budget committee report on nbfp fy 2014-15

5/26/2018 Budget Committee Report on NBFP FY 2014-15

1/136

1

THE PARLIAMENT OF UGANDA

RECOMMENDATIONS OF THE

PARLIAMENTARY BUDGET COMMITTEE

ON THE

THE MEDIUM TERM MACROECONOMIC PLAN AND PROGRAMMES FOR SOCIAL AND

ECONOMIC DEVELOPMENT

FOR FISCAL YEARS 2014/15 2018/19

AND THE

INDICATIVE PRELIMINARY REVENUE AND EXPENDITURE FRAMEWORK OF THE

GOVERNMENT FOR FY 2014/15 2018/19

May 2014


2/136

2

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................................11

PART 1: MACROECONOMIC SECTION ................................................................................................12

GENERAL OBSERVATIONS ON THE BUDGET FOR FY 2014/15 .................................................... 12

MACROECONOMIC PROJECTIONS FOR FY 2014/15 AND THE MEDIUM TERM ......................... 18

Observations on the Macroeconomic Assumptions .........................................................................18

Resource Envelope for FY 2014/15 .................................................................................................19

Fiscal/Budget Strategy for FY 2014/15 ............................................................................................20

PART II: SECTOR POLICY OBSERVATIONS AND RECOMMENDATIONS ........................................22

EAST AFRICAN COMMUNITY AFFAIRS (EACA) ...............................................................................24MINISTRY OF INFORMATION COMMUNICATION TECHNOLOGY .................................................27

EDUCATION AND SPORTS SECTOR ................................................................................................32

WORKS & TRANSPORT & LANDS, HOUSING & UBARN DEVELOPMENT SECTORS ..................39

WORKS & TRANSPORT SECTOR .................................................................................................39

LANDS, HOUSING & URBAN DEVELOPMENT SECTOR .............................................................45

DEFENCE & INTERNAL AFFAIRS SECTOR ...................................................................................... 50

VOTE 144 UGANDA POLICE ..........................................................................................................50

MINISTRY OF DEFENCE ................................................................................................................57

MINISTRY OF INTERNAL AFFAIRS HEADQUARTERS ................................................................ 58

VOTE 145: UGANDA PRISONS SERVICE ..................................................................................... 62

MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT .......................................63

NATIONAL PLANNING ATHUORITY (NPA) ................................................................................... 67

OFFICE OF THE AUDITOR GENERAL (OAG) ...............................................................................69

UGANDA REVENUE ATHUORITY .................................................................................................. 69

VOTE 143: UGANDA BUREAU OF STATISTICS (UBOS) ............................................................. 70

VOTE 153: PUBLIC PROCUREMENT & DISPOSAL OF PUBLIC ASSETS AUTHORITY (PPDA)

..........................................................................................................................................................71

HEALTH SECTOR ................................................................................................................................72

MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES ..............................................................79

MINISTRY OF TOURISM, WILDLIFE AND ANTIQUITIE ....................................................................81

AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES SECTOR ....................................................84


3/136

3

SOCIAL DEVELOPMENT SECTOR .................................................................................................... 92

MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT ............................................. 92

AUTONOMOUS BODIES UNDER THE MGLSD ............................................................................95

Vote 122: Kampala Capital City Authority (KCCA) ....................................................................... 103

JUSTICE LAW AND ORDER SECTOR ............................................................................................ 106

Vote 007: Ministry of Justice & Constitutional Affairs (MJCA) ...................................................... 106

The Electoral Commission (EC) .................................................................................................... 109

JUDICIARY .................................................................................................................................... 112

PARLIAMENTARY COMMISSION (PC) ....................................................................................... 116

NATURAL RESOURCES SECTOR .................................................................................................. 117MINISTRY OF WATER & ENVIRONMENT .................................................................................. 121

MINISTRY OF PUBLCI SERVICE ..................................................................................................... 127

VOTE 501-778: LOCAL GOVERNMENTs (LGs) .......................................................................... 132

MINISTRY OF FOREIGN AFFAIRS .................................................................................................. 133


4/136

4

Abbreviations and Acronyms

ACME Area Cooperative Marketing Enterprises

ACP AIDS Control Programme

ACT Anti Corruption Threshold

ADB African Development Bank

AIDS Acquired Immune Deficiency Syndrome

APRM African Peer Review Mechanism

ART Anti-retroviral Therapy

ARVs Antiretroviral Drugs

AU African Union

BFP Budget Framework Paper

BoU Bank of Uganda

BPO Business Process Outsourcing

BTVET Business, Technical and Vocational Education and Training

CAA Civil Aviation Authority

CADER Centre for Arbitration and Dispute Resolution

CAO Chief Administrative OfficerCDC Centre for Disease Control

CDO Cotton Development Organisation

CICS Competitiveness & Investment Climate Secretariat

CID Criminal Investigations Directorate

CIS Community Information Systems

COMESA Common Markets for Eastern and Southern Africa

DDA Diary Development Authority

DFID Department for International Development

DHO District Health Officer

DHS Demographic Household Surveys

DPP Directorate of Public Prosecutions

DRDCs Deputy Resident District Commissioners

DSC District Service Commission

DUCAR District Urban Community Access Roads


5/136

5

EA Exploration Area

EAC East African Community

EADB East African Development Bank

EAPC East African Petroleum Conference

EC Electoral Commission

EDF European Development Fund

EFT Electronic Funds Transfer

EOC Equal Opportunities Commission

ESC Education Service Commission

ESO External Security OrganisationEU European Union

EU-ACP European Union - African Caribbean Pacific

FAL Functional Adult Literacy

FAO Food and Agricultural Organisation

FBO Faith Based Organisation

FGM Female Genital Mutilation

FINMAP Financial Management Accountability Programme

FY Financial Year

GAVI Global Alliance for vaccines and Immunisation

GBV Gender Based Violence

GDP Gross Domestic Product

GoU Government of Uganda

HIPIC Highly Indebted Poor Countries

HIV/AIDS Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome

HMIS Health Management Information System

HSC Health Service Commission

HSSP Health Sector Strategic Plan

IAEA International Atomic Energy Agency

IAF Inter Agency Forum

ICC International Criminal Court

ICESCR International Convention on the Economic, Social and Cultural Rights


6/136

6

ICJ International Court of Justice

ICT Information and Communication Technology

IDA International Development Association

IDB Islamic Development Bank

IDP Internally Displaced Persons

IDPC Internally Displaced Peoples' Camp

IEC Information Education and Communication

IFMS Integrated Financial Management System

IGAD Inter-Government Authority on Development

IGAs Income Generating ActivitiesIGG Inspector General of Government

ILO International Labour Organisation

IPP Independent Power Producers

IPPAs Investment Promotion Protection Agreements

IPPS Integrated Personnel and Payroll System

IPSAS International Public Sector Accounting Standards

IREMP Indicative Rural Electrification Master Plan

ISO Internal Security Organisation

IT Information Technology

ITeS Information Technology enabled Services

JLOS Justice Law and Order Sector

JPC Joint Permanent Commission

JRM Joint Review Missions

JSC Judicial Service Commission

KIBP Kampala Industrial Business Park

KIDDP Karamoja Disarmament and Development Programme

LAN Local Area Network

LCs Local Councils

LG Local Government

LGAC Local Government Accounts Committee

LGFC Local Government Finance Commission


7/136

7

MAAIF Ministry of Agriculture Animal Industry and Fisheries

MDAs Ministries, Departments and Agencies

MDGs Millennium Development Goals

MEMD Ministry of Energy and Mineral Development

MFIs Microfinance Institutions

MIA Ministry of Internal Affairs

MLHUD Ministry of Lands, Housing and Urban Development

MOD Ministry of Defence

MoEACA Ministry of East African Community Affairs

MoES Ministry of Education and SportsMoFPED Ministry of Finance, Planning & Economic Development

