Connect with us

The Presidency

Museveni starts 4th year of his 5th term: How steady is the promised “Steady Progress”?

Published

on

THE OLD MAN WITH A BIG HAT: How much of the promised steady progress has come to pass?

Today, President Yoweri Kaguta Museveni, starts his fourth year of his fifth term as a democratically elected president, following a 60.62% win in the 18th February 2016 poll.

Mr Museveni and his ruling National Resistance Movement (NRM) campaigned on the promise to maintain, what they said was “steady progress” and said they would take “Uganda to modernity through jobs creation and inclusive development.”

The theme for the 2016 manifesto was built on earlier campaign promises- the 1996 manifesto was about “Tackling the tasks ahead” while in 2001 it was about “Consolidating the achievements.” In 2006 NRM promised “Prosperity for all” and in 2011, the key campaign promise was: “Prosperity for all: Better Service Delivery and Job-Creation.”  

President Museveni launches Nile Batteries Limited factory in Eastern Uganda. Uganda’s exports have grown significantly- although imports have grown even faster, impacting on the local currency

The 2016 NRM manifesto was aligned to the country’s larger Vision 2040 dream of taking “Uganda to a competitive middle income country from a predominantly low-income society.”

President Museveni campaigned and won based on this promises to strengthen security, good governance and democracy, consolidating growth, employment and macro-economic stability; agriculture, industry, tourism and human capital development. He also said, he would focus on health, infrastructure development for competitiveness, trade, sustainable harnessing of natural resources, public and private sector institutional development, and international and regional cooperation.  

How much steady progress thus far?

However, a few months into his presidency, a Uganda National Household Survey (UNHS) by the Uganda Bureau of Statistics would challenge the “steady progress” claim.  

Despite having increased Uganda’s budgetary resources by 136.3% from UGX11.6 trillion in 2012/13 to UGX26.4 trillion in 2016/17, the number of poor people in Uganda had instead increased by 51% from 6.7 million in 2012/13 to 10.1 million people in 2016/17!

The Ugandan shilling remains under pressure

Clearly, his challenge was well laid out.

Then in October 2018, Finance Minister, Matia Kasaija confirmed the inevitable, that Uganda wouldn’t achieve the much sung-about middle income status- for reasons he declined to divulge in full.

But nonetheless, middle income or no middle income, it hasn’t been all gloom. There’s been lots of hits and misses in nearly an equal measure.

The good  

GDP GROWTH RATE: Uganda rebounded from a bad 2016 when GDP grew by a mere 2.5% and in 2017 made it to 5% and 2018, according to IMF figures, GDP growth rate was 6.2%. IMF predicts that Uganda will in 2019 grow at 6.3% and main 6+ growth till 2021 and beyond.

INTEREST RATES & PRIVATE SECTOR CREDIT: Private sector credit growth is the engine of every private sector-led economy and as such interest rates are a crucial lever.

Between May 2016 and today, Bank of Uganda has collapsed the Central Bank Rate (CBR)- a key determinant of interest rates, by 37.5%- from 16% in May 2016 to an all-time low of 9% in February 2018 and has since been ping-ponging it between 9% and 10%.

The Central Bank has also shaved interest rates on the 91-day and 364-day Treasury bill rates by 34.2 and 28.8 percentage points respectively from 14.8% to 9.72% and 16.2% to 11.5%.                                                                                                                                     

A family manually picks red chillies from their farm in Soroti. Much as private sector credit has grown, agriculture is still less favoured, thus having an impact on overall production eand household earnings. Agricultural households reported the highest levels of poverty in 2016/17

As a result average lending rates have fallen by 21.5 percentage points across the period from 24.5% in May 2016 to 19.22% in March 2019, according to available figures from Bank of Uganda.

Falling interest rates, it appears have stimulated lending- during these three years, private sector credit grew 35.26% from UGX11.75 trillion to UGX15.27 trillion.                                                                                       

Forex denominated lending rates have also eased by 20 percentage points from 9.56% in May 2016 to 7.65% in March 2019.                 

INFLATION & EXCHANGE RATES: According to a report from BoU, during the period, both headline and core inflation have reduced from 5.2% and 6.8% in May 2016 to 3.5% and 4.8% respectively as of April 2019.

