Citizens Alternative Budget FY 2018/19

Transcription

1 Citizens Alternative Budget FY 2018/19 A civil Society Position Paper on the National Budget C S B A G 1 Budgeting for equity CIVIL SOCIETY BUDGET ADVOCACY GROUP

2 Citizens Alternative Budget FY 2018/19 was produced by the Civil Society Budget Advocacy Group (CSBAG) and its members with support from Democratic Governance Facility Uganda and OXFAM Uganda, Uganda. The contents of this publication are the responsi-bility of CSBAG and not our development partners. May 2018 Civil Society Budget Advocacy Group (CSBAG) P.O. Box 660, Ntinda Plot11 Vubya Close, Ntinda-Nakawa Rd Fixed Line: / csbag@csbag.org Web csbag/facebook.com All rights reserved. No part of this publication may be reproduced, or reprinted in any form by any means without the prior permission of the copyright holder. CSBAG encourages its use and will be happy if excerpts are copied and used. When doing so, however please acknowledge CSBAG. 2

3 Table of contents List of Acronyms iii Executive Summary iv Gender and Equity in the NBFP FY 2018/19 vii 1.0 Introduction and Background vii 1.1Macro-Economic policy framework viii 1.2 Introduction to the FY 2018/2019 Citizen Budget 11 Macro-Economic Policy Frame Work 11 Fiscal Framework in the NBFP 2018/19 13 NDP II and the NBFP FY 2018/19 14 Gender and Equity in the NBFP FY 2018/19 14 Domestic Revenue Mobilization strategies and efforts in the FY 2018/ Sector Specific CSO Concerns And Proposals ACCOUNTABILITY SECTOR 18 Sector issues and recommendations Agriculture Sector Education Sector Energy And Mineral Development Sector Concerns Health Sector Concerns Justice, Law And Order Sector (JLOS) Concerns Social Development Seector Trade, Tourism And Industry Sector Concerns Water And Environment Sector Concerns Works And Transport Sector Concerns 55 Critical Issues from the OAG report FY 2016/ Wrap 63 3

4 List of Figures Figure 1: EAC PERCENTAGE GDP GROWTH Figure 2: Interest Rates and the CBR 15 Figure 3: Comparison between NBFP allocations and the NDP II 16 Figure 4: Uganda s Tax to GDP 2011/ /16 17 Figure 5: Percentage Allocations to the MDAs under the accountability sector FY 2018/19 20 Figure 6: Accountability Sector Budget trend Category in UGX Billions (FY 2017/18-18/19) 21 Figure 7: Domestic Arrears trends 22 Figure 8: Agriculture Sector Budget trend by Category 26 Figure 9: Education Sector budget trends by Category 30 Figure 10: Total recurrent and Domestic Development allocation for FY 2018/19 42 Figure 11: Allocations to votes under the Social Development sector FY 2018/19, in UGX billions 46 Figure 12: Percentage Allocations to the MDAs under the sector FY 2018/19 51 Figure 13: Trade Tourism & Industry Sector budget trends by Category FY 2018/19 52 Figure 14: Allocations to votes under the water and environment sector FY 2018/19 in UGX billions 56 Figure 15: Percentage allocations to the votes under the water and environment sector FY 2018/19 57 Figure 16: Water and Environment Sector budget trends by Category FY 2018/19 57 Figure 17: Intra Works and Transport sectoral percentage allocations FY 2018/

5 List of Acronyms ASMs- Artisanal and Small-Scale Miners ACF- Agriculture Credit Facility BoU-Bank of Uganda CBR-Central Bank Rate CSBAG-Civil Society Budget Advocacy Group CSO-Civil Society Organization DP- Directorate of Public Prosecution EMDE-Emerging Markets and Developing Economies EOC-Equal Opportunities Commission ESSP-Education Sector Strategic Plan FY-Financial Year GDP-Gross Domestic Plan HSDP-Health Sector Development Plan HC- Health Centers IG-Inspector General JASAR-Joint Agriculture Sector Annual Review MDAs-Ministries, Departments and Agencies MFPED Ministry of Finance, Planning and Economic Development MPS-Ministerial Policy Statement NBFP-National Budget Framework Paper NDPII-Second National Development Plan OAG-Office of the Auditor General PAYE-Pay as You Earn PBB-Program Based Budgeting PEAP- Poverty Eradication Action Plans PDMF-Public Debt Management Framework PSC-Private Sector Credit SBFP-Sector Budget Framework Paper UGX-Uganda Shilling UNHS-Uganda National Household Survey URA-Uganda Revenue Authority UBTS - Uganda Blood Transfusion Service 5

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7 About this paper This paper has been compiled from views collected from an elaborate process of engagement and dialogues across all the regions of the country where civil society organizations, local and opinion leaders analysed Government s budget strategies for financial year 2018/19 contained in the National Budget Framework Paper and Ministerial Policy Statements for 10 Government sectors. 7

8 Acknowledgements The Civil Society Budget Advocacy Group (CSBAG) extends sincere appreciation to her members and partners whose participation enriched the production of this paper. Special thanks go to the following organizations that contributed extensively to the contents of this paper. These include: Green Home, World Vision Uganda, Water Aid Uganda, Reproductive Health Uganda, Food Rights Alliance,Uganda Manufacturers Association,Initiative for Social and Economic Rights, African Foundation for Community Development Uganda, Women and Girl Child Development Association, Kibaale District Civil Society Organization Network, KREP, ADPF, SD-CODE, Uganda Debt Network, Inter Religious Council, Innovations Against Poverty, Center for Entrepreneurship Development Madhya Paradesh, SPA, Citizens Watch-IT Uganda, Forum for Women in Development, Law Government Agency, National Union of Disabled Persons in Uganda, Uganda Road Sector Support Initiative,African Center for Treatment and Rehabilitation Torture Victims, Chapter Four, OXFAM Uganda,, African Youth Development Link, Center for Domestic Violence Prevention, Network of Public Interest Lawyers, The Hunger Project, Twaweza Uganda, Land net, Civil Society Coalition on Oil and Gas, African Center for Trade and development, TEENS, Volunteers Efforts for Development Concerns, Public Sector Foundation Uganda This publication owes a lot to the different people who pooled their talents and expertise to generate the information required. 8

9 Executive Summary Since 2004, Civil Society organizations under the Civil Society Budget Advocacy Group (CSBAG) annually prepare the Citizen-Budget, which contains alternative budget proposals for Government to consider as Parliament debates and approves the National budget in of given financial year. This paper has been compiled from views collected from an elaborate process of engagement and dialogues across all the regions of the country where civil society organizations, local and opinion leaders analysed Government s budget strategies for financial year 2018/19 contained in the National Budget Framework Paper and Ministerial Policy Statements for 10 Government sectors. 9

10 Executive Summary Since 2004, Civil Society organizations under the Civil Society Budget Advocacy Group (CSBAG) annually prepare the Citizen-Budget, which contains alternative budget proposals for Government to consider as Parliament debates and approves the National budget in of given financial year. This paper has been compiled from views collected from an elaborate process of engagement and dialogues across all the regions of the country where civil society organizations, local and opinion leaders analysed Government s budget strategies for financial year 2018/19 contained in the National Budget Framework Paper and Ministerial Policy Statements for 10 Government sectors. This position paper examines how pro-poor some of the budget allocations are, highlights gender equity issues, and concerns of PWDs, and other marginalized groups, and addresses key policy, planning, governance, transparency and accountability concerns in the 2018/2019 Budget Framework paper. An industrialization-heavy macro-economic framework For 20 years from the early 1990s, Uganda enjoyed high economic growth averaging 6-7% per annum up to around Poverty as a result reduced significantly from 56% in 1993 to 19% in The main development goal then was poverty eradication through the Poverty Eradication Action Plans (PEAPs). The challenge is that this growth was not evenly distributed, and even before the growth began to thaw from 2010 onwards to cluster figures, a significant portion of Ugandans had been left in poverty. With the introduction of the NDPs, Government institutionalized its prosperity for all and wealth creation mantra into development policy. The first and second NDPs have focused on investments in infrastructure and energy whereas the PEAPs concentrated on investments in social sectors such as health, education and agriculture. National budgeting therefore has reflected this development shift ever since, with the focus being on infrastructure. Hence just like the 2017/2018 budget, the macroeconomic strategy for the year 2018/2019 is to enhance the impact of public investment on growth through implementation of policies that foster efficiency in public investment, attract private investment, increase domestic revenue mobilization efforts, and achieve low and stable inflation. This however relies an array of macro-economic assumptions, which, if they are not realized, can create significant risk to the entire economic outlook. A number of factors may easily unravel these assumptions, and they include: Persistent failure to attain Real GDP Growth targets Rising public debt Declining domestic Revenue Overall concerns in the 2018/2019 BFP 1. Continued prioritization of infrastructure development at the expense of social sectors. The Works and Transport sector, just like in the 2017/18 budget and prior budgets took the lion s share of the 2018/19 budget, at 19.08%. There is nothing wrong with having a macro economic strategy that is focused on infrastructure investment. Our key concern is whether the balance that is needed to ensure that funding 10

11 geared towards direct poverty reduction is not ignored. The big question therefore is resource prioritization. Even for funding for direct poverty programs such as the Poverty Alleviation Fund, the greatest portion of this is traditionally allocated to transport and works sector. The trickledown assumption that informs such decisions poses a challenge as there are doubts as to whether these infrastructure-heavy sectors have a direct beneficial link to the poor. Government is still challenged with reconciling long-term developments with immediate needs of the country s poor citizens. 2. Unsustainable public debt The country s debt burden is worrying as it affects service delivery since most of the budgetary allocations go into debt repayment. According to the Auditor General s report 2016/17, Government has UGX trillion as outstanding commitments as at end June We are concerned that as of June 2017, the proportion of domestic debt maturing in one year was 44.9%, above the recommended benchmark of 40%. The domestic debt is expensive to run because the individuals need their money in a short time, of which returns can barely be registered in such a short period for these long term projects. Interest payment to local and external loan obligations was allocated UGX 2, billion (10.02% of the budget) making it the third largest proposed allocations in the FY 2018/19 budget. It is only behind the Education sector in second place and the works and transport sector in the first position. Why is debt rising? In part it is because of the narrow resource base but there are other reasons, including poor planning and prioritization. For instance, the long-term projects can be done in phases instead of doing them at once. Also there are other financing mechanisms that would be much fairer such as non-concessional borrowing. The Government continues to say that the debt is sustainable at 38.1% of the GDP as of June this year. This can t be true, considering that even as of 2018/19 FY budget, we are borrowing to finance debt. We don t need sophisticated indicators to tell us whether the debt is sustainable or not, when we are adding more debt to pay back previous debt. According to Bank of Uganda 1, if other areas are considered and other procedures of debt management considered, it would actually go up to at least 51% of the GDP. This is disastrous for a developing country like Uganda. We would not need additional resources from borrowing, if we enforced the need for value for money through efficiency. We therefore need to become more economical. 3. Unemployment dropped as a key Macroeconomic assumption to be tracked The budget for the FY 2018/19 was drawn under the theme Industrialization for Job Creation and Shared Prosperity. The theme is timely because unemployment remains a big challenge. Furthermore, the UNHS FY 2016/17 Prosperity for all remains a challenge as 10.1 million Ugandans are poor reflecting a recent increase in the poverty rate from 19.7% in FY 2013/14 to 21.4% in FY 2016/17. Unemployment is one of the key drivers of poverty in Uganda that needs immediate attention but nothing significant has been done about it. Dropping it as a key assumption to be tracked further demonstrates that the Government is still struggling with how to solve the dilemma posed by long term investments as opposed to dealing with immediate issues. 4. Policy Incoherence between Sector Strategic Plans and the Budget. We found many inconsistencies between several sectors strategic plans and the 2018/19 budget, in terms of objectives, targets and goals, while others have none at all