MoGLSD Ministry of Gender Labour and Social Development

MoH Ministry of Health

MoICT Ministry of Information and Communications Technology

MoJCA Ministry of Justice and Constitutional Affairs

MoLG Ministry of Local Government

MOPS Ministry of Public Service

MoU Memorandum of Understanding

MoWE Ministry of Water and Environment

MoWT Ministry of Works and Transport

MP/GKMA Master Plan for Greater Kampala Metropolitan Area

MPS Ministerial Policy Statement

MTEF Medium Term Expenditure Framework

MTTI Ministry of Tourism, Trade and Industry

MUBS Makerere University Business School

MUST Mbarara University of Science and Technology

NA Not Available

NAADS National Agricultural Advisory Services

NACS National Anti Corruption Strategy

NAD Norwegian Association of the Disabled

NAGRC&DB National Animal Genetic Resources Centre & Data Bank


8/136

8

NALSIP National Adult Literacy Strategic Investment Plan

NAM Non Aligned Movement

NAMERA North Africa, Middle East and the Rest of Africa

NAPE National Assessment of Educational Progress

NBFP National Budget Framework Paper

NCC National Council for Children

NCD Non Communicable Diseases

NCDC National Curriculum Development Centre

NCHE National Council for Higher Education

NCI Nation Construction IndustryNCS National Council of Sports

NCSP National Community Service Programme

NDP National Development Plan

NEMA National Environmental Management Authority

NEPAD New Partnership for African Development

NEU Nuclear Energy Unit

NGOs Non-Governmental Organisations

NHIS National Health Insurance Scheme

NITA-U National Information Technology Authority- Uganda

NLGA National Local Governments Authority

NLUP National Land Use Policy

NMS National Medical Stores

NPA National Planning Authority

NPART Non Performing Assets Recovery Tribunal

NTR Non Tax Revenue

NWSC National Water and Sewerage Corporation

OAG Office of the Auditor General

OPM Office of the Prime Minister

OVC Orphans and other Vulnerable Children

PAeN Pan African e-Network

PAF Poverty Action Fund


9/136

9

PFA Prosperity for All

PFAA Public Finance & Accountability Act

PMA Plan for the Modernisation of Agriculture

PNFP Private Not for Profit

PPDA Public Procurement and Disposal of Assets Authority

PPP Public Private Partnership

PRDP Peace Recovery and Development Plan

PS Permanent Secretary

PSC Public Service Commission

PWD Persons with DisabilityRDCs Resident District Commissioners

ROM Result Oriented Management

RSFP Rural Financial Services Programme

SACCOs Savings and Credit Cooperative Organisations

SADC Southern Africa Development Cooperation

SALW Small Arms Light Weapons

SMEs Small and Medium sized Enterprises

SNE Special Needs Education

SRA SACCO Regulatory Agency

STI Science & Technology Initiative

UBC Uganda Broadcasting Cooperation

UBOS Uganda Bureau of Statistics

UBTS Uganda Blood Transfusion Services

UCC Uganda Communications Commission

UCDA Uganda Coffee Development Authority

UCE Uganda Commodity Exchange

UCICO Uganda Construction Industry Commission

UCSCU Uganda Cooperative Saving & Credit Unions

UEPB Uganda Export Promotion Board

UGX Uganda shillings

UHRC Uganda Human Rights Commission


10/136

10

UIA Uganda Investment Authority

UICT Uganda Institute of Information and Communications Technology

UIRI Uganda Industrial Research Institute

ULC Uganda Lands Commission

ULGA Uganda Local Government Association

ULRC Uganda Law Reform Commission

UMI Uganda Management Institute

UN United Nations

UNBS Uganda National Bureau of Standards

UNCRL Uganda National Chemotherapeutics Research LaboratoryUNDP United Nations Development Programme

UNEB Uganda National Examination Board

UNICEF United Nations Childrens Fund

UNRA Uganda National Roads Authority

UPDF Uganda People's Defence Forces

UPE Universal Primary Education

UPF Uganda Police Force

UPS Uganda Prisons Service

URA Uganda Revenue Authority

URC Uganda Railways Cooperation

UREA Uganda Rural Electrification Agency

URSB Uganda Registration Services Bureau

USAID United States Agency for International Development

USD United States Dollar

USE Universal Secondary Education

UTB Uganda Tourism Board

UWEC Uganda Wildlife Education Centre

VAT Value Added Tax

VBDC Vector Borne Diseases Control

VHT Village Health Teams


11/136

11

INTRODUCTION

1. Section 7 (3) of the Budget Act, 2001, obligates the Budget Committee to prepare and submit areport on the national budget estimates and recommendations to the Speaker who shall in turn

send the report to H.E the President. Accordingly, Parliament has considered the National

Budget Framework Paper, comprising the Medium Term Macroeconomic Plan, Programmes for

Social and Economic Development and The Indicative Budget Framework for the next fiscal year

presented to Parliament in accordance with Section 4 (1) and (2) of the Budget Act 2001.

2.Further to the above, Section 11 of the Budget Act also obligates Parliament to analyzeprogrammes and policy issues that affect the national budget and the economy and where

necessary, recommend alternative approaches to the Government. Parliament through the

various sectoral Committees has interrogated the Policy options and Programmes presented by

the different Ministries, Departments and Agencies with a view of ascertaining their compliance

of prudent budgeting

3. The Budget Committee has examined the Budget Framework proposals of the Government andmade proposals for effective budgetary allocations and implementation. These are expected to

guide H.E the President in the preparation and subsequent presentation of the budget proposal

in June 2013.The Budget Committee also considered the reports and recommendations of

Sectoral Committees on the Governments proposals.

4. This report is presented in two main parts. These are the Macroeconomic section and theSectoral policy observations and recommendation section.

5. The Budget Committee considered the submissions from Sectoral Committees and wherenecessary proposed adjustments to figures within and across sectors in accordance with

priorities of the country and in line with national goals contained in the National Development

Plan (NDP). The Budget Committee has made general and specific observations and

recommendations.


12/136

12

PART 1: MACROECONOMIC SECTION

GENERALOBSERVATIONSONTHEBUDGETFORFY2014/15Budget Absorption

6. The Committee is concerned about the poor performance of the development budget particularlyin the first half of 2013/14. This has been largely attributed to lengthy procurement processes. It

is therefore important that procurement regulations are reviewed to ensure timely procurement

to overcome the low absorption of the development budget.

Human Development-Gaps (Manpower Survey)

7. The high human resource gaps in all sectors are a key challenge to the realization of growthtargets. Uganda last had a manpower survey in 1987-89 and since then, there has been no

effort to harmonize the manpower demand and supply. Most of the education institutions are

now focusing on commercially attractive degree programs without guidance on the critical

manpower gaps needed in the country. The Budget Committee is concerned with this trend of

events and implores government to allocate resources to enable the process of carrying out a

comprehensive manpower survey to guide education institutions in their planning of academic

programmes. This will not only avail the country with the needed manpower, but will also reduce

the high levels of unemployment resulting from the mismatch between the demand and supply of

manpower in the country.

Budget Implementation Issues

8. The Committee welcomes measures to strengthen public finance management and controlsystems in order to fight corruption and theft of public resources at all levels. More specificallylinking resource allocation to development results, alignment of work plans, procurement plans

and budget and most significantly, the implementation of the Treasury Single Account (TSA) to

improve the overall management of public resources in line with international best practice. The

efficient Public Finance Management System (PFMS) together with a robust legal framework will

restore confidence of the development partners and normalize their relations Government.


13/136

13

Monitoring of Budgets

9. The committee has observed the inadequate monitoring of the budget by the responsibleagencies including the OPM and NPA. Lack of monitoring gas compromised the quantum and

quality of outputs reported by different MDAs. Although the BMAU in MFPED has done

commendable job, it has only covered a very narrow scope of what is required. The Budget

Committee recommends that government should seriously consider strengthening the

monitoring function to improve service delivery.

Certificate of Financial Implications and Budget allocations

10.The Budget Act 2001 provides that for every bill presented to Parliament, must be accompaniedby a certificate of financial implications indicating the likely financial obligations and

commitments to government in the course of implementing the Act. Over the years, the Ministry

of Finance has been providing these certificates to all bills presented before Parliament.

However, many institutions or authorities that have been created, lack the necessary finances to

be operationanlised. Some of the notable examples are; the Petroleum Authority, the National

Oil Company, Warehouse Receipt Systems Act 2006 and the resultant Authority and Prevention

of trafficking in Persons (PTIP) Act 2009, Free Zones Act among others. The government is

urged to take appropriate action to address the problem.

Membership/ Subscriptions to International Organizations

11.The committee learnt that in many MDAs, there is either no or inadequate budgetary provision forpayment of subscription fees to various international organizations. This state of affairs has

embarrassed the country on several international meetings including H.E the President himself

and other senior Government officials. Whereas the committee appreciates the limited resources

envelope to cater for all subscriptions, government should rationalize and prioritize allocation of

funds to the most critical organizations to avoid further embarrassment for example, United

Nations, COMESA, EAC, IGAD among others.


