This week, we received one report and two speeches that were presented to parliament: report on the background to the budget for 2011/2012 fiscal year; Museveni’s address to parliament; and budget speech to parliament delivered by the minister of finance on behalf of the president. This is an annual exercise. The mandate, criteria used and data selected have distorted or omitted vital information.
1. The mandate of the background report to the budget is to highlight priorities of the coming national budget in the context of key economic trends and recent performance of government programs. The president’s mandate is to report what was done in the last twelve months and to appraise members of parliament of plans and strategies for the next twelve months. The mandate in the budget speech is to present to parliament estimates of revenue and expenditure for the financial year. Thus, in the three documents there is no specific mandate for reporting on the impact of government programs on ecological and human conditions such as soil erosion, poverty and malnutrition reduction. This is a serious shortcoming since development should be sustainable and human-centered.
2. Selection of statistics depends on what image one wants to present. The president who presents high growth figures more often than not picks periods or figures that give the highest GDP growth rate. Whereas the economy grew at 6.3 percent during the last financial year (2010/11), Museveni chose to focus on the first half of that year (July-December 2010) in which the economy grew at 9 percent. On the other hand, the minister’s speech and background report to the budget reported 6.3 percent for the whole financial year. All reports omitted to mention that in order to meet the Millennium Development Goals (MDGs) by 2015, Uganda’s economy must grow at an annual average rate of 7 to 8 percent. Since the average annual growth rate has not reached 7 percent, it is likely that Uganda will not meet most of the MDGs.
3. The benefits of economic growth have not been distributed equitably. Analysis of household incomes reveals that 20 percent of the richest households own 71 percent of total income, whereas 20 percent in the lowest income bracket own 2 percent!
4. Different sources have given different levels of Ugandans living below the poverty line. The 2009/10 Uganda National Household Survey (UNHS) reported that 24.5 percent of Uganda’s population live below the poverty line (Background to the 2011/12 budget). The United Nations Human Development Report for 2010 reported that 51.5 percent of Uganda’s population live below the income poverty line of PPP $1.25 a day (2000-2008).
5. The definition of youth by the UN and Uganda differs widely with considerable implications on the exact number of youth. Uganda defines youth as between 18 and 30 years of age (Background to the 2011/12 budget) while the UN defines it as between 15 and 24 years of age (ECOSOC 2007).
6. The government of Uganda has finally admitted that domestic factors and policies have played a part in the current high prices of goods and services. There has been too much money in circulation caused in part by excessive spending on 2011 elections. And high food prices in Uganda. “… is mainly due to the fact that most food had been exported to regional markets such as South Sudan” (Background to the 2011/12 budget). The fact that the government has decided to provide relief to households from the burden of increased kerosene prices by repealing excise duty is an admission that policies and not external factors alone had determined the price of fuel/kerosene.
7. Information in the background to the budget confirms that Uganda stands to lose in the East African economic integration while Kenya gains the most. The regional growth in exports shows that Kenya dominates intra-regional trade. In 2008 Kenya’s trade surplus with the rest of the East African community countries was $257.8 million.
Uganda had a trade deficit of $48.3 million. Once in full force free movement of goods, persons, workers, the right of establishment, right of residence, free movement of services and capital will disadvantage Uganda. It is important that regional development imbalances should be addressed first as was done in the European Union.
8. The government which had insisted on the invisible hand of the market forces and laissez faire capitalism as Uganda’s engine of growth is reluctantly accepting increased strategic role of the state in Uganda’s economy, a shift from neo-liberal to Keynesian model. We need to monitor the extent to which it implements it.
9. It is important to draw a distinction between industry and manufacturing. Tourism or service sector is an industry. What Uganda needs more is manufacturing, e.g. transforming oranges into orange juice to add value.
10. Museveni’s statement on food security needs clarification. In one paragraph of his address he stated that transformation of agriculture will mean a move “from production for household consumption to production for the market” which is similar to production for cash and not for the stomach. In another paragraph he stated that “Above all,
the government will guarantee national food security” Is this the same thing as guaranteeing food security to every individual?
11. Museveni has correctly stressed that agriculture is the backbone of Uganda’s economy. But he has failed to allocate to it at least 10 percent of national budget as agreed at the AU Summit in 1993. In 2008 financial year, agriculture’s budget share fell from 4.2 percent to 3.8 percent. For 2011/12 budget, agriculture has been allocated 4.5 percent down from 5.0 percent for 2010/11 budget.
12. Museveni’s performance and accountability should be based on what he actually does rather than what he promises.