12 In education sector for example, the sector outcome areas as extracted from the NBFP FY 2018/19 did not resonate with the sector outcomes as set out in the Education and Sports Sector Strategic Plan. The key result areas in the ESSP FY 2017/ /20 were discordant with the sector outcomes as stated in the NBFP which did not even speak to the sector strategic objectives. The SBFP point out only 3 indicators at outcome level yet the ESSP elaborates 53 indicators. Furthermore, the sector strategic plan emphasizes supervision at least 2 times a term yet the NBFP FY2017 didn t reflect specific allocation to supervision. Another example was the Health Sector. The Health Sector Development Plan FY 2015/16 FY 2019/20 in table 14 on page 50 highlights 11 Key result areas and 41 indicators. To the contrary however, the NBFP FY 2018/19 only pointed out 4 result areas which were not synchronized with what the HSDP details. With this development, we remained uncertain of where information that was input in the BFP came from since it disregarded what it is laid out in the sector plan. These inconsistences can be costly in short and long-term as they lead to misallocation, misuse of resources and confusion in the planning process. CSBAG recommended the sectors to improve on their BFPs and align them to their Strategic Plan to ensure that resources are optimally allocated and utilized. 5. Stagnant domestic resource mobilization Over the last decade, Uganda s revenue to GDP ratio has stagnated at 13% with an average growth of 0.2 percentage points per annum, the lowest in the East African region. This has made the country heavily dependent on aid and borrowing. The low tax to GDP ratio is attributed to: the large Ugandan informal sector, large subsistence economy, and corruption, political interference in tax collection, high levels of tax evasion, many tax exemptions, and limited capacity in curbing tax evasion. Many of these issues can be addressed if there is political will and commitment. The 11th economic update from the World Bank 2, stated that Uganda can raise up to 4.5% of GDP revenue by simply revising tax exemptions. Research has shown that investors are not attracted by tax exemptions but rather by the reduced cost of doing business like the infrastructure and reduced corruption. We therefore need to stop tax exemptions in our fiscal legal framework. 6. Gender and Equity in the NBFP FY 2018/19 There is marked improvement in the articulation and integration of gender and equity issues across sector votes in the NBFP. According to the gender and equity assessment report on the NBFP FY 2018/19 by the EOC, the national compliance average has increased from 57% in FY 2016/17 to 61% in FY 2018/19. It is imperative for Government to move beyond gender and equity certification of budgets to tracking implementation and evaluating effects of the stated interventions on reducing the gender and equity gaps in the country

13 Why is debt rising? In part it is because of the narrow resource base but there are other reasons, including poor planning and prioritization. For instance, the long-term projects can be done in phases instead of doing them at once. Also there are other financing mechanisms that would be much fairer such as non-concessional borrowing. 13

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15 Introduction and Background Every financial year, Civil Society Organizations (CSOs) working under the Civil Society Budget Advocacy Group (CSBAG), present CSO responses to the Ministerial Policy Statements (MPSs) and the National Budget Framework Paper, as part of promoting fiscal responsibility through citizen-centric and pro-poor budgeting. 15

16 1.0 Introduction and Background Every financial year, Civil Society Organizations (CSOs) working under the Civil Society Budget Advocacy Group (CSBAG), present CSO responses to the Ministerial Policy Statements (MPSs) and the National Budget Framework Paper, as part of promoting fiscal responsibility through citizen-centric and pro-poor budgeting. CSOs value good governance, social justice, and national development and seek to contribute to a conducive socio-economic environment that promotes dignity, opportunity and equality for all citizens. This publication is part of our annual perspectives on the Ministerial Policy Statements that were presented to the Parliament of Uganda by Government Ministries, Departments and Agencies (MDAs) as per section 13 (13) of the Public Finance Management Act, Budgets are central to the development process and are not only used as tools for collecting, allocating and redistribution of financial resources, but also as powerful instruments for shaping the future of nations in ways that advance or retard socio-economic and political progress. In fulfillment of the Uganda Constitution [Article 38 (i) & (ii)] which empowers every Ugandan to participate in the affairs and activities of Government individually or through his or her representative to peacefully influence the policies of Government, CSBAG has since its inception mobilized CSOs and the citizens to analyze budgets and develop alternative budget proposals on key sectors of the economy to ensure that Government budgets address the issues and concerns of Ugandan women and men. Since the FY 2014/15, CSBAG has sought to contribute to the development discourse surrounding the budget by providing alternative budget positions, with significant degrees of success. In the FY 2017/2018 budget process for example, we influenced the position of Government on key issues that affect citizens whereby out of the 91 proposals we submitted to the Parliamentary committees on the Ministerial Policy Statements for the FY 2017/18, 52% were adopted by the sectoral committees while 20% were adopted by the Budget Committee. Despite this achievement, there is still limited prioritization of key issues in the social sectors such as Agriculture, Health, Education, Water and Environment, Trade and Tourism, Justice, Law and Order, and Accountability, as evidenced in the allocations for the FY 2018/19. The major objective of this paper is to provide policy makers with key proposals on, among other issues of citizen concern, pro-poor and gender-sensitive budgeting that needed to be addressed in the national budget for FY 2018/19. Specifically, this paper: a. Reviews sector budget performances and adherence to the NDP II as well as Government compliance with PFMA, 2015; b. Reviews and analyses the policy options/proposals contained in the Ministerial Policy Statements for FY 2018/19 and their implications on gender, growth and poverty reduction; c. Provides key issues on pro-poor and gender sensitive budgeting which civil society wanted to be addressed in the national budget for FY 2018/19, and; d. Provides key policy recommendations for policy makers and legislators (especially Parliament and MoFPED) on improving pro-poor and gender sensitive budgeting in Uganda. 16

17 1.1 Macro-Economic policy framework Similar to the focus of the last few years where the Government has had a development paradigm shift from the Poverty Reduction focus of the PEAPs to the Wealth Creation and industrialization focus of the NDPs, the macroeconomic strategy for the year 2018/2019 is to enhance the impact of public investment on growth through implementation of policies that foster efficiency in public investment, attract private investment, increase domestic revenue mobilization efforts, and achieve low and stable inflation. To achieve this strategy, macro-economic assumptions were laid out in the NBFP FY 2018/19. However, changes in these assumptions create risks to both revenue and expenditure projections as they play a key role in the formulation of the budget as detailed below. Persistent failure to attain Real GDP Growth targets: Since 2014/15 Uganda has registered slow and declining growth in Real Gross Domestic Product (GDP) as indicated in table 1 below. Table 1: GDP growth performance FY 2014/ /17 and projections for FY 2017/18 and 2018/ / / / / /19 GDP Projections 6.8% 5.8% 5.8% 5.5% 5.5% GDP outturn 5.2% 4.7% 4.0% Output Gap -1.6% -1.1% -1.8% Source: UBOS, MoFPED The average growth projection between FY 2014/15 and 2016/17 was 6.1% against an outturn average performance of 4.6% in the same period. This realization cast a doubt on whether we would achieve the projections for the FY 2017/18 and 2018/19. The Uganda Bureau of Statistics (UBOS) recently released quarterly real GDP estimates for Q1-2017/18 indicating that the economy grew by 1.3%, which was lower than 2.5% in Q4-2016/17. Part of the negative impact of this poor and declining growth is being witnessed in the revenue figures for the FY 2017/18 which indicate a shortfall of UGX 1,135.8 billion 3 in revenue collection a shortfall mainly due to underperformances in both domestic revenue and grants. This shortfall in revenue performance would in turn increase Government s appetite to borrow both domestically and externally to meet the budget demands that have now been seen to be as basic as salaries. Unsustainable public debt We are concerned that as of June 2017, the proportion of domestic debt maturing in one year was 44.9%, above the recommended benchmark of 40% according to the Public Debt Management Framework (PDMF). This, coupled with the current practice of rolling over maturing debt, implies that Government faces a risk of being unable to refinance its maturing domestic debt. At the end of June 2017, the present value of public debt stock was 26.7% of GDP and grew by 1.4% to 28.1% in December Including committed but undisbursed loans, the ratio of total public debt to GDP is closer to the threshold of 50%. According to the BoU, this poses a risk of higher exposure or failure to meet external debt obligations in case of unfavorable exchange rate volatility and slow growth in exports. In addition, high debt may become a drag on economic growth by discouraging public investment due to the high debt service costs. In the FY 2018/19, interest payments on debt took 10.02% of the entire budget. According to the Auditor General s report 2016/17, Government had UGX trillion as outstanding commitments as at end June BoU, March 2018, State of the Economy report 17

18 Central Bank Rates and Interest Rates. On the domestic scene, yields (interest rates offered) on Government securities continued to decline during the quarter ended January Yields on the longer-term bonds also declined during the quarter ended January The significant downward shift of the yield curve across the spectrum of the maturity profile reflects transmission of the CBR cuts. Commercial bank interest rates continued to reduce in response to the easing of the monetary policy stance though sluggishly and with a lag. The weighted average lending rate on shilling denominated loans eased to 20.2%, from 21.4% in the preceding quarter. Growth in Private Sector Credit (PSC) remains poor, with average annual growth at 5% in the quarter ended December 2017, down from 5.9% in the quarter ended September The CBR and interest rates are known for moving in the same direction. However, sometimes the lending rate does not react or respond to the change of the CBR as immediately as expected; there is a structural lag in this case, which is a result of the cost of power used to run the generators at the specific branches, lack of appropriate means of transport, policy failure and inefficiency in the regulation and transmission mechanism. This has been an injury to the private sector in terms of acquiring credit from the available financial institutions. Hence forth, for the purposes of keeping inflation at check the BoU managed to reduce the CBR from 13% Nov 2016 to currently 9.5% with respective fluctuating lending rates which is currently at 21.42%. This economic outlook presents domestic and external economic developments in the period June 2017 to January 2018, extending into February 2018 where data is available. On the international scene, economic activity continued to strengthen, with global output now estimated at 3.7% in 2017, which was higher than had been projected in October 2017 and the outturn for The pickup in growth was broad based, with improvements from Advanced Economies (AEs), Emerging Market and Developing Economies (EMDEs), broadly driven by monetary and fiscal policy stimulus and increased investment and productivity. According to the Bank of Uganda, Global financial market conditions remained relatively stable supported in large part, by easy monetary conditions, albeit with some volatility in the equity and bond markets. Preliminary data for the first six months of FY 2017/18 indicates shortfalls in revenue collection and Government expenditure relative to the programed amounts. Total Government revenue (including grants) amounted to UGX 7,346.7 billion, which is UGX 1,135.8 billion lower than the programed amount a shortfall mainly due to underperformances in both domestic revenue and grants. Total Government expenditure and net lending also underperformed, to the tune of UGX 1,894.8 billion, largely due to lower development expenditure driven by slow implementation of Government development projects. During the quarter ended December 2017, the Uganda Shilling stood at an average midrate of UGX 3,624.2 per US Dollar, a depreciation of 0.9% and 2.9% on quarterly and annual basis, respectively. On monthly basis, the Uganda Shilling strengthened by 0.1% to UGX 3,636.5 per US Dollar in February 2018, supported by Banks long dollar positions amidst inflows mainly from export proceeds and NGO inward remittances. The Ugandan economy continued to struggle in FY 2017/18. The Uganda Bureau of Statistics (UBOS) recently released quarterly real GDP estimates for Q1-2017/18 indicate that the economy grew by 1.3%, which was lower than 2.5% in Q4-2016/17. This growth was mainly supported by growth in the industry sector. For FY 2017/18, the economy grew at 5.8% and is forecast to average about 6.3% in the medium to long term, supported by accommodative monetary policy, improvement in public investment management and an improvement in the global economy. 18