14/136

14

Establishment of the Salary Review Commission

12.The Committee urges government to expedite the establishment of the Salary ReviewCommission to deal with issues relating to salary discrepancies in the public service to avoid

selective awards across the service. This will greatly enhance the productivity of labour across

the entire public service

Efficiency Gains

13.The Committee welcomes a new measure requiring all government agencies to becomeconnected to prepayment systems for all utilities such as Water, Electricity and Telephone

services. In this regard any domestic arrears should be charged against the Budget provision forthe respective Votes in order to reduce the current public debt burden.

Parastatals

14.The Committee welcomes measures the bold decision to bring on board Government Parastals,authorities and all semi-autonomous institutions currently receiving Government subventions so

as to provide totality in the Government Budget. This should enable Parliament to do scrutinize

all revenues and expenditures of these organizations with a view of increasing the efficiency and

effectiveness of resources use. It will also help in harmonizing budgets and work plans of these

institutions in line with the NDP and MTEF and reduce of resource abuse by streamlining

procurement plans, human resource issues including remuneration that have not been

consistent with other public sector organizations.

Construction of Central Government Offices

15.The committee observed that budgeting for the construction of Central Government Offices is notcoordinated. The committee was informed that the office of the President was charged with the

responsibility of coordinating all initiatives for constructing government offices including the

mobilization of resources. The committee further noted that a number of MDAs had presented

unfunded proposals for consideration for funding. The Budget for office accommodation for

MDAs is huge and threatening the availability of resources that could be otherwise allocated to

other critical areas. The committee recommends that government seriously considers thi s

matter with a view to coming up with a harmonized strategy whose implementation

should become effective in 2014/15.


15/136

15

NDP Financing

16.The Budget Committee has noted that financing of the NDP I in the first four years ofimplementation (FY 2010/11 to FY 2013/14) has exceed the NDP financing estimate on the

overall by shs. 1,596.5 billion. Based on FY 2014/15 estimates, government is on the right track

to meeting the estimated total financing requirement for the NDP1 of shs 54 trillion. This has

been made possible due to increased investments for infrastructure development to address the

infrastructure deficit and keeping the role of the public sector in national development.

17.The share of national budget devoted to complementary sectors (infrastructure- transport, energyand ICT) increased from 20% in FY 2009/10 to an average of 31.2% over the NDP period.

However, this remains below the projected NDP estimates of 44.2% for the period under review.The enabling sector cluster (Security, Accountability, Public Sector Management; Legislature;

Public Administration; and Justice, Law and Order) have received MTEF Budgets above the

NDP projections as indicated in Table 1.

Table 1: MTEF VS NDP Cluster Spending, Average for NDP Period as a

Proportion of total MTEF Budgets

NDP Clusters MTEF Approved Budgets and

Budget Estimate for FY 2014/15

NDP Projections-FY 2014/15

Primary Growth(Tradable) 4.5% 8.8%

Complementary (Infrastructure) 31.2% 44.2%

Social Cluster 23.3% 26.5%

Enabling (Other) 34.3% 21.1%

Source: MFPED and PBO Computations

18.Table 1 suggests that more budget resources have been allocated to the enabling cluster, awayfrom other critical clusters like the primary growth cluster, which has received half of the require

resources. While the NDP envisaged declining share of agricultural financing over the NDP

period, actual allocations were much less than the NDP projections and the desired sector

growth rates have been missed over the NDP 1 period.


16/136

16

PerformanceoftheEconomyduringtheFirstHalfofFY2013/1419.GDP Growth:Growth in Uganda is expected to remain subdued at 6% in FY 2013/14, which is

slightly below the earlier projections of 6.3% and below the NDP projection of 7.4%, due to

unfavorable weather conditions in most parts of the country are affecting both food and livestock

production. Over reliance on agriculture to spur growth is unsustainable without adequate

investment in addressing the biding constraints in the Agricultural Sector.

20.Bank lendingrates though receding at a much slower pace (to 20.8%); continue to be high toattract private sector borrowing, which has only increased marginally by 6% as at February

2014. The slow growth in private sector lending points towards unfavorable lending terms

especially for the Agriculture sector which needs long term financing from the banking industry. .

21.Trade Balance: despite the improvement in the trade balance from a deficit of US$ 87.3 million asat February 2014; government does not have an effective national export strategy to improve the

countrys export base. The Export Promotion Board which is mandated to promote exports

continues to operate at low ebb as it is grossly underfunded.

22.External financing: The donor flows in terms of loans and grants have improved from US$39.3million recorded in July 2013 to US$ 161.5 million in February 2014, which is a sign of restored

confidence in government financial management systems by donors.23.External Debt: There is low absorption of resources resulting into unnecessary costs in servicing

external loans. This is due to inadequate project selection and design coupled with poor project

implementation. In addition, there are weaknesses in procurements and contract management of

some projects, also leading to implementation delays.

24.Fiscal stance: the Committee is concerned with the poor performance of domestic taxesresulting from shortfalls experienced in corporation tax and withholding tax with a shortfall of

Ushs. 161.19 billion Ushs. 30.72 billion, respectively during the half year period of fiscal year

2013/14. This implies the economic environment has not favored companies to make profits or

profits are understated, on which corporation tax should be based. In addition, excise duty

realized from mobile money transactions, has not yielded the desired levels of tax revenue

owing to some loopholes in the law.

25.The overall budget deficit (including grants) was 11% beyond the anticipated level of Ushs1,123.31 billion. The implication of this was the unplanned domestic borrowing which was 200%

above the targeted level. This creates additional pressures on the budget to finance the


17/136

17

associated domestic interest costs and also crowds out private sector borrowing, through high

interest rates.

Recommendations

26.The strategy of Government to increase investment spending should be supported; however, thestrategy should be accompanied by other strategies to boost the revenue base, increase the tax

revenue to GDP ratio and avoid excessive recurrent spending growth. The investment spending

should be financed by a sustainable combination of external and domestic borrowing and to

properly utilize government savings earmarked to infrastructure investment.

27.Government should continue with infrastructure investment by exploring alternative sources offinance from traditional grants and concessional borrowing to non- concessional borrowing,

issuance of sovereign bonds and other forms of financing including Public Private Partnership

arrangements.

28.Government should place the tax efforts on a more comprehensive strategy in order to widen thetax base. In addition government should remove critical VAT and income tax exemptions, while

also focusing on better tax administration.

29.Government should, among other initiatives, introduce Islamic banking, fast track implement ofthe national Identification project to enable financial institutions hold confidence in their clients

against default risks.

30.Government should extend financial literacy campaigns to rural areas; and liberalize the pensionindustry to improve liquidity in the credit markets and; broaden and deepen the financial sector

and non financial sector

31.Government should design an effective export promotion strategy to guide and prioritize publicinvestments in export oriented sectors. In addition, the export promotion board should be

prioritized in terms of additional financing to strengthen its capacity to boost the export sector.

32.In order to deal with supply side constraints which lead to inflation and curtail growth,government should transform its contribution of the Agricultural Credit Facility into an agricultural

bank to be able to provide medium and long term affordable finance to the agricultural sector to

improve production and productivity in the Sector.

33.Government should improve the implementation of the development budget to be able to realizeits growth objectives, while at the same time increase employment levels in the country.


18/136

18

MACROECONOMICPROJECTIONSFORFY2014/15&THEMEDIUMTERMObservationsontheMacroeconomicAssumptions

34.Given that the government budget is only about 20% of GDP and contributes to 28% on GDPgrowth, the overall growth will have to rely more on the performance of the private sector. The

private sector expenditure is about 80% of GDP and contributes more than 50% to GDP growth.

35.In the FY 2012/13 the household consumption was subdued due to the declining real wages. Tocounter the trend, real wages ought to rise proportionate to inflation expectations. Connectedly,

in the first half of FY 2013/14, growth in private sector credit was slower than anticipated due to

the sticky lending rates. Should the private sector credit trend continue this way, then the overall

growth projection of 6.8% will not be realized in FY 2014/15.36.The current key challenge to growth is translating into higher living standards, poverty reduction

and improved social indicators. Government is challenged to ensure that growth is not only

sustainable, but with quality and inclusiveness. Government action should be aimed at

integrating lagging regions, foster agricultural productivity and strengthen institutions that

contribute to improvement of social indicators.