The Ugandan shilling however depreciated by 11.4% from UGX3,364.5 per dollar to currently UGX3,737.

PRIVATE SECTOR CONFIDENCE IN THE ECONOMY: It is therefore not surprising that business confidence index (Business Tendency Indicators as measured by BoU) which had in 2015, reached its lowest ever (53.1), kept rising, from 55.2% in 2016 and closed 2018 at 57.1.

In April 2019 it stood at 58.6%.

This is supported by the Stanbic Bank’s Purchasing Manager’s Index (PMI) which reported that although the PMI index for March 2019 dipped to 51.7, down from 54.4 in February, there a twenty-six month successive monthly improvement in business conditions, since the index was launched in June 2016. 

The survey, sponsored by Stanbic Bank and produced by IHS Markit, covers the agriculture, industry, construction, wholesale & retail and service sectors. The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI™) which provides an early indication of operating conditions in Uganda.

Hoima Substation, Hoima-Nkenda Transmission Line: President Museveni’s government has put a lot of major focus on electricity and plans to connect 300,000 customers annually, with a goal to achieve 60% access to electricity by 2027

The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

GENERATION & ACCESS TO ELECTRICITY: Electricity is one of the biggest drivers of economic growth as well as improved standards of living. Early this year, Uganda switched on, the much awaited 183.2 MW Isimba Dam increasing Uganda’s installed power generation capacity from 1, 014 megawatts (MW) to 1, 197MW.  

As a result of increased generation capacity over the years, Umeme, the nation’s power distributor has been able to increase the number of customers connected to the grid by 35.8% from 950,000 customers in 2016 to 1,292,000. With Karuma Dam’s expected 600MW coming onto the grid soon, government has announced plans to connect 300,000 customers every year so as to increase access to electricity to 60% by 2027.  

EXPORTS & IMPORTS: During the 3 years Uganda’s export earnings grew by 24.7% from USD2.9 trillion to USD3.6 billion. However, import expenditures grew even wider- at 35% from USD 4.5 billion to USD6.1 billion widening the trade imbalance by 53.9 percent to USD2.457 billion- the highest in 7 years, since 2011.

What needs to be fixed?

On a sombre note though all the above was achieved against heavy public borrowing. Over the 3 years, the public debt has expanded by 71.4% from UGX29.9 trillion as at June 2016 to UGX41.5 trillion as at June 2018. UGX29.9 trillion. In a recent report by the Auditor General, Mr John Muwanga said that if the government is to service the loans as projected in the next financial year 2019/2020, it would require more than 65 per cent of the total revenue collections which is over and above the sustainability levels of 40 per cent, according to The Observer newspaper.

“Although Uganda’s debt to GDP ratio of 41 per cent is still below the International Monetary Fund (IMF) risky threshold of 50 per cent and compares well with other East African countries, it is unfavorable when debt payment is compared to national revenue collected which is the highest in the region at 54 percent”, said the AG in his summary report.

Increased debt repayments have serious implications especially as they begin competing with the other national priorities. According to the Budget Framework Paper, whereas the budget has increased by 4.9 percent from UGX32.7 trillion shillings to UGX34.3 trillion shillings, a lion’s share of the resources in the envelop are for debt repayment, interest payment and non-resource funds for domestic debt refinancing with interest payment allocated UGX2.9 trillion which the second largest share standing at 11.4 percent of the entire budget.

A smiling Museveni: Will he have the last laugh when his 5th term ends in 2021

Despite massive efforts that appear to have been put into fighting corruption, it still remains a big vice that is affecting the entire country.

Corruption, according to the Business executives surveyed for the World Economic Forum (WEF) Executive Opinions Survey 2017-18 still remains the biggest hindrance for doing business in Uganda with a score of 14.7% after taxes at 16.4%. 

Similarly, the March 2016 Public Procurement and Disposal of Public Assets (PPDA) 3rd Integrity Survey Report, showed that  the Corruption Perception Index in public procurement was at all-time high of 71.8% and that bidder confidence stood at an all-time low of 22%; below the 30% baseline established in 2013/14 and obviously way below the 50% target for 2014/15.

Because of such high corruption rates, according to the Transparency International Corruption Perceptions Index (CPI), between 2010 and 2016, Uganda’s global rankings have degenerated from 127th position in 2010 to 151st in 2016.