19 1.2 Introduction to the FY 2018/2019 Citizen Budget The FY 2018/19 is the 4 th year of the 5-year NDP II plan that is scheduled to end in the FY 2019/20. Chapter 9 of the 1995 Constitution of Uganda describes the management of public finances, and the development of the budget annually is enshrined in Article 155 and operationalized by Sec 9 and 13 of the PFM Act 2015 (as amended). The NBFP is one of the products of the budget preparation stage in the budget process. It is a policy document that communicates the Government s investment strategic direction for the next FY and now with the introduction of Program Based Budgeting (PBB), the NBFP sets out sector outcomes and targets upon which resources are mapped for allocation and implementation. The budget for the FY 2018/19 was drawn under the theme Industrialization for Job Creation and Shared Prosperity. The theme is timely because unemployment remains pronounced with three in four Ugandans unemployed 4. Furthermore, from the UNHS FY 2016/17 by UBOS, prosperity for all remains a challenge as 10.1 million Ugandans are poor reflecting a recent increase in the poverty rate from 19.7% in FY 2013/14 to 21.7% in FY 2016/17. Our concern however, is that Government dropped unemployment as a key macroeconomic assumption to be tracked. Every Shilling Counts is an annual document on the citizens perspective on the NBFP and associated budget processes. It is a united work of 47 CSOs 5 that were represented by members from all regions of Uganda during dialogues, discussions and consultations held across the country between CSOs, Local Government s, and Development Partners. CSBAG, as the consortium secretariat therefore is presenting these proposals and the recommendations on their behalf Macro-Economic Policy Frame Work The macroeconomic strategy for the year 2018/2019 is to enhance the impact of public investment on growth through implementation of policies that foster efficiency in public investment, attract and crowd in private investment, increase domestic revenue mobilization efforts, and achieve low and stable inflation. **Need a sentence here to connect the two paragraphs if we have to keep them Real GDP Growth: It is well known that since 2010/11 Uganda has registered slow growth in real Gross Domestic Product (GDP). The Country s real GDP growth shows that there is an increase for FY 2016/17 by 0.1% from the earlier estimated 3.9%. However, this is lower than the 4.7% for the FY 2015/16. There have been productivity losses in the agricultural sector mainly due to uncertain weather changes and unprocessed material. The economic growth in FY 2017/18 was 5.8% and is projected to grow at 5.5% in FY 2018/19. However, the question is whether this target is achievable given the rising fuel prices, depreciating local currency, increasing cost of doing business and also over relying on rain-fed agriculture which is unreliable. 4 UNHS FY 2016/17 5 Annex 1 19

20 Figure 1: EAC PERCENTAGE GDP GROWTH Source; IMF: World Economic Outlook (WEO), Data base-april In comparison to other EAC countries, Uganda s Percentage GDP growth has lagged behind her counterparts from 1980 to date. It is also projected to lag behind in the upcoming years up to 2022 (IMF). See figure 1. Table 2: EAC growth performance EAC PARTNER STATES U ganda 7.6% 4.8% K enya 3.3% 5.5% Tanzania 5.4% 6.9% R wanda 10.1% 7.0% Source: Ministry of Finance Planning and Economic Development Central Bank Rate and Interest Rates. The CBR and interest rates are known for moving in the same direction. However, sometimes the lending rate does not react or respond to the change of the CBR as immediately as expected; there is a structural lag in this case, which is a result of the cost of power used to run the generators at the specific branches, lack of appropriate means of transport, policy failure and inefficiency in the regulation and transmission mechanism. This has been an injury to the private sector in terms of acquiring credit from the available financial institutions. Hence forth, for the purposes of keeping inflation at check the BoU has managed to reduce the CBR from 13% Nov 2016 to currently 9.5% with respective fluctuating lending rates which is currently at 21.42%

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40 This raise serious question on equity in the country in terms of the facilitation of public education. Recommendation(s): We recommended that the ministry of education establishes the optimum and maximum unit cost per child. It is envisaged that this will help in regulating the school fees structure but also help in developing realistic budgets. b) Limited functionality of SMCs The School Management Committees (SMCs) in Uganda are mandated to undertake critical responsibilities in the proper management of the schools. However, SMCs have not effectively carried out the roles in terms of; coordinating school programs, policy making towards pupils progress. There have been myriads of issues facing the school management committees. The SMCs do not appear to be effective in many schools due to the following factors: Some head-teachers and teachers feign ignorance of their existence and refuse to accept them as part of the management system for local schools. While, some of the SMCs are competing with the better known and better established and resourced Parent Teachers Association (PTA), this aspect has undermined their level of effectiveness. The 23 rd Education and Sports Sector Annual Performance Review field report indicates that within the 24 sampled districts; only 61% and 41.4% of primary and secondary schools were considered to have functioning SMCs and Boards of Governors (BoGs) despite the District Education Officers approving 95% and 86% of the primary school SMCs and secondary BoGs respectively. Recommendation(s): There is need to develop a comprehensive education policy and amendment of the education act 2008 to provide an enabling legal framework within which to support and clearly provide for the roles and responsibilities on how SMC, BoDs and PTAs can work together. c) Inadequate budget allocation to SNE Uganda instituted the Persons with Disability Act 2006 that, among others provides for 10% of the education budget to be utilized to provide for education needs of Persons with Disability. However, the facilitation for PWDs in the education sector falls short of this commitment. The financing to SNE as a proportion of the education sector budget has stagnated at UGX 3.4bn (0.1%) between Financial Year 2017/18 and FY 2018/19. This therefore affects provision of relevant equipment including braille, and other accommodative devices to provide an effective learning environment for PWDs. The number of pupil with disability is high, yet the funding allocated to support special needs education is inadequate. Recommendation(s): CSOs call for the finalization of relevant legislations including the inclusive education policy and the Persons with disability Bill

41 d) Monitoring and support supervision Regardless that in the last FY 2016/2017, the funds allocated for monitoring and supervision were insufficient and slashed by UGX 500M from 4.6 billion to 4.1 billion. The NBFP FY 2018/19 programme performance indicators highlighted monitoring and supervision under programme pre-primary and primary. The sector strategic plan emphasizes supervision at least 2 times a term. Sufficient resource allocation to the monitoring and supervision sector would ensure better learning outcomes by curbing teacher absenteeism and other related issues. But also improve the learning outcomes for the pupils. However, the NBFP FY2018/19 doesn t reflect specific allocation to supervision. Recommendation(s): CSO call upon Parliament to ensure appropriate funds are allocated to monitoring and inspection and protect or ring fence funds as this is a vital component in achieving quality and meaningful education. e) Limited staffing in schools Inadequate Qualified Teachers in Government aided primary schools. The issue of teachers is so critical because teachers play a pivotal role in improving the quality of primary education service delivery. In 2014 total enrolment in Government aided schools stood at 7,124,124, the number of teachers on Government payroll 131,310 (ESSAPR, 2013/14). This translates into a Pupil Teacher Ratio (PTR) of 54:1. The target PTR is 45:1 giving an estimated qualified teacher gap of 27,003 in Government schools alone (ESSAPR). High pupil teacher ratios lead to higher dropout rates and have a negative effect on learning achievement. Recommendation(s): The teacher pupil ratio varies according to the district and region. Government should give special focus to those areas by addressing issues of recruitment, retention and motivation. The Ministry should produce a clear plan and strategy on recruitment, motivation and retention. The financing to SNE as a proportion of the education sector budget has stagnated at UGX 3.4bn (0.1%) between Financial Year 2017/18 and FY 2018/19. 41

42 2.4 Energy and Mineral Development Sector Concerns 2.4 Energy and Mineral Development Sector Concerns For the FY 2018/19, Government planned to continually increase and improve the quality and affordability of energy infrastructure to support productivity enhancement and incentivize innovation and industrialization. This shall be done through development of key infrastructure necessary to provide affordable and reliable energy. In this process, priority will be given to: Completion of major hydro power plants, including Karuma and Isimba; Expansion of the transmission and distribution networks to industrial zones and rural growth sectors to support industrialization; Hastening preparations for the development of the Kabaale (Hoima) Airport, The East Africa Crude Oil Pipeline and Refinery to enable delivery of first oil by 2020 and Completion of the airborne geophysical survey, geological mapping and geochemical sampling of the remaining 20% of the country. The overall Budget allocation for the Energy and Mineral Development Sector FY 2018/19 amounts to UGX 2, billion which is 9.72% of the total budget. At the Program level, the Sector s approved budget under the GOU amounts to UGX 2, billion of which UGX 1, billion was released by the end FY 2016/17 42

43 which represents 58.4% of the budget. UGX 1, billion of the released funds were expended which represented 59.0% of the budget. Figure 12: Allocations to the MDAs under the Energy sector FY 2018/19 Source: Approved Estimates FY 2018/19 (Volume 1)-MoFPED Key for figure 12; MEMD-Ministry of Energy and Mineral development REA-Rural Electrification Agency UNOC-Uganda National Oil Company PAU-Petroleum Authority of Uganda From figure 12, it is observed that REA was not allocated any recurrent budget but got UGX GoU for domestic development and UGX as external financing. On the other hand, UNOC and PAU have got recurrent budgets but no domestic development and external allocations. This poses a risk of facilitating recurrent expenditures without corresponding development expenditures with tangible benefits. Sector Issues and Recommendations a) Failure to consume all the power generate by the various sources in the energy mix Due to national strategic objective of generating electricity to boost industrialization in line with economic growth targets of the national development plan, Government embarked on various power generation projects. However due to the slow industrialization process, not all the power generated is consumed. Besides the slow rate of industrialization, failure to consume the electricity produced is also attributed to high tariffs and connection costs that are not affordable to household consumers. The issue of delays in land acquisition, compensation and resettlement processes for power transmission lines also affects the level of access to power hence limiting consumption. 43

44 Recommendation(s): Reallocation of funds from increased energy generation under vote 017, to increased access to rural electrification under vote 123, to subside ore lower connection costs for rural consumers. Renegotiation of power purchase agreements that are partially responsible for the high tariffs of electricity which are currently affected by the dollar rate. The Government to promote off-grid power supply as the suppliers to the grid have a low tariff which is set by ERA. ERA to also find a way to lower the power tariff when selling to suppliers like UMEME as it gets to the consumer at a much higher price. b) Failure to formalize and/or legalize the operations of Artisanal and small-scale Miners The issues of Artisanal and Small-Scale Miners (ASMs) also known as Illegal miners in Uganda s mining sector is as old as mining has been in this country. Artisanal mining which is the use of rudimental tools in the extraction of minerals employs a high number of Ugandans which improves livelihoods of the citizens, who are harassed by the larger scale miners and their agents. As a result of non-formalization of the ASMs, Government views them as illegal miners hence prioritizing large-scale mining by investors which employs less people at the expense of ASMs. In view of the program performance indicator that targets increasing the number of Uganda gainfully employed in the mineral sector from 6,600 to 10,000 people, formalization of ASMs would exponentially increase the number of Ugandans gainfully employed in the sector faster than large scale mining would, and protect them from abuses. Recommendation(s): The legal regime should be streamlined to enable ASMs to easily acquire location licenses. c) Poor revenue collection from the mining subsector Notwithstanding the mining sector s potential to generate substantial revenues to boost economic growth in the country, the revenues collected from the sector remain low. This has been partly attributed to lack of proper monitoring of mining activities by the DGSM. Some entities continue to operate mines using exploration licenses hence do not declare the ores being mined since they are alleged to be samples, not to mention the ASMs whose operations are not properly taxed because they operate informally. The fact that most of Uganda s minerals are exported as ores without adding value is another factor that is causing loss of revenue, however, the establishment of a gold refinery in Entebbe will go a long way in addressing this challenge. 44

45 There is also the issue of speculative acquisition of Exploration and location licenses. The practice of Individuals obtaining concessions over mineral rich land with the view of selling their rights to potential investors is prevalent. This makes it difficult for serious mining investors to access these areas as they are found to be under the concession of speculators who do not operate mines or carryout any mining activities. These challenges have culminated into low tax and royalties from the sector. Recommendation(s): The Ministry of Energy and Mineral Development should prioritize Mechanisms for capturing data, tracking and collecting of revenues from mining companies and ASMs operating across the country. Implementation of the presidential directive on Mineral beneficiation and value addition to minerals before they are exported. d) Delayed review of the legal and policy framework of the Mining sub sector Between 2014 and 2017, the Government of Uganda through the ministry of Energy and Mineral Development committed to review the legal, policy and regulatory framework of the mining subsector. This started with the review of the mining policy 2003 and development of a new mining policy a Green Paper of which has since been developed through consultative multi-stakeholder process. The Policy has not been approved by cabinet and this is stalling the review of the Mining Laws that are supposed to be aligned to the new policy once it is passed. Recommendation(s): Expediting the passing of the mineral policy for which currently before cabinet. Provide funding for the review of the Mining Act since the targets to have the Policy approved in FY 2017/2018. In view of the program performance indicator that targets increasing the number of Uganda gainfully employed in the mineral sector from 6,600 to 10,000 people, formalization of ASMs would exponentially increase the number of Ugandans gainfully employed in the sector faster than large scale mining would, and protect them from abuses. 45

