The excitement of the budget reading ended a long time ago. Last week by the time finance minister Mathia Kasaija read the budget, we knew all there was to know about the 2024/25 budget.
The budget making process had been going on for nine months
and was passed at the end of May. The budget reading to a large extent, is a
constitutional requirement now.
But even before that, with the liberalization of the economy
and privatization of state owned enterprises, government has no direct control
on prices.
"A whole generation of Ugandans do not know the excitement of
waiting for the finance minister to pronounce on the price of milk, petrol and
sugar. It is now generally accepted that the finance minister has no business
setting commodity prices. Which is as it should be...
Believe it or not, by liberalizing the market and privatizing
government companies the economy has become more efficient in generating wealth
and some may argue, distributing it as well. But that is more testament to government
inefficiency down the years, because the market is not the best distributor of
wealth.
While official figures show otherwise -- Kasaija reported the economy grew six
percent, there is a general feeling the economy is not working for the man on
the street.
Kasaija left some clues as to why this is so; debt repayment
as ratio of revenue collections will jump to 40 percent from 33 percent, way
above the acceptable threshold of 20 percent. This means more and more money is
going to paying off debt and not to building infrastructure and social
services. The minister pointed out though, that most of the debt has gone to infrastructure
development which is underpinning our current growth.
Looking at roads alone there is not much to write home about. Ten years ago then finance minister Maria Kiwanuka reported that the country had 5,224km of paved roads, last Thursday her successor reported we now have 6,338 km of paved road. In ten years we have added 1,114km or about 100 km a year during the period. We know of course that the issues around procuring the projects and compensation slow down these projects, but how does the problem persist decade after decade?
We have all seen it in the suburbs, how there is an
explosion of economic activity once some tarmac is laid down. It therefore
follows that a faster road construction, to at least keep up with population growth,
might just ease our economic pains. As it is now our stock of paved roads are
growing at barely two percent a year compared to the population growth rate of
about three percent.
Interestingly, Kiwanuka said there were 1700 km of road in
the works, are some of those roads only just being done now?
Minister Kasaija also said last week, the government has
earmarked sh200b for paying arrears, a pittance when seen against a total stock
of nearly sh8trillion. In mathematical terms, if the government owes you a
million shillings it will repay you sh20,000 in the next financial year. So there
are many businesses, maybe hundreds of businesses, which will fold or will
endure unbearable hardship as the wait in anxious hope for government to repay
them.
The pain of course is shared by their employees and
suppliers and hence the general feeling that this economy is not working for us.
For the man of the street, it is hard to reconcile his
hardship with the economic progress of the last ten years.
"Ten years ago, Kiwanuka was making do with a sh15trillion budget or about half what we expect Uganda Revenue Authority (URA) to collect in taxes in the next financial year. In 2014 the size of the economy was about $32b compared to $53b now. It is safe to say we are well into middle income status now – per capita GDP over $1,100 but in 2014 per capita GDP was about $897...
We also feel a bit hard pressed because they are many more
demands on our shilling these days than was the case a decade ago. Mobile phone
users were about 20 million in 2014, a number that is what MTN reports as its
subscriber base today.
But beyond voice calls we are using data at a prodigious
rate. I was shocked to learn a few weeks ago that more than half of MTN data
usage last year was on the short video app Tiktok! We no longer walk, why when
there is a boda boda within spitting distance of anywhere. And of course our
night life has continued to flourish as every suburb now has a half decent bar
or two, within walking distance of every home.
So while there are issues of macro-economic inefficiency and
government priorities, our own spending habits are making us feel harder
pressed, even if the statistics show that the Uganda economy is on a tear.
