Business

2019/20 Budget to support industrialization for job creation and shared prosperity

L-R: Airtel Uganda CEO V.G Somasekhar, Private Sector Foundation Uganda (PSFU) Executive Director Gideon Badagawa, EY Tax Partner Muhammad Sempijja, Economist Dr Fred Muhumuza and EY Associate Director Tax David Baliraine. The five were part of the discussion panel during the Ernst & Young Budget Breakfast.

The Uganda National Budget 2019/20 has for the third-year running highlighted industrialization for job creation and shared prosperity as its budget theme. The fact that this theme is aligned to those of the other East African Community (EAC) underscores the importance attached to inclusive growth by all the regional countries, including Uganda.

The financial year 2019/20 budget strategy as contained in the national budget emphasizes the government’s commitment to promote industrialization and skills development which is intended to lead to job creation and shared prosperity among Ugandans, thus addressing the perennial challenges of unemployment and income inequality.

The major development challenges that have been identified are that 70% of Ugandan households remain engaged in the subsistence economy; income inequality continues to widen between the rural and urban populations; low agricultural sector growth; declining private sector competitiveness; inadequate and/ or unskilled labour; and limited application of technologies in production processes, particularly in agriculture and industry as well as the limited to long-term credit to start or boost Small and Medium Enterprises (SMEs) to boost private sector investment.

The three-pillar budget strategy consists of expanding the industrial base of the economy; exploiting natural resource endowments with environment protection in mind; and providing affordable financing for production and business.

The expansion of the industrial base is expected to create jobs, thereby addressing the challenges of unemployment and income inequality, leading to inclusive growth. Government has committed to improve the capacity of manufacturing firms to increase productivity especially in the arena of agro-processing by providing incentives in the development of industrial parks and free zones in the form of specific tax exemptions from income taxes, Value Added Tax, Excise Duty and Stamp Duty.

The government has also identified several measures to address constraints to financing the private sector and this will assist to achieve sustainable private sector investment. These measures include additional capitalization of the Uganda Development Bank (UDB) and providing affordable credit to SMEs through the Microfinance Support Centre.

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