46 2.5 Health 2.5 Health Sector Concerns The health sector is critical in the attainment of the Uganda Vision 2040 through production of a healthy and productive population. Health sector financing and performance are hinged on the strategic directives set out in the Health Sector Development Plan (HSDP) 2015/ /20. The goal of this plan is to accelerate movement towards Universal Health Coverage (UHC) with essential health and related services needed for promotion of a healthy and productive life. We recognize that FY 2018/19 marks the midterm period for the HSDP which is a critical point of reflection of how the sector has performed since the Plan s commencement. The overall sector performance in FY 2016/17 was 69%. This was fair performance. The sector-approved budget for FY 2016/17 was 1, billion, which represented a 43.8% increase from the FY2015/16 allocation. In FY2016/17, Government of Uganda funded 52% of the budget. The GoU released 95% of the budget (UGX 917 million) and spent UGX 897 million (98%) by 30th June The sector failed to spend approximately 19.5billion by 30th June In FY 2018/19, the health sector budget allocation amounted to UGX 2, billion (9.20% of the total budget). This is an increment from UGX 1, billion in the FY 2017/18. According to the HSDP, the sector needed UGX 3.528trn to effectively deliver in the health services to the Ugandans however the NBFP FY 2018/19 projected 1.7 trillion as the allocation to the health sector. The GOU development financing will remain constant at UGX billion in FY 2018/19 while the External financing will be UGX 1, billion. This shows that external funding for the health sector in Uganda exceeds the GoU spending on the sector. This puts the country s health sector at risk since external sources of revenue are unreliable. This therefore calls upon GoU to prioritize the health sector by adhering to the 2000 Abuja declaration of allocating at least 15% of the National Budget to the heath sector. 46

47 Sector Issues and Recommendations a) Inadequacy of the Proposed Recurrent Wage Bill In its Annual Health Sector Performance FY 2016/17, MOH acknowledges that current remuneration of health workers is low and does not attract personnel to work in remote service areas. 14 One of the recommendations it proposes is an increment in the salaries of health workers. This issue escalated into a national crisis in late 2017 when health workers laid down their tools demanding for better remuneration and working conditions 15. The Government committed to conduct an evaluation of salary enhancements for health workers and the strike was halted on the pledge of the State to increase the salaries with effect from FY 2018/19. To be specific, Hon. Muruli Mukasa, Minister of Public Service, addressed the nation stating that the Government had resolved to enhance the salaries of all public servants, health workers inclusive, will be enhanced in a phased manner, commencing in July However, the FY 2018/19 wage bill has been projected to remain stagnant at UGX billion, the same amount in FY 2017/18, a contradiction of the commitment made by the State. Failure to increase the wage bill exposes the country to another sit-down strike by health workers which is bound to cripple the functionality of the health system. Recommendation(s): CSOs recommended that Government demonstrate commitment to fulfil these pledges made by allocating additional financing for the health workers remuneration and working environment. b) Persistent Stock out of Essential Medicines and Health Supplies (EMHS) and other drugs at Health Facilities According to the FY 2016/17 Government Annual Performance Report (GAPR), there are continued stockouts of drugs and supplies at different levels in the health system. This countrywide challenge raised by people and highlighted in Baraza reports, the main concern being deaths attributed to treatable diseases like malaria due to failure to access drugs in public health facilities although the NMS warehouse is fully stocked with drugs. 16 The Report also notes that there have been persistent complaints from health facilities that they are supplied with drugs which they do not require even when specific requests are made in advance to NMS. 17 The budget for Pharmaceutical and other supplies under Program 05, MOH has been significantly cut from UGX 762bn in FY 2017/18 to UGX 515bn in FY 2018/19. Although the NMS financing has increased to UGX 278 billion in the FY2018/19, this cut will be detrimental to the efforts to eliminate drug stock outs. For instance, the MOH Pharmacy Division Overview of 2017 Reproductive Maternal New-Born Child and Adolescent Health (RMNCAH) Forecasting and Supply Planning Report indicates a gap of US$ 8 million as a funding gap of reproductive health commodities in FY2017/218 after Government allocations and donor funding. 18 This was projected to increase to more than US$31 million for FY2018/19, if external donors do 14 Ministry of Health, Annual Health Sector Performance Report 2016/17 at p Office of the Prime Minister (OPM), FY 2016/17 Government Annual Performance Report (GAPR), p Ibid. 18 Ministry of Health, Pharmacy Division Overview of 2017 Reproductive Maternal New-Born Child and Adolescent Health (RMNCAH) 47

48 not commit funds for the year. The biggest gap remains on procurement of Mama Kits and family planning commodities including condoms. 19 Recommendation(s): The Government should not cut the budget for Pharmaceutical and other supplies under vote 014, but rather divert this money to Vote 116 to cover the NMS funding gap. We reiterate that NMS and MOH should ensure that drugs are supplied to all health facilities in accordance to the needs of the people. c) Reduction of the Primary Healthcare (PHC) programme funding In FY 2017/18, PHC was allotted UGX billion, 20 a slight increase from the UGX billion allocation in the FY 2016/ The proposed budget for FY 2018/19 cuts the funding for this program further by UGX. 3bn. 22 this reduction contradicts the Ministry of Health priority of preventive rather than curative strategy. Since PHC is vital in implementing preventive strategies, its reduction will impede these efforts and hence increase the disease burden. This PHC reduction also comes at a critical time when the Ministry of Health is plans to upgrade all Health Center II (HC IIs) to Health Center III (HC IIIs) facilities in a bid to completely phase out the former. 23 According to MOH, 225 Sub Counties across the country currently have HCIIs which need to be upgraded to HCIIIs and with effect from FY 2016/17, the Government ceased the construction of HCIIs. 24 This upgrade will therefore inevitably entail an increase in the operational expenditure of these health facilities and staff recruitment among others to meet the threshold required for a functional HC III. It has previously been acknowledged by the Ministry of Health that the PHC grants are insufficient to meet their core functions of management and quality service delivery as illustrated in table 6 which analyzes the PHC Non-Wage allocation by Service Delivery Strata. 25 Forecasting and Supply Planning Report, December Ibid 20 National Budget Framework Paper, FY 2018/19 at p Ministry of Health, Annual Health Sector Performance Report FY 2016/17 at p National Budget Framework Paper, FY 2018/19, supra. 23 Ministry of Health, Strategy for Improving Health Service Delivery, at p Ibid. 25 Ministry of Health, Annual Health Sector Performance Report FY 2016/17, supra at p

49 Table 6: PHC Non-Wage Recurrent Allocation by Service Delivery Strata within the PHC system FY 2016/17 Level of Health Service Delivery District Health Office Municipal Health Office Health Sub Districts Number of Units Annual NWR Allocation Per Level Annual Average Allocation Per Level Annual Allocation Range Per Level Maximum Minimum 115 4,696,841,333 40,842,099 91,862, ,386,017 12,106,976 40,936, ,823,358,729 26,469,812 75,951,723 3,636,423 Annual requirement 10,647,282 99,360,000 2,598, Hospitals ,990,584, ,574, ,400,743 42,010, ,650,000 HC IVs 190 3,135,258,973 16,501,363 44,469,764 7,003,466 42,232,000 HC IIIs 1,170 7,516,563,332 6,424,413 23,091,103 1,199,107 15,592,000 HC IIs 1,954 7,192,076,216 3,680,694 12,690, ,458 12,592,000 Source: Ministry of Health, Annual Health Sector Performance Report FY 2016/17. The table 6 above illustrates that the annual average allocation per level for PHC at the respective levels falls below the annual requirement. For instance, each HC II should receive UGX 12.6 million annually, yet they received only UGX 3.7 million in FY 2016/17. Further reduction of the PHC budgetary allocation will paralyze the operation of health facilities in Uganda, both high and low level. Recommendation(s): The Government should therefore align the allocations for PHC to its plans to construct new HCIIIs and upgrade the existing HCIIs to HCIIIs, an intervention which is heavily reliant on PHC funds for effective functionality and operation. d) Reduction in financing of the Uganda Blood Transfusion Services (UBTS) The Uganda Blood Transfusion Service (UBTS) is the National Blood Service responsible for all blood transfusion and safety activities for the entire country. A key challenge and constraint for UBTS is to expand blood collection capacity to meet the increased national blood demand especially at health Centre IVs when they become fully operational. Currently UBTS has 7 regional blood banks of the 13 targeted by 2019/2020 according to the HSDP. Out of the 8 blood collection centers recognized nationally, UBTS is considering closure of 4 blood collection centers due to the significant reductions in budget arising from the ending of the PEPFAR funding to UBTS 26 this will reduce blood collection to the tune of 43,200 units of blood annually Annual Health Sector Annual Performance Report FY 2016/17 at p Ibid. 49

50 According to the Approved estimates FY 2018/19, financing for the UBTS increased from UGX 9.441bn allocated in the FY 2017/18 to UGX billion in the FY 2018/19. We applaud Government for this move considering the blood crisis that hit the country late e) Limited Financing for Disability and Rehabilitation Services Article 25 of the Convention of the Rights of Persons with Disability (CRPD) requires Party States to ensure access for Persons with Disabilities to health services that are gender-sensitive, affordable, and within proximity to their communities including health-related rehabilitation. Furthermore, it requires state parties to appoint health professionals with the capacity to effectively provide quality health care to PWDs. Critical medical equipment including adjustable beds, special creams for albinos, assistive devices remain scarce thus denying PWDs access to effective health service delivery. Health professionals lack skills in sign language interpretation and the State has not employed professional sign language interpreters in health facilities which impede access to health care for the Deaf community. Inadequate funding for rehabilitation programs especially for children with disabilities and eye health problems remains a challenge. Furthermore, these rehabilitation programs often times target adults and exclude children. The financing for Community Health which houses the Disability and Rehabilitation Division under the Ministry of Health has received minimal incremental funding from UGX 3.124bn in FY 2015/16 to UGX 2.094bn in FY 2017/18 as detailed below: Table 7: Financing for Community Health Program under the Ministry of Health FY 2015/16-FY 2016/17 FY 2015/16(bn) FY 2016/17(bn) FY 2017/18(bn) Vote Function 04: Clinical and public health Program 04 Community Health Percentage of Community Health to total Vote Function Budget 7.2% 7.8% 5.4% Source: Ministry of Health Ministerial Policy Statement FY 2017/18 Recommendation(s): CSOs recommend for the inclusion of a module highlighting care for Persons with Disability to cater for among others, sign language to provide them with equitable effective health care. The need for a Vote Function for Disability Prevention and Rehabilitation in the health sector, this will enable the sector to prioritize disability concerns. 50

51 2.6 Justice, Law And Order Sector (JLOS) Concerns Economic development and transformation is directly linked to the presence of rule of law and a justice system. This is the concern of JLOS and the sector s focus includes enhancing the policy, legal and regulatory framework, enhancing access to JLOS services to all people without and promoting the respect and observance of human rights and institutional accountability for service delivery. Figure 10: Total recurrent and Domestic Development allocation for FY 2018/19 From 10, 24% of the total sector (UGX billion) is the development budget while 76% of the total sector budget (UGX billion) is the total recurrent budget. Source: Approved Estimates FY 2018/19 (Volume 1)-MoFPED 51