37.Government can make growth more inclusive by promoting job creation and skills development,especially for the masses that are leaving the unproductive land and joining the service and

industrial sectors. Such efforts can be complemented by fostering financial inclusion and access

to finance.

38.Uganda is vulnerable to regional political instability, governance challenges, spending pressures,and capacity constraints. All these and more pose a potential risk to growth target for FY

2014/15.

39.The projections also point towards a drop in international foreign reserves required to cushion theeconomy against external shocks. This is due to planned utilization of government deposits to

finance the infrastructure projects.40.The anticipated decline in foreign reserve cover will ease the burden on budgetary resources, as

the fiscal deficit is projected to fall in FY 2014/15 compared to FY 2013/14 levels. Other factors

leading to a declining fiscal balance, one is the anticipated rise in domestic revenues by 0.6% of

GDP and the drop in budget expenditure by 2.6% of GDP in FY 2014/15. However, as observed

in FY 2013/14, tax revenue growth is projected to be off pace by 0.1% of GDP. The shortfall is


19/136

19

happening in spite of the numerous tax revenue enhancements through policy refinements,

modernization, and administration improvements.

41.In absence of any new approaches aimed at capturing the untapped revenue potential tax areas,the FY 2014/15 tax revenue target will be hard to attain.

Recommendations

42.The macroeconomic assumptions should clearly indicate the financing plans of government inparticular the large projects. If the projects are to be financed by borrowing, then the processing

and implementation should be fast tracked to avoid fiscal liabilities and non-absorption costs.

Institutions involved in processing and implementation of huge projects should be strengthenedto ensure efficiency and transparency in financial management and accountability.

43.Given the above observations, Government should modify the above assumptions to reflect theeconomic realities and abide by them during the implementation of the macroeconomic policy.

ResourceEnvelopeforFY2014/1544.The Committee observes the growth of the resource envelop by 21.5% (or by Ushs 2,565 billion)

in FY 2014/15 compared to current FY 2013/14. However, the committee is concerned with the

significant projected rise in borrowing from the domestic sources to finance by Ushs. 995.4

billion (153%), which has translated into an interest cost rise by 129.5 billion (13.3%) from FY

2013/14 levels. This trend has continued despite its effects on interest rates. And the threat it

imposes on the availability of private sector credit and overall growth of the economy

45.The Committee commends government financing the larger part of the budget where, domesticand external resources will constitute 81% and 19% respectively, compared to the current

composition of 79% (domestic) and 21% (external).however, domestic mobilization efforts

should be further encouraged with a view to expanding resource envelope and reducing the

fiscal deficit.

46.The committee notes that in the event that external support is unforthcoming, government willhave to mobilize additional domestic resources to maintain the same level of fiscal deficit or cut

spending, which could negatively impact on growth. Any negative consequences to growth will

dampen any prospects for additional domestic revenue mobilization efforts.


20/136

20

47.URA Tax revenue is projected to rise by 0.5% of GDP next FY 2014/15. While the 0.5% target isprojected to be missed in FY 2013/14, prospects for FY 2014/15 are mixed unless there is a

comprehensive strategy to reform the tax system.

48.According to IMF, Uganda faces a large shortfall in VAT revenues compared to other EACcountries as illustrated by the Country (C) efficiency measure, which captures both revenues

lost from statutory exemptions in the law and from poor administration and enforcement of tax

laws.

Recommendations

49.Government should use the cost benefit analysis to determine which tax exemptions are worthmaintaining and which ones should be dropped to improve efficiency.

50.Government should undertake a comprehensive review of exemptions under the income tax actand pay close attention to capital gains tax on the disposal of commercial property.

51.URA should focus more on areas with the highest revenue potential.

Fiscal/BudgetStrategyforFY2014/1552.The design of the fiscal stance to be consistent with the objective of monetary policy of reducing

core inflation to the medium term target of 5% is costly in terms of the interest cost to the budget.

53.Total expenditure is projected at about 19.6% of GDP and include among other items, wageincreases to compensate civil servants for the decline in purchasing power of their salaries;

election related expenditures; and the continuation of spending on the two large-scale hydro

power projects.

54.Consequently, the overall deficit is projected at 5.5% of GDP. Financing of the deficit will rely onexternal sources (including non-concessional loans), which will account for about 3.9% of GDP,

while up to 1.6% of GDP will be from domestic sources.

55.Achieving the growth in tax to GDP ratio by 0.5% remains a challenge which affects financing ofthe budget.


21/136

21

Recommendations

56.Government should explore cheaper sources of financing the deficit, especially concessionalborrowing from external sources, to relive the budget from increasing domestic interest costs

57.Government should take a cautious approach in increasing non concessional external finance, tominimize risks associated with external non concessional debt

58.Government should explore various options of widening the tax base to be able to realize the taxto GDP ratio over the medium term.

59.Government needs to further streamline Public financial management systems in order to winback development partners confidence to finance the national budget priorities.

60.Given the pressing needs presented in the NBFP as unfunded priorities. Parliament shares theview that the tax base should be further widened. To this end, the committee recommends that

taxes on gambling and sports betting should be increased by 100%. The committee further

recommends for an inspection fee on vehicles for roadworthiness.


22/136

22

PART II: SECTOR POLICY OBSERVATIONS AND

RECOMMENDATIONS

61.The Committee noted the following key programmes for social and economic development, whichare derived from the NDP and the NRM Manifesto ( See table 1 below)

i. National Security and Defense;ii. Transport and Energy Infrastructure;iii. Science, Technology, innovation and employment;iv. Agriculture production and productivity;v. Human Capital developmentvi. Governance and public service delivery

Table 2: Sector Nominal Allocations in the MTEF for FY 2013/14 Vs FY 2014/15(Ushs. Billion)

Sector Allocation 2013/14 Approved Budget 2014/15

Budget Proj

2013/14

% Share

2014/15

% Share

Works and Transport 2510.70 2,575.50 19.22% 18.08%

Energy and Mineral Development 1675.70 1,711.70 12.83% 12.02%

Eductaion 1761.60 1,699.40 13.48% 11.93%

Health 1127.50 1,197.80 8.63% 8.41%

Interest Payments Due 975.30 1,104.80 7.47% 7.76%

Public Sector Management 1093.80 1,070.40 8.37% 7.52%

Security 1048.50 1,005.50 8.03% 7.06%

Justice/Law and Order Sector 625.70 778.50 4.79% 5.47%

Accountability 698.80 707.10 5.35% 4.96%

Public Administration 398.30 504.20 3.05% 3.54%

Agriculture 382.70 440.70 2.93% 3.09%

Water and Environment 383.90 430.80 2.94% 3.02%

Legislature 237.60 237.60 1.82% 1.67%

Lands, Housing and Urban Dev't 30.00 99.10 0.23% 0.70%

Tourism, Trade and Industry 54.80 68.40 0.42% 0.48%

Social Development 44.40 52.90 0.34% 0.37%

ICT 15.40 15.40 0.12% 0.11%

Unallocated 542.89 3.81%

o/w Salaries 450.19 3.16%


23/136

23

Table 2: Sector Nominal Allocations in the MTEF for FY 2013/14 Vs FY 2014/15(Ushs. Billion)

Sector Allocation 2013/14 Approved Budget 2014/15

Budget Proj

2013/14

% Share

2014/15

% Shareo/w VAT Arrears 20.00 0.14%

o/w Taxes on Government Imports 70.00 0.49%

o/w Various Local Governments 2.70 0.02%

GRAND TOTAL 13,064.70 14,242.69 100.00% 100.00%

Source: NBFP 2014/15 -2018/19

62.The committee analyzed the nominal sectoral allocations by government as summarized in table2 above and makes the following observations and recommendations.

a) The high investment in works and transport, energy, education, health and security isappreciated. However, to achieve a double digit GDP growth, this high spending in

infrastructure should correspond with high investment in agriculture, industry and trade

and tourism to ensure that infrastructure maintains a high level productivity and return

on investment.

The committee recommends that the current trend of sectoral allocations should be reviewed to

ensure;

i) More resources for agriculture, trade and industry and tourism are provided

ii) Structural reforms to improve the governance of these sectors should be implemented

immediately

Iv) Increase value for money and periodic monitoring for results to minimize loss of public

resources particularly at lower government level.

Each year there is a drought in Uganda, the macroeconomic stability of the country is severely

affected. The GDP Growth target is not achieved and there is general inflation experienced in

the country. This phenomenon which is increasingly becoming rampant has been reported in

almost all previous background to the budget documents explaining the failure to attain growth

targets.