The need to fix corruption can’t be overstressed more than this.

The problems to be fixed are many, but the other major issue that the NRM government needs to pay attention to is budget discipline. For starters ministry of finance needs to start aligning its resource allocation to national priorities and then government needs to proceed to ensure and enforce performance.

For example the Annual Budget for FY2016/17 is was rated at 58.8% in compliance to the National Development Plan (NDPII) compared to 68.2% in FY 2015/16. According to the parliament report on the 2018/19 budget, alignment to NDP II was just 42%.

This simply means that we are funding the wrong priorities- something that must be fixed if we are to get out of poverty, the way the NRM government has promised us to.

The Presidency

Presidential Committee recommends urgent and comprehensive sweeping Central Bank reforms

A committee appointed by President Yoweri Museveni to study several complaints made to the Inspectorate of Government and Parliament about Bank of Uganda, has recommended “urgent and comprehensive review” of what it believes is an archaic “legal regime governing the Bank of Uganda.” “The Bank of Uganda Act Cap 51 was last amended in 1993, […]

This is Restricted Premium Content. Please Subscribe to Access

or, are you an existing Member?

Published

on

A committee appointed by President Yoweri Museveni to study several complaints made to the Inspectorate of Government and Parliament about Bank of Uganda, has recommended “urgent and comprehensive review” of what it believes is an archaic “legal regime governing the Bank of Uganda.” “The Bank of Uganda Act Cap 51 was last amended in 1993, […]

This is Restricted Premium Content. Please Subscribe to Access

or, are you an existing Member?

Continue Reading

The Presidency

Gov’t refutes missing money allegations at BoU but confirms currency related scandal

Published

on

Statehouse's anti-graft unit has confirmed they are investigating BoU over a yet to be specified crime. If confirmed, this will be a new low in the history of the bank

Government has refuted claims that any money is missing at Bank of Uganda but confirmed an investigation is going on to establish how illegitimate cargo, found itself on a chattered plane carrying new BoU banknotes on April 27th.

On June 14th, nearly 24 hours after it was first reported by online media houses, government spokesperson and Executive Director of the Uganda Media Centre, Ofwono Opondo P’Odel told  a hastily organised press conference that while there was no money missing.

“No arrests have been made, it’s just investigations of about six to eight Bank of Uganda officials in procurement, currency and legal for failing to do due diligence. Others are customs officials from the airport,” the Uganda Media Centre official twitter channel posted. 

He however did not explain why it took nearly 50 days, for government to come out openly about the scandal.

Ofwono Opondo said that following the discovery on arrival in Uganda, that the cargo plane, belonging to a yet unnamed carrier, was carrying 5 more cargo palettes, BoU officials reported to the Governor, who then called in the Statehouse anti-graft Unit to investigate.

“”Governor of Bank of Uganda Prof Tumusiime Mutebile then wrote a letter to the Anti-Corruption Unit at Statehouse to conduct a special expeditious investigation,” Ofwono said.

Earlier statements by both the Statehouse anti-corruption Unit and Bank of Uganda had confirmed an investigation was going on, but declined to specify the nature of the crime and the extent.

Both a letter to the Anti-Corruption Unit at Statehouse to conduct a special expeditious investigation,” Ofwono said.

Lt. Col. Edith Nakalema’s State House Anti-Corruption Unit called it a “special investigation on a matter pertaining to the Bank’s procurement and supply chain activities” while a statement by Bank of Uganda Governor, called it “an anomaly in the inventory of the expected consignment.”

Mutebile in his statement said that following the anomaly, he “requested the Anti-Corruption Unit (ACU) of State House to investigate the matter.”

“The ACU has started investigations and Bank of Uganda is fully co-operating with the process,” Mutebile added.

Ofwono Opondo said that preliminary investigations showed that the extra 5 palettes belonged to 13 different entities that among others included the United Nations, USAID and city businessman Charles Mbiire.  

Cash heist?

When the story first leaked to the media, unconfirmed reports on several online media platforms said, Lt.Col Edith Nakalema’s unit raided the central bank this week and arrested five officials in the currency department over what is said to be unauthorised printing of vast sums of currency- said to be in excess of UGX90 billion, for private benefit.