52 Many institutions performed below 50% of their target, it would require focusing on bottlenecks that have made it difficult for these institutions to achieve their intended targets to improve performance. Sector Issues and Recommendations. Judiciary The judiciary is key in dispensation of justice. In 2017/18 the judiciary managed to dispose of 23% of the targeted cases. This is a very low percentage compared to the prevailing case backlog. In 2018/19 the judiciary targets to achieve 47% which is double the target they were able to achieve in 2017/2018. However, the same institution targets to achieve 50% in 2019/2020 (an increment of 3%), whereas the projections for 2018/19 are commendable those of 2019/20 are very small. The judiciary still faces many challenges which could have all been responsible for this low achievement. Budgetary and other remedies need to be sorted to improve the performance of the judiciary if they are to double the target. Key among the challenges faced by the judiciary are; a) Delays in appointment of judicial officers resulting in case backlog There have been delays in appointment of judicial officers especially in key courts such as the high court and the court of appeal. At high court level, there are 50 justices instead of the approved 82. The Judicial Service Commission has over the years made recommendations of individuals to be appointed to fill these gaps however no appointments have been made. This has resulted in high number of cases to be handled by judicial officers hence resulting into case backlog and inability to achieve the intended goals/targets. Related to the above has been the failure to operationalize high court circuits that were approved in FY 2015/16. The approval of these high court circuits was intended to bring the court closer to the people and work towards reduction of delays in hearing of cases. However, to date the circuits have not been operationalized. This needs to be supported by an increase in the number of magistrates to bring justice closer to the people. In practice the judiciary is still not an independent arm of Government unlike the legislature and the executive and this has prompted the making of the Judicial Independence Bill which would separate the functioning of the judiciary from the executive. This will enable proper functioning and delivery of targets by the judiciary. Recommendation(s): Amend the constitution to give the Judicial Service Commission full powers to appoint judicial officers. Passing of the judiciary Bill to give the judiciary more autonomy and less dependent on the executive which undermines the judiciary s ability to check on the other branches of Government. Provide budget for operationalization of already approved high court circuits to bring justice closer to the people. 52

53 b) Understaffing and poor staff remuneration Understaffing and poor staff remuneration is a major challenge in the judiciary and other agencies such as the Directorate of Public Prosecution (DPP), and police. In the case of the judiciary and DPP there are high personnel-case ratios which undermine the quality of research and case handling and this has a potential to result into miscarriage of justice. There are major staffing gaps among support staff such as process servers, translators and clerks. For example, there are no personnel specialized in sign language translators and braille to provide judicial services to individuals with special needs. When it comes to remuneration in 2017 members of the judiciary went on strike 28 over poor pay, these were followed by state prosecutors while judicial support staff had also threatened to go on strike. There is need to review the remuneration of all personnel in the sector. Recommendation(s): CSO recommendations include; Review the salaries of judicial officers, DPP and support staff. This should also focus on other benefits like accommodations and facilitation for hard to reach areas. Increase the number of magistrates to at least 1 magistrate grade I for every sub county. Focus on PWDs specifically in areas of providing friendly services such as braille services, ramps and other facilities to ease access and sign language and interpretation services Directorate of Public Prosecution The Directorate of Public Prosecution (DPP) is an independent entity mandated to fight crime through prosecution of suspects charged with different crime. In the financial year 2017/18 the directorate was able to achieve 25% of its target while in 2018/19 the directorate targets have been set at 95%. Over the years the directorate has faced numerous challenges including. c) Case backlog and delays in the justice system There is a high case backlog mainly due to high prosecutor-case ratio, lack of witness facilitation, protection and delays in investigation of cases. The DPP faces challenges of poor pay that resulted into industrial action hence causing further delays in the cases. There are high cases of abuse of criminal justice system. This is mainly in the cases where individuals bring up fictitious and frivolous cases and where cases are brought to achieve political ends. These have greatly resulted in wastage of resources and contributed to the case backlog at the expense of genuine cases. The lack of adaptation of plea bargaining as a general policy to reduce the time it takes to handle minor offences 28 html 53

54 has contributed to case backlog, congestion in prisons and wastage of resources. Case file management gaps still exist, these range from missing files, lack of proper records and computerizing case management systems. There is limited use of Information Technology (IT) systems in gathering evidence mainly from witnesses which would save time and resources. Recommendation(s): CSO recommendations include; Increased funding on salary and benefits such as hard to reach areas this should go hand in hand with increase in staff to address manpower gaps. There should be a state attorney at every sub county. Need for introduction of witness protection systems, this should include making a law on witness protection, funding systems to provide for such protection. CSO recommendations included; General Recommendation: The issue of lack of data sharing and interoperability across different justice and law enforcement agencies is a serious one and should be allocated enough resources. This issue is also highlighted in the JLOS strategic Plan. In pursuance of the goals of crime prevention and criminal justice, an integrated robust information system inter-linking various stakeholders in the criminal justice system such as the Police, Ministry of Justice and Constitutional Affairs, The Directorate of Public Prosecutions, Prisons Services and the Courts of the Judicature is the perfect information system model that will facilitate real time data sharing and transfer of case details between stakeholders, quick retrieval of records and files that are electronically captured, efficient generation of crime statistics across the board, improved sector wide monitoring and evaluation of criminal An integrated information justice services and programs. System for the Justice, Law and Order Sector will also greatly reduce the huge costs associated with each individual institution procuring, implementing and developing its own system. Procuring a centralized application with each institution running and administering its own module customized to its inherent unique needs has a huge return on investment with so much being done by relatively so little. With an integrated data management system, JLOS institutions would: Process cases faster Process records faster Secure data Share data on criminals Track suspects faster Generate cause lists with ease Rationalize the allocation of staff vis a vis the workload Strengthen judicial independence through automated allocation of cases Strengthen performance management Strengthen monitoring and evaluation in JLOS. 54

55 2.7 Social Development Sector According to the GoU Annual Performance report 2016/17, the Social Development Sector is among those that performed at an average of 59% and above. The Sector had 29 key output indicators and managed to achieve its targets at 80.6% of these notably; support of 154% of the targeted 119,310 older persons under SAGE, the inspection of 108% of the planned 1,174 workplaces, training and skill development for youths where 6,025 were supported against the planned 130. Underperformance was noted on many key outputs especially support to youth groups with grants/start-up capital where only 1.2% of the planned 280,000 youth groups were supported during the FY under review. A total of 30,766 beneficiaries (2,412 groups) were supported with the dominant categories being wholesale and retail trade (41.2%) and Agriculture (35.6%). The approved budget for the Sector in FY 2016/17 was UGX bn excluding taxes and arrears. This amount represents the Wage allocation of UGX 3.437bn, Non-Wage of UGX bn, GOU Development of UGX bn and no money was allocated for Non-Tax Revenue. By end of FY 2016/17, UGX bn which is representative of 61.3% of the total budget was released. In relation to this release, Shs3.437bn is Wage, Shs19.742bn is Non-wage recurrent, and Shs86.117bn is GOU Development budget. The Sector achieved a utilization rate of the GoU receipts of 99.9%. 55

56 Figure 11: Allocations to votes under the Social Development sector FY 2018/19, in UGX billions Source: Approved Estimates FY 2018/19 (Volume 1)-MoFPED It has been noted that the Ministry of Gender continues to take the largest proportion of the sector budget in FY 2018/19 allocations. Of all the three votes under the social development sector thus Ministry of Gender, Labor and Social Development (MGLSD), Equal Opportunities Commission (EOC), Kampala Capital City Authority (KCCA) and Local Government s (votes ) it is only MGLSD that has got external financing as can be observed from figure 11. Sector Issues and Recommendations a) Unclear targets, outcomes and indicator measurement There is also use of performance indicators that are either hard to measure or have no apparent link to the outcome. For instance, under outcome 1, the performance indicator Percentage of workplaces complying to labor laws, regulations and standards shows a baseline percentage of 0.75% in The projected achievement for FY2018/19 is 0.82%. This begs the question of how realistic these projections are and if the sector (Ministry) has up to date information because workplaces are mostly well-known places with addresses. Recommendation(s): There is need for the sector to properly align outcomes, indicators to sector objectives to enhance measurement of progress. b) Inadequate commitment of funds towards the Youth Livelihood Program (YLP): Success of the YLP as intended would represent a major achievement of the sector towards the achievement of some its key outcomes and strategies. The YLP has so far had a majorly successful implementation in the past period, with the process report produced in April 2017 showing at least 51% of youth groups that received support reporting success and repaying off their grants. 56

57 The concern with YLP is the level of commitment and disbursement of funds towards the program. With the program entering year 4 of the 5-year initial phase, only UGX 130 billion out of the UGX 265 billion overall program budget has so far been disbursed representing just 49%. We are also concerned about the persisting cases of collusion between Government officials especially CDOs to defraud youth groups by declaring more funds given than actual. This is making it harder for youth to re-pay the grants and discouraging others from even applying for these grants. (YLP performance report April 2017) Recommendation(s): CSO recommendations include; There is need for comprehensive training of youth groups that have been selected to get the funds to build their skills in project management, finance and book keeping and project identification based on their needs and abilities. Government should avail the allocated annual funds for disbursement if it s to meet the program s objectives. There is also need to reduce and streamline the red tape that makes it hard for youth to access these funds. This will increase uptake of the program and funds and in turn enable the Government meet both disbursement targets and outcome targets. c) Lack of funding for SAGE The NBFP 2018/19 quotes a growth in the number of older persons in Uganda to 5% of the population and acknowledges them to be a vulnerable group. One of the sector s key intervention areas as establishing and expanding comprehensive social protection programs for vulnerable persons. The SAGE program had provided a steady source of income for a considerable proportion of the elderly persons. The SAGE program contributes to outcome 3 of the sector Vulnerable and marginalized persons protected from deprivation and livelihood risks which was supposed to grow though the 5-year program. It comes as a concern that funding for the Social Assistance Grants for Empowerment (SAGE) was not reflected in the NBFP for 2018/19. Additionally, Back Ground to the FY 2018/19 and Budget Speech only make mention of SAAGE without any clarity on how much money SAGE was allocated for the FY 2018/19. The Approved estimates for FY 2018/19 show UGX billion allocated to the Disability and Elderly subsector all recurrent and no development. Cancellation of the program will definitely create a deficit in the plans and pockets of many vulnerable people in the country. However, on close scrutiny the SAGE program cost is estimated at UGX billion per month and UGX billion annually if it is to cover the entire elderly population in Uganda of million people: (1,725,000 x x 12). This is unrealistic basing on the entire budget for social protection for vulnerable groups of for FY 2018/19 (vote 018/4). 57

58 Recommendation(s): We recommend that Governments commits itself to sustainable funding of social protection flag ship project. We further recommend that government should fast-track pension reforms to target the informal sector as well as amend NSSF Act to expand social security opportunities for members. d) Inadequate funding and coverage for UWEP The Uganda Women Entrepreneurship Program (UWEP) is a Government of Uganda Social Protection Intervention aimed at accessing funds for poor and disadvantaged women to improve their livelihoods and improving their competitive edge in the business sector. This program began in October 2016 and it is meant to benefit women from the ages of years. We are concerned that there is no increment in allocation between FY2017/18 and FY2018/19 for the program, standing at 40.18Bn. To get figures on re-payment and success rate of projects. Most rural women are illiterate (about 75 percent) and run informal non-farm enterprises that are micro and seasonal in nature. Accessing finance through local groups such as Rotating Savings and Credit Associations (ROSCAs) was most common for rural women in business. Thus, training materials particularly the financial component, mentoring and an early warning system for these entrepreneurs should be established together with effective management and leadership of these groups. The amounts offered to women (not exceeding UGX 12 million) are often small amounts for groups of many women and end up not making meaningful gains for the groups. The repayment period (1-year grace period) is not favorable for some of the projects. Recommendation(s): CSO recommendations include; There is a need for related capacity building in leadership skills, project identification, record keeping and other entrepreneurship skills development for women. We commend the figure of 105 billion allocated in FY2018/19 for purchase of computers for UWEP focal persons. We however recommend that these should not be new people, but rather use existing persons like CDOs so as to avoid duplication and promote efficiency. Revision of loan amounts for women groups who may need more capital but who lack the collateral and favorable repayment schedules for projects that have long maturity periods. 58