24/136

24

b) The committee recommends that the investment in the Water infrastructure especiallyfor the small and large irrigation schemes be upscale in order to ensure sustainable and

high annual GDP growth

c) The committee also noted that because of the surging population, demands for socialservices have to continue mounting pressure on the Budget. This NBFP carries very many

critical unfunded social priorities which can only be addressed with an expanding economy

characterized by a public investment structure illustrated above. Without this happening, the

government should be in for a cost sharing regime to ensure delivery of quality social

services

EASTAFRICANCOMMUNITYAFFAIRS(EACA)Dissemination of a National Policy on EAC integration:

63.The Committee was informed that a draft policy was place and a validation exercise had occurredin April 2014. A cabinet process for approval had been initiated with a memo. The Ministry has

planned to develop an implementation strategy by June 2014 to guide other stakeholders across

Government and other key stakeholders. A funding gap of 500 million was identified for rolling

out the policy.

64.The Committee recommends that Ministry of Finance gives Ushs. 500 million to the Ministry tofacilitate the dissemination of the National Policy on EAC integration.

Awareness of the EAC Integration

65.The Committee observed that since the inception of the EAC, the impact and benefits of theRegional Integration has not been felt by the Uganda Communities. MEACA needs to make

better awareness and communication strategies that will ensure that knowledge andparticipation of the citizens in the EAC integration are enhanced. The Committee was informed

that the low awareness of the EAC integration is largely contributed by inadequate funds and the

activity is largely considered by the Ministry of Finance to be a consumptive item. The

Committee was informed that MEACA needs to procure a dedicated awareness service van at a

cost of 200 million; in addition, MEACA needs to acquire Information Education and

Communication (IEC) materials for awareness effort at a cost of 200 million.


25/136

25

The Committee recommends that Ushs. 400 million is given to MEACA to effectively carry out

sensitisation and awareness campaigns to enhance citizens participation in the EAC integration.

Office Space

66.Due to increasing staffing levels, office space at MEACA has remained a challenge. The Ministerinformed the Committee that MEACA is looking forward to acquiring another floor (third floor) on

Postel building at a cost of Ush 230 million. In addition, the Committee learnt that the property-

owner made revision in cost of rent from US$ 9.2 to US$10 per square meter, hence creating a

gap of Ushs 54 million in rent provision.

67.The Committee recommends that Ushs. 284 millionbe given to MEACA to secure more officespace on Postel building and to cover the rent provision for the coming FY. In addition, the

Committee urges Government to come up with clear policy on Office accommodation for all

Government institutions.

Timely and effective implementation of EAC decision, directives, policies and programmes

68.The Committee noted that MEACA receives, communicates, monitors and evaluates councilsdecisions and directives to the implementing MDAs. Timely and effective implementation of the

EAC decisions is a challenge due to capacity and resource constraints. Moreover, MEACA is yet

to fully operationalise the East African Monitoring and Evaluation system (EAMS-Uganda) for

tracking implementation of EAC directives and decisions.

69.The Committee recommends that Ministry of Finance gives MEACA Ushs. 100 million to fullyoperationalize the East African Monitoring and Evaluation System (EAMS) for Uganda.

Coordination of Implementation of the Common Market

70.The Committee was informed that Uganda has already developed a Common MarketImplementation Plan (CMIP) and a certificate of financial implication secured from Ministry of

Finance. CMIP will guide the country to realise the Common Market. Ugandas national laws are

also being harmonised to facilitate the implementation of the protocol.

71.The Committee recommends that Ushs. 200million should be given to MEACA to facilitate thecoordination and implementation of the Common Market Implementation protocol.


26/136

26

Vacant Posi tions at MEACA

72.The Committee observed that the issue of vacant posts is still outstanding and this has continuedto affect the performance of MEACA.

73.The Committee urges the Ministry of Public Service to fast track the recruitment of workers forthe Ministry to enable effective performance.

Harmonisation and ratification of protocols

74.The Committee observed that while the Ugandan laws, policies and strategic frameworks to beharmonised into the EAC context were identified and indeed the first omnibus bill was prepared,

the process is still very slow. In addition, MEACA has a number of EAC protocols that require

ratification in Uganda; the process of ratification at cabinet level is not given sufficient priority.

75.The Committee recommends that Government gives sufficient priority to the ratification of theEAC protocols.

Dissemination of MEACA Outputs

76.MEACA generates a lot of output in form of Consultative and Dialogue reports; Engagementsupport reports; Research, Study and Technical papers; Progress and status reports; Countryposition papers and; Instruction and Education materials. These products need a wider

dissemination to reach as many stakeholders as possible, to ensure information sharing and

effective utilisation of the findings in the EAC integration. The Committee was informed of a

number of ways in which MEACA disseminates its outputs to the business community, EAC

clubs in schools, donor community and the general public. MEACA holds engagement meetings,

media campaigns, Umoja news letter, MEACA website and the MEACA resource centre but all

this is not sufficient. The Committee recommends that MEACA takes to disseminate its

information widely in order to deepen the EAC integration process.


27/136

27

MINISTRYOFINFORMATIONCOMMUNICATIONTECHNOLOGYThe National ICT Policy

77.The ICT sector has been working without a National Information and CommunicationsTechnology Policy which has created a void and given rise to uncoordinated planning and

duplication of ICT programs/activities across Ministries, Departments and Agencies. However,

the Committee was informed that the Certificate of Financial Implication for the draft National

ICT Policy had been secured from MoFPED and had been submitted to cabinet for approval. A

copy of the Certificate was tabled to the Committee by the Minister.78.The Committee recommends that the Minister fast tracks the approval of the Policy by Cabinet at

least by the end of FY 2013/14.This will greatly guide the ICT sector and other MDAs in regard

to an overarching policy to guide formulation of other ICT related policies.

Analogue to Digital Migration

79.The Committee observed that there is lack of commitment in as far as the operationalization ofAnalogue to Digital migration is concerned. The country is at a risk of failing to meet the June

2015 the deadline that was set by the International Telecommunications Union (ITU). The

Committee notes that unbundling of UBC has not yet been done as earlier recommended and

that instead, the Ministry is pushing for a law, the Analogue to Digital Migration Bill to regulate

the process which may be too late given the deadline.

80.The Committee strongly recommends that all government Institutions concerned; that is UCC,UBC, MoICT and Ministry of Information and National Guidance urgently work together to fast

track the process.

The MoICT should consult on the law that should be amended to ensure unbundling of UBC as

soon as possible instead of coming up with the Analogue to Digital Migration Bill.81.The Committee further recommends that part of the 1% levy funds be allocated towards fast

tracking the Analogue to Digital Migration process in addition to the funds that UCC had

allocated to this process in their budget for FY2013/14.


28/136

28

Extra 1% Levy from Telecom Companies (NTR)

82.The Committee expressed concern on the way the extra 1% from telecommunication companiesis being shared within the Sector. The Committee was informed that the 1% levy will be shared

as follows; Ministry of ICT 25%, NITA-U 45%, UCC and UICT 30%. The Committee observed

that this was done without substantive regulations to the UCC Act 2013 in place as yet.

83.The Committee further noted that these funds expected in form of NTR were largely allocated toconsumptive items like Workshops and consultancies in the case of the ministry yet they have

unfunded priorities.

84.The Committee recommends that the funds from the extra 1% levy should strictly be allocatedtowards development of ICT as clearly highlighted in the UCC Act 2013.

85.The Committee further recommends that the NTR from the 1% levy for FY2014/15 should beallocated towards fast tracking Analogue to Digital Migration, turning UICT into a Center of

Excellence and the construction of the ICT Park in Namanve that will house MoICT, NITA-U and

the BPO operators, hence saving on the exorbitant rent dues.

86.The Committee strongly recommends that allocation of the funds from the 1% levy be agreedupon with the Committee of ICT in order to ensure that its spent on activities that will benefit theICT sector as a whole.

National Backbone Infrastructure (NBI)

87.The Committee observed that NITA-U had been authorized by MoFPED to spend the NTRcollected from the commercialization of the NBI at source; however as at half year, NITA-U

hadnot generated any NTR. NITA-U handed over to the Commercial Manager on 31stMay 2013

and as per the contract the manager was given 6 months to mobilize. The projection for next FY

2014/15 is UGX 11.3 BN.