It was also alleged that the money entered into the country via Entebbe International Airport, but never made it to the central bank’s strong rooms.

BoU’s Director of Communications, a one, Charity Mugumya was unreachable.

This reporter spoke to BoU Tumubweine Twinemanzi, the Executive Director, Bank Supervision and Mrs. Susan Wasagali Kanyemibwa, the Bank Secretary (Executive Director), who both declined to talk about the matter and referred this reporter back to the central bank’s spokesperson.

An answered questions remain

Even though government has refuted claims that any money is missing, it is unclear why it took more than a month to come out about the scandal.

It also remains to be understood why BoU senior officials initially denied knowledge of the scandal.

We will over the coming days unveil more details about the scandal.

Continue Reading

The Presidency

BUDGET: Kasaija to spend UGX982, 187 on every Ugandan in 2019/20

Published

on

Next year, in 2019/20, the government of Uganda plans to spend 23.8% more money than it has spent, this year financial year. According to a national budget read yesterday, by Finance, Planning and Economic Development (MoFPED) minister, Hon Matia Kasaija, Uganda will in 2019/20 spend UGX40.5 trillion, up from UGX32.7 trillion in 2018/19.

Given Uganda Bureau of Statistics (UBOS) population projections of 40 million and 41.2 million people for 2019 and 2020 respectively, that is an increase of 20.2% from UGX817,433 to UGX982,187.  

But where will he get this money from?

According to Kasaija, out of the UGX40.5 trillion, UGX20.9 trillion (51.6%) will be tax and non-tax revenue raised locally. As a result Uganda Revenue Authority (URA) must collect 25% more revenue- their targets have been raised from UGX16.4 trillion in 2018/19 to UGX20.45 trillion next financial year.

Hoima Substation, Hoima-Nkenda Transmission Line- UGXUGX3 trillion has been allocated to the energy and mineral development sector, UGX562 billion more than the UGX2.43 trillion allocated in 2018/19

KAsaija also expects to borrow UGX2.8 trillion (7%) from local financial markets. The finance minister also plans to borrow from external sources, as well as receive project support from Uganda’s foreign development partners, altogether, UGX9.4 trillion (15.9%).

He also expects general budget support of up to UGX675.2 billion (1.7%) and aid of up to UGX201.1 billion. 

Because of the heavy debt burden, domestic debt re-financing will account for UGX6.5 trillion or 15.9% of the resource envelope- this is not actual money though.

According to Kasaija, the stock of Government debt rose to UGX42.8 trillion (USD11.5 billion) as at end-December 2018, up by 15.1% from UGX37.2 billion (USD10.2 billion). Of this external debt constitutes is 66.5%- UGX28.4 trillion or USD7.7 billion.

How will the money be spent?

Thanks to a burgeoning debt and the attendant need to restructure, Uganda will spend UGX10.6 trillion on debt repayment.

Kasaija however insists that our debt, although high, it is still sustainable- at 41.8% of GDP in nominal terms and 31.7% of GDP in present value terms, as of December 2018. This is well below the threshold of 50% Debt to GDP ratio contained in the Charter for Fiscal Responsibility and the East African Community (EAC).

Part of the newly completed Soroti-Akisim-Moroto road in Karamoja. Government has allocated government has provided UGX1.67 trillion more money for roads, increasing by 35% the planned expenditure on roads to UGX6.46 trillion

Works and transport will take UGX6.46 trillion, while security will account for UGX3.62 trillion and education and sports UGX3.37 trillion. The government will spend UGX3.14 trillion on interest payments, UGX3 trillion on the energy and minerals sector, UGX2.62 trillion to health and UGX1.73 trillion to the Justice/Law and order sectors.

The accountability sector will be apportioned UGX1.54 trillion while local governments will get UGX1.25 trillion. The agriculture, animal industry and fisheries as well as water and environment sectors will each get UGX1.1 trillion. Others are: public administration (UGX979.1 billion), Public Sector Management (UGX857 billion), legislature (UGX687.8 billion) and Lands, Housing and Urban Development at UGX227 billion. Trade and industry will get UGX202.8 billion, social development UGX219.2billion, tourism will get UGX193.7 billion and Science, Technology and Innovation, UGX186 billion.

Continue Reading

Ad3

Ad1

Ad2

Now Trending

error: Content is protected !!