billion) as at end-December 2018. At end-

December 2017, it was Shs. 37,208 Billion (equivalent to US$ 10.2 billion).

External debt constitutes is 66.5% of the total debt and this amounts to Shs.

28,427 billion (equivalent to US$ 7.7 Billion). Domestic debt constitutes the

balance.

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Debt Sustainability

116. Madam Speaker, I would like to assure the country that our debt

remains sustainable in the medium to long term. As of December 2018, debt

was at 41.8% of GDP in nominal terms and 31.7% of GDP in present value

terms, well below the threshold of 50% Debt to GDP ratio contained in the

Charter for Fiscal Responsibility and the East African Community (EAC)

Monetary Union Protocol. Uganda compares very favourably with its peers,

because most of our debt has been contracted on concessional terms. Our

debt has financed priority and productive sectors which will generate

positive economic returns.

117. Government will continue to exercise caution while taking on new

debt. The rate of debt accumulation is expected to reduce in the medium

term, as flagship infrastructure projects are completed. To ensure Debt

Sustainability in the short, medium and long term, Government will:

i) Continue to prioritise borrowing for mainly infrastructure development

projects to address the existing infrastructure gaps for industrial

enhancement, power transmission and distribution, transport, and

water for production;

ii) Improve loan absorption as well as effective utilisation of the

borrowed resources; including investing in export-oriented areas to

boost exports which also increase our capacity to service external

debt;

iii) Apply more stringent vetting of projects to be financed by loans,

including prioritizing only projects that enhance the productive

capacity of the economy, demonstrate high economic returns, and

help generate future growth.

iv) Minimize the financing risks arising from commercial loans and

associated volatility in exchange rates and interest rates.

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v) Enhance domestic revenue mobilisation to reduce the levels of

Government borrowing.

118. Madam Speaker, while debt financing is used to finance critical

public projects, some non-patriotic members of the society unfortunately

continue vandalizing project assets, mainly in the electricity and transport

sectors. This does not only undermine the generosity of the tax payers from

the countries of our development partners but also curtails effective

utilization of the assets when the projects are completed. I therefore appeal

to the public and citizens of this country to respect these assets and desist

from acts of vandalism.

G. CONCLUSION

119. Madam Speaker, the Financial Year 2019/20 Budget seeks to deliver

inclusive growth and development for the vast majority of our people. It

seeks to further build on the significant gains we have achieved in socioeconomic

transformation, by ensuring gainful jobs, increased incomes and

greater wealth for Ugandan households.

120. Madam Speaker, the NRM Government has built a firm foundation for

all to seize boundless opportunities. I implore the youth and women of

Uganda to seize opportunities that will build their skills, permit them engage

in productive work and also establish business enterprises, where they can.

I call upon farmers to cooperate and participate in the process of agroindustrialization

in order to fully benefit from higher rewards to their efforts.

This will enable households to improve production and productivity. As a

consequence, incomes will rise, and new jobs will be created. This will lead

to sustained growth and development of this beautiful Uganda.

121. I beg to submit.

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