88.The Committee recommends that NITA-U makes efforts to actualize its projections as far asgetting NTR from the commercialization of the NBI is concerned. Projected NTR for FY2014/15

is UGX 11.3bn and would go a long way in funding the IT infrastructural projects in NITA-U.


29/136

29

Country Code Top-Level Domain (ccTLD)

89.The Committee also noted that the ccTLD (.ug) is still managed by an individual whichcompromises governments cyber security efforts. The Government needs to urgently take on

the management of its domain or execute a PPP. The Committee was informed by NITA-U that

the process to re-delegate the domain had already started and the process would take between

9-18 months to be complete.

90.The Committee recommends that government urgently harmonizes the management of theCCTLD if cyber security undertakings are to be realized. The period 9 18 months affirmed to

the Committee should be adhered to and any developments to that effect should be shared with

the Members of the Committee.

Expenditure on Consultancies by the Sector

91.The Committee noted the high NITA-U expenditure on consultancies. NITA-U attributed this tothe fact that the Authority is under staffed with the approved staffing level filled to only

25%,hence most of the work being hired out to consultants.

92.The Committee recommends that MoICT, NITA-U and MoFPED work out modalities ofaddressing the issue of the wage ceiling in FY2014/15 and that affirmative action be sought for

the MoICT in terms of remuneration if it is to recruit the competent and skilled top management

personnel it needs.

93.The Committee further recommends that UGX 0.150bn be availed to MoICT to cater for the wagefunding gap and UGX 2.5bn be availed to NITA-U to cater for its wage shortfall and vacant posts

as this will greatly reduce the sectors expenditure on hiring consultants.

National Post Code and Addressing System

94.The Committee noted that the Pilot National Post Code and Addressing System in Entebbe thatcommenced in June 2011 and should have ended in June 2012 has not yet been concluded up

to now.

95.The Committee strongly recommends that implementation of the project should be carried out byUPL with support from UCC and that the Ministry of ICT supervises and formulates the

necessary laws and policies to guide the project.


30/136

30

96.The Committee further recommends that Government urgently embraces this project and availsthe Ministry with UGX 1.065bn needed to complete the pilot project in Entebbe Municipality as it

will greatly enhance revenue collection by easing URAs work among other benefits of

numbering and addressing.

Procurement o f the Intelligent Network System

97.The Committee observed the delay in the procurement of the Intelligent Network System whichhas dragged on for some time. The INS was intended to assist UCC to enhance its monitoring

capabilities of the telecom companies in terms of revenue generated and quality of service in

order to increase its regulatory efficiency.

98.The Committee strongly recommends that the evaluation process for the procurement of the INSbe expedited and that the Minister follows up its procurement to ensure that the INS is in place in

FY2014/15 as this will go a long way in addressing revenue shortfalls and Quality of Service.

Quality of Service by Telecom companies

99.The Committee noted that consumers continue to experience problems of dropped calls andunsolicited message from telecom companies that are charged off the consumers airtime. The

Committee was also informed that the penalties to address the issue of quality of service will be

stipulated in the regulations of the UCC Act 2013 that will be brought to Parliament soon.

100. The Committee recommends that the MoFPED urgently revisits the taxes levied on the telecomcompanies, as they seem to be the highest in the region and are in turn passed on to the

consumers. These are mainly manifested in the incoming international calls terminating in

Uganda.

101. The Committee also recommends that Government clearly highlights its stake in UTL and explainwhy UTL is not meeting its obligations like other telecom companies.


31/136

31

102. The Committee further recommends that the regulations containing the penalties meant toaddress issues of vandalism and unsolicited messages be finalized and tabled before the

Committee by the end of FY2013/14.

The Ban on used Computers

103. The Committee noted that its earlier recommendation on the ban on importation of usedcomputers has not been adhered to and they are still being imported, packaged and disguised as

new ones in order to exploit the unsuspecting consumers. With the evolution of technology,

importing second hand computers only serves the purpose of making Uganda a dumping ground.

104. The Committee strongly recommends that Government upholds the ban on used computerssince technology is fast changing to mobile handsets and second hand computers will only be a

serious environmental hazard to the country.The Committee further recommends that the

capacity of the UNBS staff be enhanced in order to ably identify a used computer from a new one

before it gets into the country.

Rural Communications Development Fund (RCDF)

105. The Rural Communications Development Project under Uganda Communications Commission(UCC) has registered some success especially in the education sector but the telemedicine

project has failed to take off despite the huge sums of money invested in procuring the

equipment. The Committee noted that most of the regional referral hospitals visited during its

oversight work like Arua, Mbarara and Kabale, lacked full sensitization and training on how to use

the equipment and there was no internet.

106. The Committee recommends that the entire RCDF project should be re-strategized in line withthe needs of the communities its intended to serve.

107. The Mandate of UCC should be clearly defined since this is a multi-sectoral project that alsoinvolves Ministry of Education and Ministry of Health.

108. UCC should consider hiring a consultant in rolling out the Telemedicine project to ensure thatequipment is fixed and working in coordination with the Ministry of Health as it will go a long way

in addressing the problem of doctor to patient ratio especially in hard to reach areas.


32/136

32

EDUCATION&SPORTSSECTORSectorBudgetAllocationforFY2014/15

109. The Committee observed that the Sectors overall budget is projected to decline by 2.7% (Ushs54.3Billion). This is on account of external financing that has reduced by 71.59 bn in the FY

2014/15 as result of completion of ADB APLI program. The reduction leads to the allocation of

Ush 1,952.02bn in the FY 2014/15 from Ushs 2,006.3bn inclusive of the Non Tax Revenue

collections by the Public Universities. The Sectors MTEF Budgetary allocation will account for

12% of the National Budget resource envelop in the FY 2014/15 down from 13.5% in the FY

2013/14 allocations.

Sector funding

110. The sectors share of the National Budget has declined from 13.5% to 12% of the NationalBudget in the FY 2014/15 despite the Dakar-Senegal declaration that called for at least 20% for

the Member States to attain the millennium goal of universal access to education. The proportion

of the sector budget that will be invested in key sector output for service delivery is projected to

decline as a share of the sector budget to 52% from 54% which implies increasingly more

resources will be devoted to capital development rather than actual teaching.

Development Budget

111. The Sectors Development Budget will account for 19% of the sector resources with externalfinancing contributing 11% on backdrop of a reduction by ushs 71.59 billion in the sectors

financing.

112. The Committee noted with concern the continued congestion in classrooms with some districtslike Agago, Amudat and Amuria reporting an oversubscribed classes of 100:1 pupil classroom

ratio as compared to the national average of 55:1.

113. The Committee recommends rational allocation of the available development resources todistricts to support schools that are oversubscribed in classrooms.

UPE & USE Program

114. The NBFP provides for continuity of the two programs though with a reduction in the capitationgrant for UPE from ushs 7000 to ushs 6860 per annum on account of increased enrolment


33/136

33

against a static budget allocation. This is contrary to previous recommendation of Parliament to

be revised to Ushs 10,000 to provide for inflationary tendencies for which the funds are supposed

to be applied.

115. The USE capitation remains at Ushs 41,000 and ushs 47,000 for the public schools and thoseunder partnership respectively per term.The Committee was informed that there was a funding

gap of ushs 22.745 billion to raise UPE capitation to Ushs 10,000.

116. The Committee strongly recommends the reinstating of UPE caption grant to Ushs 7000 and thereview of the grant to Ushs 10,000 as previously recommended. The Committee furtherrecommends that USE caption grant be reviewed to at least Ushs 100,000 per term per child

Capitation grant shortfall

117. The Committee established that despite results from the 2013 head count exercise reflecting anenrolment increase of 58,078 students from 753,960 (2012) to 795,234 (2013) in USE and

29,682 students from 38,411 (2012) to 66,261 (2013) under UPOLET; the capitation grant

allocation remained static in the FY translating into a Ushs.14,356bn deficit.

118. The Committee observed the need for an urgent solution to this situation which was likely toaffect the performance of the program as many children may be denied chance to study under

the program. The Committee recommends that resources be found to support these programs.

Emergency classroom construct ion

119. The Ministry has planned to undertake classroom construction and rehabilitation of primaryschools despite it being a decentralized function under the pretext of emergency construction.

This has been characterised by delayed works and underperformance of the programme as

allocated funds are never fully utilised within the financial year.