59 e) Limited financing for SGBV Response and management While there is a policy framework for GBV management, it is still unfunded. Most of the SGBV interventions implemented by MGLSD are still heavily reliant on donor grants and this raises overall sustainability issues as well as national recognition of the extent of the challenge and the need to provide appropriate response to GBV (There is no Government run SGBV shelter). In the Local Government s, the structures and people charged with management of SGBV are very poorly funded and supported. The office of the DCDO and Probation Officers often lack facilitation to handle cases. Lack of adequate information and data regarding response to GBV. The existing system remains inadequate. For instance, it does not capture and report on the different GBV interventions by the various duty bearers. Furthermore, the GBVMIS is not connected or even harmonized with the data bases of police, health and JLOS whose role is to primarily respond to GBV incidents. In the Health sector, the MoH is mandated to spear-head medico-legal services relating to GBV cases, there is limited mention of forensic examination in Ministerial Policy Statements; although the inputs for such examinations are not expensive. District health officials rarely appreciate the usefulness of these examinations in prosecuting SGBV crimes. Partly as a consequence, about one in every four files for rape or defilement cases registered at the DPP office are closed due to lack of medical evidence. Police: The number of GBV cases reported and investigated by the police continues to increase annually, without a corresponding increase in budget allocation for GBV prevention and response. In 2016, the Uganda Police Force investigated over 40,000 GBV cases. Despite GBV accounting for a substantial share of annual reported crimes, there is inadequate prioritization of enforcing GBV laws. In 2015, only 42% of reported defilement cases were investigated and arrests made.6 GBV cases are closed or dismissed at a far higher rate than conviction and only 3-5% are concluded annually, resulting in impunity for perpetrators, insecurity for survivors, and exacerbation of GBV. Recommendation(s): CSO recommendations include; JLOS: Fast track the creation of a GBV Specialized Court and Procedures. A specialized GBV/SGBV court is required under the NGBV Policy and agreed-to in principle by JLOS leadership. Enhance support for survivor safety, participation, and support: The NGBV Policy requires JLOS to provide protection and support to GBV survivors/victims and to eliminate barriers to victim s participation in the judicial process. MOH: There is a need to amend the Health Management Information System (HMIS) codes to ensure that GBV incidents addressed at health facilities are suitably captured. Ministry of Internal Affairs: To effectively combat GBV, the UPF should create a GBV Directorate, merging and elevating the existing CFPU and sexual offences unit. 59

60 f) Inadequate funding for the disability council Disabled Persons Organizations applaud Government efforts to provide vocational education for Youth with disability.however the target remains stagnated at 170 PWDs 29 between FY 2015/16 and FY 2016/17 that are supported in Vocational Rehabilitation centres of Lweza, Kireka (Wakiso district),ruti (Mbarara district) and Mpumudde (Jinja district). 30 The National Council for Disability is mandated to conduct monitoring and evaluation of the extent to which Government, NGOs and the private sector include and meet the needs of PWDs in their work,as well as research in matters of violations of PWD rights and take appropriate action, among others. It s financing, however, remains limited. This is illustrated below: Table 8: Financing trends for the disability council FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 Wages 0.036bn 0.036bn 0.036bn 0.225bn Non-wages 0.500bn 0.500bn 0.500bn 0.311bn Total 0.536bn 0.536bn 0.536bn 0.536bn Source: Approved budget estimates Recommendation(s): CSO recommendations include; We urged that the number of PWDs supported by the Ministry should increase to ensure more support for PWDs. CSOs also urged Government to fast track the review of the Persons with Disabilities Bill and National Policy on Disability. The target number of PWDs reached through the vocational Rehabilitation centres should be increased from 170 to at least These groups are supported to join groups in their communities to benefit from Government development programs. 30 Annual Budget Performance Reports FY 2015/16 and FY 2016/17 60

61 2.8 Trade, Tourism And Industry Sector Concerns 2.8 Trade, Tourism And Industry Sector Concerns In FY2016/17, the sector achieved 59% of the performance indicator targets which was a decrease from 70% in the FY2015/16. 18% was moderate, 21% was not achieved while 2% was not assessed. At outcome level, the sector achieved 50% of her annual targets while the rest (50%) was moderately satisfactory. UGX billion (97%) of the approved UGX billion was released and 91.9% was absorbed by the sector. Regarding output performance for FY2016/17, it was just above average achieving 59% of the annual indicator targets, 18% was moderately satisfactory & 21% was not achieved. Figure 12: Percentage Allocations to the MDAs under the sector FY 2018/19 Source: Computations from the NBFP FY 2018/19-FY 2022/23 data 61

62 Figure 13: Trade Tourism & Industry Sector budget trends by Category FY 2018/19 Source: NBFP 2018/19 Sector Issues and Recommendations We appreciate the fact that the Tourism sector has had growth over the last decade evidenced by an increase in both tourist arrivals and earnings in form of foreign exchange from visitor exports. The number of tourists visiting the country has increased from 945,040 visitors in 2010 to 1,322,522 visitor arrivals in Earnings from tourism exports and services more than doubled from US$ 662 million in 2010 to US$ 1,371 million in However, there are other issues that have not been tackled yet if considered can be a good driver of growth at the sector level and as a country as highlighted below. a) Inadequate support to the District Commercial Officers District Commercial Officers (DCOs) promote trade through enterprise development, market linkages to domestic, regional markets, improvement of standards of products; promote consumption of locally produced goods. According to the Ministry of Trade, this allocation is not sufficient to enable it to reach all the Commercial Officers and indeed, Wages, Non-Tax Revenue, Government development and Taxes all had 0% allocation. This shows that despite their critical role, DCOs are underfunded. Furthermore, DCOs play a critical role in undertaking feasibility studies especially in linking production to markets. The GAPR (2015/16) report points out that Government has constructed 77 rural markets in 35 districts in Eastern and Central Uganda including 9 modern markets. However, while a lot of money is used in establishing these market facilities, they remain underutilized and thus have not fulfilled the objectives for their establishment. 62

63 Recommendation(s): CSO recommendations include; With the termination of the EU funded District Commercial Services Support (DICOSS) Project, it is important that the project be mainstreamed into Local Government systems and ensure that the trade and production related issues are catered for. Since District Commercial Officers (DCOs) play an integral part in the linkage of all commercial & trade related services right from district to national level, we recommended that a dedicated budget of UGX 45bn re-located from the OWC budget should be allocated geared towards supporting the operationalization of the district commercial offices. DCOs should be able to advice, support, document and monitor all district investment avenues, ideas, innovations & prospects and thus forward them on a quarterly basis to the mother Ministry (Trade & Industry) for selection, mainstreaming & top level (national) support. b) Limited funding for Trade Negotiations Trade is the most regulated sector in the world, where 60% of global treaties, protocols and agreements are trade related. Uganda has entered trade agreements and cooperation treaties both at bilateral, multilateral and regional level in a view of ensuring market access for her exports; reduce their trade deficits and subsequently achieving sustainable development. Currently, Uganda is engaged in negotiations like the EAC-COMESA-SADC Tripartite Free Trade Area, the EAC- EU Economic Partnership Agreement (EPA), the World Trade Organization (WTO) negotiations, the Continental Free Trade Area (CFTA). These parallel and overlapping negotiations can have an implication on regional integration efforts as they promote incoherence with the National Development priorities and strategies. It is therefore important to ensure pro-active engagement in these negotiations by the Government. In the FY 2016/17, the external trade department of the Ministry of Trade which is responsible for trade negotiations with third parties received a total of UGX billion of which UGX 100 billion was Wage recurrent and bn was Non-Wage Recurrent. This allocation cannot cater for full participation in these negotiations that donor support has been sought for negotiations like the EPA. This subsequently has undermined Uganda s ability to negotiate from a sovereign position. Furthermore, the current EAC-EU EPA, CFTA and WTO negotiations do not adequately address EAC s development concerns, and may in fact constrain the policy space for adopting necessary development policies and practices, including undermining Regional Integration efforts in future. MTIC is also responsible for ensuring good relations between Uganda and other countries for purposes of trade. 63

64 Recommendation(s): CSO recommendations include; In order to support the capacity of the Ministry of Trade in building a massive and strong trade negotiation team for the country while promoting coherence and coordination among its structures, there is need for increased funding. Parliament should demand for an update from the Ministry of Trade and Ministry of EAC Affairs on the EAC-EU EPA negotiations as Uganda is determined to conclude the negotiations despite objections from other EAC countries like Tanzania which cite the negative implications of the EPA on her infant industries, revenue and policy space for development. Evidence has shown that nations such as South Africa, Rwanda, Kenya, Egypt, Mauritius & India that have raised their funding and facilitation towards their Trade Negotiation teams have equally got good returns out of their Trade & Investment regimes. Equally Uganda should raise its funding budget towards Trade Negotiation so as to get better & favorable deals out of the negotiations that won t bias the country. c) Industry and industrial parks for industrialization, value addition & job creation According to the GAPR (2015/16) report, the contribution of the industrial sector to GDP continued to decline in the FY2015/16 from 19.1% in FY2013/14 to 18.3% in the last FY. This could be attributed to slowdown or decline in performance of both the manufacturing and construction subsectors as the major drivers of the industrial sector in the country. By contrast, the NDP II target is to increase the contribution of industry to GDP to 27.9% by Furthermore, The NDP II target is to increase the ratio of manufactured exports to total exports from 6.0% in 2012 to 19.0% by It is against this backdrop that the President of Uganda has, according to the 23 presidential directives, identified industrial parks as one of the major priorities among priorities, and has directed that 22 industrial parks be built, with 5 parks being targeted to be completed each year. Current trade, manufacturing & export statistics show that the global industrial power houses such as India, China, South Africa, Egypt, Malaysia, and Mauritius & Asia in general have made tremendous industrial growth & export competitiveness by developing and maintaining their industrial parks & export processing zones (EPZs). These are very conducive towards attracting investors into well demarcated & planned industrial parks that ease the implementation of vast projects thus creating jobs, raising export quantities, boosting innovation & research and this posting better results for the Uganda. 64

65 Recommendation(s): CSO recommendations include; The national budget should dedicate funds to fast track the infrastructural development of Uganda s industrial parks & Export Processing Zones (EPZs). The Ministry of Trade should establish regional business incubation centers in industrial parks to nurture nascent industries and boost their competitiveness both at local, regional and global level. d) High Fuel prices affecting business pricing. We believe that Government shouldn t only be a tax collector, but an active sector player like in other countries. Elsewhere gov ts buy, import, supply and sale fuel just like any other player thus controlling the final fuel pump price to the final consumer. A national oil company (NOC) is an oil company fully or in the majority owned by a national Government. According to theworld Bank, NOCs accounted for 75% global oil production and controlled 90% of proven oil reserves in Due to their increasing dominance over global reserves, the importance of NOCs relative to International Oil Companies (IOCs), such as ExxonMobil, BP, or Royal Dutch Shell, has risen dramatically in recent decades. NOCs are also increasingly investing outside their national borders. Uganda shouldn t solely rely on the private sector, but should go beyond stocking fuel and go the whole value chain up to final pump sales, supply & distribution. Recommendation(s): We recommended that the Government establishes a National Oil Company Current trade, manufacturing & export statistics show that the global industrial power houses such as India, China, South Africa, Egypt, Malaysia, and Mauritius & Asia in general have made tremendous industrial growth & export competitiveness by developing and maintaining their industrial parks & export processing zones (EPZs). 65

66 2.9 Water And Environment Sector Concerns 2.9 Water And Environment Sector Concerns According to the Government Annual Performance Report (GAPR) , Output performance declined with 39% of indicator targets achieved in FY2016/17 compared to 65% in FY2015/16: Good output performance was on; Construction of boreholes (325 drilled against the planned 270), valley tank construction (30 planned and 47 constructed), demarcation of wetlands (167.7Km demarcated against the planned 150Km), resurveying and marking of forest boundaries (306Km covered against the planned 203Km) and conclusion of EIAs where 1,340 were concluded against the planned 680. Fifteen per cent of the sector s key output indicators had borderline performance; notably 80% of the planned 12 rural piped water systems/gravity Flow Schemes constructed, 83.3% of the planned 120 hectares of degraded lake shores and river banks restored and 87.6% of the targeted 16,688,318 tree seedlings raised and sold by NFA. Low performance was noted on 33% of the sector indicators especially; construction of dams where only 2 of the planned 7 dams were completed, construction of urban pipes water systems where 34 of the planned 59 schemes were built, reclamation and protection of wetlands where only 19% of the targeted 2500 KM were restored, and replanting of degraded forests where 56% of the targeted 627Ha were restored. CSBAG observes the significant disparity between approved and actual released budget which could have affected attainment of set targets. For instance, the FY 2016/17 total approved budget of UGX 1,098.6bn, only 78% (UGX billion) was released with the sector absorbing a significant 94% (UGX 811billion). This implies that the sector operated at 73% of the total approved budget (UGX 1,098.6bn) and this affects sector capacity and efficiency to deliver sustainable services. 66