120. The Committee reiterates its earlier stand on this program and calls for the strengthening of theDistrict Local Governments to undertake this program and funds be channelled to the schools for

better and timely response to disasters.


34/136

34

Skilling Uganda Program

121. The Committee established that the Ministry has prioritised the implementation of skilling Ugandaprogram through the existing structures of vocational and business training. The ministry has

instituted a Task Force to review Vocational training curriculum so as to reorient the program to

suit the demands of the current job market. The Committee observed that the modality for the

program implementation does not come out clearly in the BFP in terms of funding, responsibility

centres and accountability among others.

122. The committee therefore recommends a systemic appraisal of the program to provide for a clearresponsibility centres and accountability taking into consideration its programming and

accessibility.

Early Childhood Development Program

123. The Committee notes the immense benefits of Early Childhood Development Programs to theindividual and the nation at large. However, its disappointing to learn that this is purely a private

led initiative with little government intervention. The committee finds this situation unfortunate in

the era of universal education.

124. The Committee therefore recommends that Government seriously considers the uptake of thissegment with the amendment of the Education Act 2008 to provide for this segment rather than

just simply regulating but should include facilitating of the learning of children.

Establishment of Public Universities

125. The Committee established that the Ministry plans and has allocated funds for the establishmentand support of Task Forces for the operationalization of Muni and Soroti Universities to a tune of

Ushs 12 billion. The Committee was assured during the consideration of the Ministerial Policy

Statement for the FY 2013/14 that Muni University will have a Vote status this has not yet been

realised. This has an implication on the functioning of the university that has planned to admit its

first cohort during this academic year as funds are accessed through ministry of Education and

Sports.

126. The Committee recommends that Muni University be supported to start its program during thisacademic year 2014/15 with the provision of a vote status without any further delay as they have

already put in place the necessary infrastructure and systems to conduct lecturing.


35/136

35

Support to Private Universities

127. The Committee notes continued government support to private universities and yet publicuniversities are struggling with hosts of challenges.

128. The Committee urges government to prioritise the funding of public universities to enable themfunction normally before taking on extra responsibilities under private universities.

129. Further the Committee recommendations rationalisation and adoption of a proper criterion forselecting and supporting private universities with a one-off financial support.

Increase in unit cost of service delivery

130. The Committee noted that the cost of a number of services and goods has doubled in terms ofunit cost. For example the construction of a 3 classroom block has risen from Ushs 35 million in

FY 2013/14 to Ushs 106m in FY 2014/15; an increment of two folds 202%. Likewise an

administrative block has risen from ushs 62m to ushs 112m. The indicative planning figures can

easily tie up sector resources or lead to misallocation without proper costing.

131. The Committee recommends an observance of the market prices and where possible provisionsbe made for a review of the contract sums as some projects in the sector have previously failed

to be completed due to under costing by the Ministry.

Karamoja Development Program

132. The Committee established that the Ministry under project number 1232 Karamoja PrimaryEducation Project plans to construct classrooms in the sub region with a budget provision of ushs

15.6 billion.

133. The Committee welcomes the affirmative action for the region and strongly recommends theexpeditious implementation of the program.

Student Loan Scheme

134. Parliament passed into law the Higher Education Financing Bill to provide for the student loanscheme with an initial budgetary allocation of ushs 6 billion. In the proposals for the FY 2014/15,

the sector plans to avail the same level of funding despite the policy proposal and the publicity to

incrementally provide budgetary resources to cater for more qualifying students.


36/136

36

135. Further the Committee established that the students Loan Board is set to its first cohort ofstudents following approval by Parliament. The scheme is set to give loans to 5000 students to

pursue science courses at unit cost of 4,000,000 which translates into Ushs. 16bn needed for this

exercise.

This leads to a budget deficit of Ushs 10 billion as only Ushs. 6bn was allocated towards the

students loan scheme this academic year.

136. The Committee recommends adequate funding of the Loan scheme with the additional 10 billionto enable the scheme take off and afford needy but bright students access higher education.

137. The Committee recommends the phasing out of State House scholarship and the redirecting ofthe resources previously appropriated under state house to the loan scheme.

Office accommodation for the Ministry Headquarters

138. The Committee established that the Ministry of Education and Sports office accommodation hasa funding gap of Ushs 10 billion for the construction of its headquarters at Kyambogo Hill. The

Ministry has recently reallocated from Development House to Regency House where they are

currently renting.

139. The Committee recommends that the Ministry explores the Public Private Partnership frameworkto identify a potential developer to construct an office block on BOT (Build operate and Transfer)

basis as they await the PPP Bill that is before Parliament.

Special Needs Education (SNE)

140. The Committee notes with concern the failure by the ministry to provide a separate vote functionfor SNE for the last 8 years and the ministry has not fully embraced the rolling out of SNE project

country wide

The Committee recommends as follows:

141. A separate budget function for SNE be created before the Ministries budget for next financialyear is presented.

142. The Ministry of Education & Sports should follow up with the Ministry of Finance on the fundingrequest amounting to 4bn shillings for the project to roll out SNE countrywide.


37/136

37

Health training Institutions

143. The Committee noted with concern the deteriorating education standards of health traininginstitutions since they were transferred to the Ministry of Education and Sports. This has been

attributed to the fact that the Ministry lacks the technical capacity to adequately supervise and

support these institutions

144. The Committee recommends that Government considers a policy shift by reverting HealthTraining Institutions back to the Ministry of Health.

Key unfunded budget priorities for FY 2014/15

Counterpart funding obligations145. Ushs. 16.2bn is needed as counterpart for the development of BTVET project (Saudi, OPEC, S.

Korea, BADEA) which cannot be accommodated under the Sector MTEF ceiling although Ushs.

8.06bn has been provided leaving a shortfall of Ushs. 10.14bn. In addition, ADB V project meant

for higher education, science and technology requires an additional Ushs. 6.02bn as counterpart

funding.

UNEB shortfall in the unit cost

146. UNEB presented a proposal for revision of Unit Costs from 17,524; 85,360 and 95,072 for PLE;UCE and UACE respectively to 19,000; 100,000 and 103,000 respectively. Based on the UNEB

Act, the Ministry has to approve the unit costs of all examination boards and currently, this

proposal cannot be catered for in the current budget for the education sector. Ushs. 8.49bn is

the additional funding needed to achieve the proposed new unit costs by UNEB.

Other examination boards

147. These include UAHEB; UBTEB and UNMEB. Additional resource of Ushs. 3.1bn was allocatedto the boards but this is still inadequate with a deficit of Ushs. 4.32bn remaining as a funding gap.

MoES submitted supplementary requests to MoFPED for this FY 2013/14 and this has not been

granted. These boards are under skilling Uganda therefore they are very key.


38/136

38

University Staffing

148. The Committee notes with concern that most of the public universities have continued to operateon an average of 40% of their staff establishments which has impacted negatively on their

performance. MoES proposed that all public university staffing levels be increased to at least

50% (o/w Busitema 5.52bn; Mbarara University 3.326bn; Gulu University 1.640bn; Kyambogo

university 7.29bn and Makerere University 9.87bn) therefore, Ushs. 27.646bn is critically required

to improve staffing levels of universities.

Rollout of the Kiswahili curr iculum and training of sub math teachers

149. Ushs. 4.5bn is required to orient teachers in Kiswahili and Ushs. 1.2bn is also needed to orientteachers in sub math which is now a subsidiary subject at A-level. In addition, 0.5bn will also be

needed to print the P4 syllabus and teachers guide needed to facilitate the process.

Presidential pledges:

150. The Committee learnt that the Ministry has a data base in place to capture both pledgesimplemented since FY 2009/10 and outstanding pledges due in the education sector. Currently;

the sector has outstanding presidential pledges worth ushs. 71.6bn and this amount is projected

to grow over the medium term. The sector was initially allocated ushs. 11.115bn for

implementation of the presidential commitments but this allocation has dwindled over the years

and is currently constant at ushs. 4.5bn which is too insufficient.

151. THE Budget committee recommended that HE should scale down his pledges by honoring theprevious pledges to avoid piling pressure on the sector budgets

Grant Aiding

152. The Committee noted the lack of funding to schools grant aiding for secondary schools andprimary. The Committee accordingly recommends that government finds resources for grant

aiding of schools in sub counties without any government secondary schools.


39/136

39

WORKS & TRANSPORT & LANDS, HOUSING & UBARN DEVELOPMENT SECTORS

WORKS&TRANSPORTSECTORInfrastructure Planning and Financing

153. The Committee applauds Government and UNRA in particular for having many national roadsdesigned ahead of time making them ready to compete for financing. However, the Committee

notes that the number of ready designs has far out stripped the availability of funds to have them

implemented. This is likely to increase the risk for budgetary waste as designs become outdated

necessitating to have them reviewed to align them to the current situation which take into accountincrease in traffic volumes among others.

154. In addition, when projects are designed but their actual implementation is delayed, there is atendency for unscrupulous people rushing to have new developments along the passage of the

proposed road in the end government is forced to incur huge costs to have them compensated

when the project eventually starts. No wonder, the cost of road construction has remained high.

As a result, Government has resorted to spreading the available resources thinly on many road

projects with very minimal impacts.

155. The Committee further notes that several road projects have been designed without taking intoaccount future trends in infrastructural developments needs of the Country as well as future

economic growth trends and projections resulting into budgetary wastage and unprecedented

delays as road designs have to undergo revisions mid-way into their implementations yet this

could have been foreseen during the preliminary designs.

156. For example Tororo Mbale Soroti Road which is under rehabilitation but the Committee wasinformed that the same road is currently being redesigned for reconstruction, strengthening and

widening to take into account heavy traffic plying from Kenya and Eastern Uganda to Juba inSouthern Sudan. Although this is a good gesture, the Committee notes it could have been

undertaken at the time of designing for the current on-going works.

157. The Committee was concerned about the haphazard way in which the Sector undertakes itsplanning for road infrastructure developments in the Country which has cost Government

colossal sums of money and time. Many times, the Ministry comes up with Short-term plans

which are not linked to the overall long-term National Plan. As a result, road construction projects


40/136

40

have been undertaken with huge financial implications but shortly after their completion, the

same roads are redesigned for upgrading with new specifications which could have been

foreseen at the time of undertaking the initial preliminary designs.

158. The Committee recommends that road construction designs incorporate future developmentssuch as installation for utilities such as water pipes, telecommunication fiber cables, and

electricity poles to avoid the costs resulting road damage by Companies having to cut through the

road after it has been completed.

159. The Committee further recommends that the Ministry of Works and Transport should adopt aComprehensive Multi-sectoral long-term perspective planning modality in order to tap into

economies of scale. In addition, the Ministry of Works & Transport should liaise with otherMinistries such as Agriculture Animal Industries & Fisheries, Water & Environment, Energy &

Minerals, Lands, Housing & Urban Development and ICT to ensure proper coordination and

harmonization during planning phase.

Funding for Water, Air & Railway Transport

160. The Committee notes that Water, Air & Railway transport sub-sectors have not been accordedenough attention as compared to the road sub-sector. In FY 2013-14, UGX 28bn, 1.9bn & 15.8bn

was allocated to the Water, Air & Railway transport sub-sector respectively. In total, Water, Air &

Transport sub-sectors are programmed to receive UGX 44.78bn in FY 2014-14, a reduction from

UGX 45.63bn earmarked in FY 2013-14.

161. It is this gross underfunding which has overstretched the road sub-sector by increasing roadmaintenance backlog with minimal funds for road maintenance each year. The Committee was

further concerned that despite Parliaments previous recommendation to Government there is

need to re-instate Passenger Services within Kampala and along Kampala Jinja Railway line,

this has not been done to date.

162. The Committee recommends that Government should actualize its commitment and implementits strategy of revamping Water, Rail & Air transport sub-sectors by providing adequate budgetary

allocation to develop the railway network, rehabilitate and construct modern landing sites for

Ferries, upgrade all existing Aerodromes across the country and expedite the process of

compensation to pave way for the upgrading of Kesese Aerodrome to International Airport Status

which has dragged on since 2008.


41/136

41

163. The Committee further recommends that Government should consider re-instating passengerTrain Services that are not included in the Concession with Rift Valley Railways as earlier

recommended by Parliament.

National Road Reserves

164. The Committee appreciates efforts by UNRA to demarcate and protect road reserves againstencroachment. However, the Committee notes that this is being done at a very high cost. Next

FY 2014-15, a total of UGX 2.3bn and UGX 1bn has been earmarked for the demarcation of a

stretch of 450km and for protection of Road Reserves respectively. The Committee notes that the

cost of protection could be avoided or minimized if Government adopted a sector wide approach

in planning, for example National Forest Authority (NFA) can be mandated to plant trees along allacquitted national road reserves which can serve a duo-purpose, that is to protect the

environment and the road reserves from encroachment.

165. In addition, the Committee was concerned that road reserves have remained very narrowrendering future road expansion costly and cumbersome.

166. The Committee strongly recommended that Government should amend the existing legislation sothat road reserve requirements is increased from the current width of 30m to 50m to provide for

enough room for road expansion with less strain.

167. In addition, the Ministry should intensify its efforts to ensure security of all Road reserves and tosecure Land Titles for the all road reserves. Government should explore the possibility of

incorporation road reserve demarcation and tree planning into the costs of road construction

whenever a new road is being opened or rehabilitated. The Ministry of Works and Transport

should ensure that all illegal structures erected in the Road reserves should be demolished at

owners expense.

Bridges and Drainage Structures

168. The Committee appreciates the proposed increase in the budget for bridges from UGX39.486bnapproved in FY 2013-14 to UGX 54bn in FY 2014-15 (an increase of UGX 14.514bn) but given

the magnitude of the problem this is still inadequate. The Committee was informed that a total of

66 bridges which need urgent repair and or construction require a total budget of UGX 350bn if

implemented in a phased manner (4 years), however this funding is not available even in the

medium term.


42/136

42

169. Due to inadequate funding, construction works for a number of bridges has remained on paperrendering many parts of the country cut-off. It should be noted that absence of bridges in many

parts of the country renders accessibility to essential services such as education, medical care

and markets very difficult as these are cut-off. At the current rate when new roads are being

opened and rehabilitated, it is likely that demand for bridges, culverts, gabions will increases this

necessitates increasing funding in this area.

170. The Committee noted that the current arrangement of having funds for Bridges for DUCAR underthe Ministry while funding for bridges on National roads is under UNRA does not only breed

inefficiency in monitoring and supervision but also is recipe for budgetary waste, since it

increases the cost for administration.171. The Committee recommends that Bridges should be housed under UNRA where there is

capacity and the Ministry should not be involved in implementation but should instead remain to

provide policy direction and political supervision. In addition, the allocation to bridge repair and

construction should be increased in a phased manner to avoid accumulation of bridge backlog

like the case for roads.

Kampala City Council Traffic Management Plan/Transport Master Plan

172. The Committee appreciates the current efforts by the management of KCCA in trying to de-congest the City. The Committee however notes that the solution to the current congestion in the

City lies squarely in the successful implementation of the Greater Kampala Transport Master

Plan as outlined in the Greater Kampala Metropolitan Plan (GKMP).

173. Although, there are efforts to ensure that this Plan is actualized, there is no indication that this isbeing done in consultation with other key-stakeholders. The Committee noted that despite the

fact that several roads are being designed for dualling Kampala Entebbe, Kibuye Maya,

Kampala - Jinja roads among others, there is no plan to gazette and stop further development

along these roads. These continued developments will inevitably push the cost of compensation

beyond manageable levels.

174. The Committee recommends that the Ministry of Works & Transport to liaise with, Lands,Housing & Urban Development, Local government, Energy & Minerals, ICT, and Water &

Environment among others to ensure harmony in planning for the Greater Kampala as envisaged

in the GKMP.


43/136

43

175. The Committee further recommends that implementation of the Greater Kampala TransportMaster Plan should be expedited as this is the only solution to the problem of congestion

currently experienced in Kampala city. The Committee further recommended that in the

meantime, all bus stops and or stages for omnibuses should be demarcated clearly to curb

overcrowding and traffic jam resulting from Taxis stopping anywhere any time. In addition, Police

should maintain its stance on the road to completely eliminate bad driving and ensure full

compliance to traffic regulation without compromise.

Road Maintenance Backlog

176. Although it had been anticipated that the Road Fund would be ring fenced to provide readyfinancing for road maintenance, it is not clear whether this is to be achieved. Despite Parliaments

continued demand that the URA and URF acts be amended to allow Road User Charges be

remitted directly on URF account, the process has been very slow. The Committee was informed

that the Draft Amendment Bill was before Cabinet. In addition, the

budget committee report on nbfp fy 2014-15

Documents