67 Figure 14: Allocations to votes under the water and environment sector FY 2018/19 in UGX billions Source: Approved Estimates FY 2018/19 (Volume 1)-MoFPED Key to figure 14; MWE-Ministry of Water and Environment KCCA-Kampala Capital City Authority NEMA-National Environment Management Authority UNMA- National Environment Management Authority LG-Local Government s ( ) Figure 15: Percentage allocations to the votes under the water and environment sector FY 2018/19 Source: Approved Estimates FY 2018/19 (Volume 1)-MoFPED From the figure above, the ministry of water is allocated almost the whole allocation to the sector (84.462%). However, there is an insignificant allocation to KCCA. 67

68 Figure 16: Water and Environment Sector budget trends by Category FY 2018/19 Source: NBFP FY 2018/19 There is a slight change in the expenditure allocations for the sector. Notice that there is no change in the wage and Non-wage recurrent allocations and the GoU. Sector Issues and Recommendations a) Absence of baseline data on performance indicators to inform investment planning Whereas the sector revised its performance measurement framework in line with the SDGs and is expected to have start reporting/using the new framework in the current FY 2017/2018, the sector has not collected baseline data on service levels to inform investment planning. Absence of baseline data means that there is misleading information on service levels such as access to water and sanitation services. Recommendation(s): CSO recommendations include; CSBAG recommend that the process to develop the Sector Investment Plan (SIP) be halted and budget is reallocated from Vote 019 Output 01 Policy, Planning, Budgeting and Monitoring (UGX 235,748,000 billion) to expedite national baseline data collection against the new indicator framework for efficient investment planning. b) Decreasing external financing to the sector Whereas the sector is demonstrating efficiency in budget absorption currently at 94.6%, the actual releases (UGX billion) are low equivalent to 78% especially on the side of donors. For instance, the approved sector budget (UGX 1,098.6 billion) constituted donor funding of 33%, 32% from AIA and 30% by GoU. However, the sector experienced significant low releases especially from donors equivalent to 17% against 68

69 the approved contribution of 33%. In comparison, Appropriation in Aid contributed the biggest share of 41% of the released funds, followed by 35% by GoU funding. Government released funds represented 90.4% of the GoU committed funds. At the same time, the Joint Water and Environment Sector Support Programme (JWESSP) Phase II was ending and commitment for renewal of this programme had not been secured. CSBAG is concerned that donor withdrawal and reduced commitment to finance the sector is significantly increasing over reliance on internally generated funds from NWSC, NFA, UNMA and NEMA and this cannot be sustained with the decreasing subsidization from both donors and Government. Recommendation(s): CSO recommendations include; CSBAG recommends for integration of district local revenue from natural resources as part of the internally generated revenue to the water and environment sector and for Government to institute a framework for its regulation and monitoring for re-investment in the sector. This will significantly increase sector financing in the wake of the declining Government and external funding. c) High rate of forest cover loss The continued rampant encroachment and illegal timber/tree extraction have led to degradation and destruction of natural forests. In 1990 forest cover was 24%, 11% in 2015 and 9% in Forest cover loss is happening in both protected areas managed by NFA but more rampant on private lands through illegal encroachment for agriculture and settlement and charcoal burning among others. Reducing forest cover has increased vulnerability to climate change as manifested by pro-longed drought, floods, erratic rains etc. This has reduced agricultural production leading to food and income insecurity as well as poverty. Because the underlying causes are cross-sectoral, the challenge has exceeded capacity of mandated forestry institutions particularly FSSD and NFA to enforce existing and new regulations/guidelines such as charcoal burning Therefore, at least 20% (UGX 269,030,300 m) of the budget allocation under Programme 09:05 Natural Resources, Output 51 for supporting the Environmental Protection Force and Procurement of seedlings be reallocated to facilitate the oversight function of the Policy committee on Environment and the ENR-sector working group to institute cross-sectoral policy and legislative measures to reverse forest cover loss and fast track their integration in respective sectors of energy, lands and agriculture. Recommendation(s): Use of a strategic sector-wide approach to planning, regulation and enforcement of regulation targeting underlying pressures from Land utilization, energy insecurity and food production. Possible policy measures could include tax reductions on alternative energy sources such as Liquefied Petroleum Gas (LPG) to reduce charcoal consumption. 69

70 d) Low efficiency of the District Water and Sanitation Development Conditional Grant (DWSDCG) The failure by 16.5% of the 115 districts to absorb all the funds disbursed to them affects services to the community as the unspent funds was returned to the centre. The total amount of unspent funds worth 6,765,255,542, could have provided about 338 additional hand pump/ boreholes (at an estimated unit cost of 20 million per borehole) serving about 84,500 people to further support implementation of the Presidential directive on ensuring that each village has a water source. However, some districts such as Hoima and Kamuli diverted unspent WASH funds equivalent to 530,000,000 (half a billion) to support other departments and payment of pensions of former civil servants respectively. This presents a big challenge to an already underfunded sector that cannot adhere to the guideline for utilization of the conditional grant for rural water supply. Recommendation(s): CSBAG recommends that the office of the Auditor General and Parliament strongly enforce accountability of Local Government s with regard to utilization of the DWSCG. In addition, CSBAG recommends that the DWSCG is reduced by 10% and the budget cut used build capacity of Regional water authorities with regard to Operation and Maintenance of water schemes outside the gazette towns where the new Regional authorities continue to offer O&M support on top of the direct management support in gazette towns. e) Inadequate funding for Operation and Maintenance of piped water schemes in small towns and rural growth centres The high rate of urbanization standing at 5.9% has led to a reduction of service levels in urban areas, particularly small towns. This is evident with the reduction of access to safe water from 73% in 2015 to 71% in 2017 against the NDP target of 95%. Other limitations to access are due to minor inefficiencies such as non-revenue water and poor O&M. However, the sector has not provided funds for construction of piped water schemes in the planned 80 towns while inadequate funds (UGX 400,000,000) have been allocated for O&M. Recommendation(s): CSBAG recommended that 60% of the budget allocation of UGX 900,000,000m for Collection and compilation of data for magazine documenting the achievements of Ministry of Water and Environment at 30 years of NRM, Newspaper supplements and Talk shows, World Water Day and other events be diverted to fund O&M to increase water supply in small towns. 70

71 f) Delayed finalization of the Irrigation policy (MAAIF, OPM, NPA and MWE) The Draft National Irrigation Policy was tabled for discussion at cabinet level but there is no clear progress reported. Meanwhile, the country continues to be challenged by unexpected prolonged droughts and floods. Most water stressed areas continue to suffer the effects of drought manifested in loss of animals and crops leading to food insecurity (MWE 2016). Food production also affected. This is aggravating risks associated with the lack of strategic policy direction on drought and climate resilient food production. Recommendation(s): CSO recommendations include; Cabinet should fast track the approval process of the National Irrigation policy and its financing mechanism by allocating 30% of the WfP Output: 06 Sustainable Water for Production management systems budget (UGX 1,059,368,000 billion) to facilitate development of detailed district investment plans for water for production to for integration into one irrigation master plan by MWE and MAAIF. In addition, funding to bulk water supply should be situated in the Ministry of Water and Environment as opposed to having in in both MWE and MAAIF The failure by 16.5% of the 115 districts to absorb all the funds disbursed to them affects services to the community as the unspent funds was returned to the centre. The total amount of unspent funds worth 6,765,255,

72 2.9 Works And Transport Sector Concerns The sector is largely dominated by the transport segment. However, there was increased focus on the nonroad transport segment (works) in the FY 2018/19 budget framework paper. This in tandem with the CSBAG recommendation on the FY 2017/18 budget related to increasing focus on multi modal transport investments. The overall performance of the roads sub-sector was fair at an estimated at 69%. The overall transport and works sector budget for the FY2016/17 increased by 9.31% from UGX 3, billion in FY 2015/16 to UGX 3, billion. By the end of the FY, a total of UGX 3, billion (89.4%) had been released and UGX 2, billion (87.9%) expended. This was a good financial performance Figure 17: Intra Works and Transport sectoral percentage allocations FY 2018/19 Source: Approved Estimates FY 2018/19 (Volume 1)-MoFPED 72

73 The sectoral allocations for the FY 2018/19 amounted to UGX 4, billion making the Works and Transport sector the sector with the biggest share of the FY 2018/19 budget at 19.08%. UNRA accounted for the most percentage share (65.399%) of the works and transport sector with the projected allocations of UGX 3,130.4 billion for FY 2018/19. The fastest nominal increment is the work and transport sector is to the Works and Transport vote reflecting the increased allocations to SGR, airport development and capacity enhancement as well as increased undertakings on Bukasa and Port bell ports. Table 9: Budget Performance for FY 2016/17 Budget* Approved (UGX: Bn) Released (UGX: Bn) Spent (UGX: Bn) %of budget released %of budget spent %of release spent Sector Total 3, , , Ministry of works UNRA 2, , , Uganda Road Fund Source: Works and Transport sector report FY2016/17. *Budget figures exclude taxes and arrears Additionally, as shown in Figure above, 21.4% of the approved sector budget was not spent in part due to the under releases (89.5%). UNRA did utilize over 30% of the approved budget but partly since the releases performed at 81%. Even then UNRA only absorbed 83% of the budget released. Despite the underspending in FY 2016/17, the approved allocation of FY 2017/18 was increased to UGX 4.5 trillion (170% of the spent budget in FY 2016/17). And only 11% was spent in the 1st quarter of FY 2017/18 which is less than the pro rata 25%. Sector Issues and recommendations. a) Weak local capacity. Despite BUBU policy providing that the works contracts that are above USD12 million, 30% of the works should be subcontracted to local contractors. The SGR provides substantial Local Content of up to 40% of Civil works. However, the capacity in the sector remains weak as exhibited by the near absence of local contracts of medium to large contracts. The same applies to execution of the supervision of the works contracts. In some instances, poor contractor performance was observed due to inadequate capacity and poor mobilization of equipment necessary for road works. A case in point, the contract for Musita-Lumino-Busia/Majanji (104km) had to be terminated because it was behind schedule by over 70%, despite several warnings. The intended use of PPPs does not substitute for capacity of the public sector but instead increases the demands on the capacity of respective entities. The sector like other sectors was yet to undertake the 1st PPP projects and the pilot project. Kampala Jinja Express has been under preparation since the 2015/16. Additionally, while the Entebbe Express Highway is expected to be commissioned this year as a PPP for operation and maintenance, there is no law that supports collection of Tolls. 73

74 Recommendation(s): CSOs recommend that the draft National Roads Bill that provides toll collection for the tolls should be expedited. b) High Unit costs for infrastructure projects: The Unit costs of the Entebbe Express Highway were raised as an Audit issue in the FY 2014/15 Auditor General s report. Comparisons indicated that unit costs for Entebbe Express Way were 4 times the costs of similar projects in the region. The preliminary costs of the Kampala Jinja Express way the 77kms is expected to cost USD 800 million (over USD 10 million per Km). Recommendation(s): CSOs recommended for a detailed Unit cost audit or study in the transport sector. c) Acquisition of land for Government projects. As afore mentioned for most of the loan funds which fund the development segment of the sector budget, execution has been low and in part due to land compensation challenges. For example, the works on Kampala Northern Bypass registered a cumulative progress by end of June 2017 of 46.7% against the programmed 97.95%. The elapsed time was 98.81% based on the Original Program of Works. The major issues affecting progress were delayed site access, Design issues and Relocation of services. The same constraint was experienced on the Kampala-Entebbe express way which should have been completed by December 2017 but execution rate stood at 88% end June Kampala Northern Bypass highlighted as project to be concluded in FY 2018/19. This is not feasible as none of the six roundabouts which have sizable infrastructural and structural undertakings has been commenced on. The land acquisition process is also hampered by encroachers on wetlands and forest reserves as is the case for SGR acquisition on Right of Way. Recommendation(s): CSOs recommend Parliament to challenge Minister of works to present the Resettlement Action Plan for the projects listed in the BFP and the associated implementation plan. The budget should also demonstrate explicitly the respective compensation budgets for each project. An example is the compensation budget for the Greater Kampala Flyover Project and the oil road projects. 74

75 d) Social and environmental safeguards continue to prevail. At vote level, while UNRA has developed Environment and Social Safeguards Policy, and prepared procedures and guidelines for implementation and Management of Social risks but implementation challenges still predominate ranging from lack of enough funds to carrying out monitoring on the implementation of safe guards, lack of adequate capacity of contractors and consultants, and limited capacity of UNRA. The implementation of environmental and social safe guards also involves several sectors and, yet the intersectoral coordination is still weak. Resettlements also continued to hamper progress on a number of projects including Bukasa port. Government has as strategy to increase road coverage in hard to reach areas for examples highland. Majority of these roads have contributed to flooding through runoffs. Yet there were no measures to reduce these incenses. The rains experienced across the country have left many roads flooded e.g. northern Uganda, Kasese rendering the roads impassable. This impacts trade negatively and hence both Local and National revenue. Majority of the roads especially feeder roads in the districts and even high ways have no environmental and social safeguards. Recommendation(s): CSO recommendations include; Review designs of road construction Strict monitoring of environment impact assessment plans to ensure compliance Plant Streep of trees on the sides of roads on high lands.. As afore mentioned for most of the loan funds which fund the development segment of the sector budget, execution has been low and in part due to land compensation challenges. For example, the works on Kampala Northern Bypass registered a cumulative progress by end of June 2017 of 46.7% against the programmed 97.95% 75

76 Critical Issues from the OAG report FY 2016/17 1. Poor utilization of borrowed funds as illustrated by the Construction of 14 Bridges in Northern Uganda-IDB (LOAN NO. UG 006) According to the OAG report FY 2016/17, Government of Uganda received a loan from the Islamic Development bank (IDB) towards the construction of fourteen (14) small Bridges in the Northern and North Eastern of Uganda. The loan agreement was signed on 24th November 2008 and became effective in April After the revision of the contracts the completion date for the works was extended to 31st July The Government of Uganda was to co-fund US$ million representing 10%, while IDB would contribute US$ million. The works were clustered into 4 lots implemented under the Ministry of Works and Transport. However, it was observed that Lot-4 was cancelled and funds to a tune of UGX 6 billion were returned to the Bank due to non-performance. Therefore, construction of Ajeleck, Opot and Ojanal bridges were not undertaken. This is an indicator that the project was not properly managed. Recommendation(s): We call upon Government to conduct a forensic audit on the works done and establish the cause of non-performance of the loan, yet the country continued to pay interest on it. 2. Ghost acreage and farmers un earthed in supply of tea seedlings in Kigezi sub region, Buhwejju and Kabarole for the financial year 2013/2014 According to the OAG,it was revealed that from the total estimated acreage of the 64 farms sampled of acres in the 5 Districts, acres could not be traced. It was also noted that 4,440,507 seedlings were supplied instead of the recommended 2,369,333 seedlings resulting into excess supply of 2,071,174 seedlings valued at UGX.932 million at a market rate of UGX 450 per seedling. It was also noted that 27,000 seedlings supplied to the Zatwoshaho Joy to Bukinda seminary and Bukinda Parish, could not be traced to particular tea farmers in Kabale District. Recommendation(s): We call upon Government (IG) to move in to recover the lost funds and prosecute those found culpable. We further call for an investigation into how NAADS is handling procurement of seedlings and seeds so as devise ways of managing wastage of resources in over supplies as well purchases that are not in line with 76

77 3. Uncollected Royalties from Gold exports worth USD million The Mining Regulations, 2004 require that minerals obtained under a mineral right or under a mineral dealer s license may only be exported under an export permit granted by the Commissioner at the Directorate of Geological Surveys and Mines (DGSM) in the Ministry of Energy and mineral development. However, comparison of Gold exports recorded by the directorate with the exports figures declared to customs and excise department of the Uganda Revenue Authority revealed the following anomalies; a) The Directorate of Geological Surveys and Mines issued Gold export permits for only kilograms, compared to records from Uganda Revenue Authority, which indicated that 8,691 kilograms of Gold, valued at USD million were exported from Uganda in the financial year 2016/17; b) The Gold exports permits for an exporter were supported by export permits from the Ministry of Tourism, Trade and Industry as opposed to being issued by DGSM (MEMD), which was contrary to the Mining Act, There was equally no evidence of payment of royalties on the exported gold. The above implies that, during the financial year, the country lost revenue ranging from USD 3.39 million to USD million in royalties from the undeclared gold exports and imports depending on the applicable rates of 1% and 5% for the imported or locally mined gold respectively. Although Management admitted that the exporter does not make any declaration of gold exports to the Commissioner claiming they were offered a tax waiver by MoFPED, there was no evidence to this effect. A similar observation was reported in my report for the previous year. Recommendation(s): MoFPED should clarify to the DGSM (MEMD) about the tax waiver status of the said exporter. We further reiterate our recommendation to have URA collect ALL NTR as this will help close the inefficiencies and losses in the MDAs. In this case URA could have collected the relevant dues if the Mining Act was not pushing the collection to the DGSM which has obviously failed. 4. Nugatory Expenditure Government during the period under review paid UGX 2.74 billion as payments for delayed settlements of obligations arising from contracts for Construction Services, Court awards. This expenditure is considered wasteful as the expenditure could have been avoided had these been settled in time. We note however that the nugatory expenditure level in the FY 2016/17 was much lower than the UGX 6.9bn recorded in the FY 2015/16. Recommendation(s): The Accounting Officers for institutions that have nugatory expenditure should not be re-appointed in the next FY. 77

78 Uganda s macro-economic strategy vs the budget Until the introduction of the first National Development Plan (2010/ /15), the country s previous development strategies were clearly underpinned by the poverty eradication objective. It is indeed arguable that Uganda was a pace-setter in both prioritizing and articulating approaches that combined economic growth and poverty eradication as a key goal, implicitly recognizing that by itself growth is not enough to eradicate poverty unless it is accompanied with measures for enhancing equity and inclusion. From the 1990s when the new International Development Financing approach enforced Poverty Reduction Strategy Papers (PRSPs) 31 many developing countries began to change their development priorities. The PRSPs paved way for new development approaches by the Bretton woods institutions and other international finance organizations to tackling global poverty and Uganda, like other developing countries adopted a poverty-focused approach in its attempt to get out of a miry of decades of underdevelopment. When the National Resistance Movement (NRM), the current ruling Government, took over power in 1986 through a civil war in 1986, the economy was in a vegetative state. The NRM then embarked on an ambitious economic plan, dubbed the Economic Recovery Programme (ERP) with the support of the International Monetary Fund (IMF), the World Bank (WB) and other donors. The program emphasized infrastructural development and by 1996, the economy of Uganda had achieved a remarkable average growth of 6.5%. Despite the historical setbacks, the Government showed promise and in fact was cited by donors as a success story for other nations to learn from. By 1995 however, it was evident that ten years of rapid macroeconomic growth did not result into a matching reduction in poverty that the architects of the approach had anticipated. In 1997, therefore, the Poverty Eradication Action Plan (PEAP) was established and set out clear implementation strategies for prioritization of public expenditure to key programmes geared at reducing poverty. Under this strategy, the Government of Uganda promised to rigorously prioritize its expenditures to ensure that public expenditure maximizes its contribution to the PEAP (MoFPED, 2004). For this to be realized, three conditions regarding public expenditure on poverty eradication were set: 1. Inter-sectoral budget allocations would be shifted in favor of those sectors which can make the strongest contributions to tackling the core challenges of the PEAP 2. Intra-sectoral budget allocations would be shifted in favor of projects and programmes which most clearly contribute to poverty eradication in a cost effective manner. 3. Efficiency would be improved in all areas of public expenditure, so that better value for money, in terms of the quality and quantity of services, can be achieved with the scarce resources available to Government. Government committed to avoid duplication and reduce costs, thereby freeing up resources for PEAP priority expenditures. 31 Poverty Reduction Strategy Papers (PRSPs) describe a country s macroeconomic, structural, and social policies and programs to promote growth and reduce poverty, as well as associated external financing needs. PRSPs are prepared by Government s through a participatory process that involves civil society and development partners, including the World Bank and the International Monetary Fund (IMF). Poverty Reduction Strategy Papersprovide the basis for World Bank and IMF assistance as well as debt relief under the HIPC (Heavily Indebted Poor Countries) Initiative. PRSPs should be country-driven, comprehensive, partnership-oriented, and participatory. A country only needs to write a PRSP every three years; however, changes can be made to the content of a PRSP using an Annual Progress Report. 78

79 Despite the slow pace of the recovery, Government s ambitious Macroeconomic policies considerably reduced poverty levels since 1986 cutting the absolute numbers into half, in a period of nearly 20 years. The National Development Plan The PEAP was replaced by the National Development Plan (NDP) 2010/ /15, a five-year blueprint for the new focus of development priorities on socio-economic transformation unlike the PEAP that emphasized poverty eradication and therefore focused on social services. The NDP is part of a series of plans that are meant to build on the PEAP and catapult the country into a middle income status by Now on its second rolling plan, The NDP has an implementation strategy that is meant to enhance the operationalization of the plan and determine how the objectives will be met. While the strategy is robust on the institutional and structural systems to implement the objectives, it is, at best inadequate on the resource generation and allocation strategies and what will determine those decisions. The strategy stipulates that Project selection, design and implementation will take into full account regional balancing, affirmative action, environmental sustainability and development of the rural economy. FY 2018/19 is the fourth and final year of the second NDP. The progress the NDPII has made towards achieving its objectives is mixed. This is in part due to fragrance violence of the NDP principles and those supporting its legal and institutional frameworks such as the Public Finance Management act, This has led to stagnation The poor, as an absolute function of population growth and other dynamics in modern Uganda have actually increased in number, according to UBOS s UNHS 2016/2017 from 19% to 21.7% This means that governance issues are largely the reasons why we cannot meet our development targets, even though the size of the resource envelop is also important factor. Uganda is still ranked among the world s poorest countries, occupying the un-coveted position of 143 rd out of 169 countries. It was among the 48 poorest countries of 2012 along with Haiti 32. MTEF and the Budget Uganda is cited as the first nation in Africa to formulate Medium Term Expenditure Framework without conditionalities. The purpose was to improve allocative efficiency of budget resources. Uganda benefitted from the debt Forgiveness that was granted under HIPC, on condition that this money was ring fenced for PAF and since 1997 we have been implementing poverty alleviation programs. We had PEAP 1 and 2, NDPI, NDPII and planning to roll out NDPIII in one years time from now. These were well thought framework structures that we thought would transform Uganda from subsistence to modern society in It s also on record that the resources available for the budget in our country are on an increase. So, why are we not achieving the set goals? Lack of ownership of the initiatives we come up with, seen in poor planning/coordination. 32 UN s Economic and Social Council report evaluates countries based on average household income, the country s Gross National Income, Human health, Nutrition, average level of school achieved and literacy rates (called Human Assets); and economic health and vulnerability. For a country to be added to the LDC list, it must have GNI of less than $992 per capita. To graduate off the list, GNI must rise above $1,190 per capita 79

80 Initially budgeting was based on input vs output framework which did not yield the intended results, so we shifted to outcome based planning which we discovered was rather data intensive. With this outcome-based framework sectors started forging outcome-based indicators due to insufficient baseline statistics upon which to base their studies. Unfortunately, the Parliament approved these outcome-based budgets but these outcomes were not reliable. The Parliament is denied information regarding the key inputs/outputs. To curb this, we came up with the reforms in financial management, giving birth to the Public Financial Management Act (PFMA). Even with the PFMA, 2015, gaps still exist. There s need to monitor the ongoing excessive wastages and unsustainable borrowing. Uganda needs value for money through budget efficiency. 3.0 Conclusion With a resource envelope of UGX 32.7 trillion for the FY 2018/19 and a projected GDP growth target of 5.5%, there should be efficiency in utilization of funds allocated to various MDAs. This among other pre-requisites like budget transparency and accountability are necessary pre-cursors for the Uganda economy to achieve its growth and development aspirations. These will subsequently uplift majority of the citizenry from the claws of poverty hence improved quality of life through quality and timely service delivery All spent resources must be accounted for.. because every shilling counts! 80

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82 C S B A G Budgeting for equity CIVIL SOCIETY BUDGET ADVOCACY GROUP P.O. BOX 660, Ntinda Plot 11, Vubyabirenge Close, Ntinda Tel: / csbag@csbag.org Web: Face book: CSBAGUGANDA 82