By; Jjunju Francis and Francis Lubega
11th June 2020
Government has made assurance to the Ugandans that it has set up measures to boost the economy after the post Covid Era.
In his address on the 45.5 trillion budget that to facilitate national operations in the financial year 2020/21; the minister of Finance Matia Kasaijja said that government has deferred some of the taxes until September 2020.
Among the deferred taxes include corporate income tax on small and Medium enterprises, PAYE tax, wave interest arrears, deduction of taxes on donations and also reduce charges on digital money transactions.
He further emphasised that there will be no penalties and accumulated interests on loans.
Kasaija also revealed that industrial sector grew at only 2% experienced in the 2019/20 financial year, down from 10.1% in 2018/19, becoming one of the biggest victims of the Coronavirus pandemic.
While reading the 2020/21 financial year budget this afternoon, Finance Minister Matia Kasaija said the sector was affected by the closures and inability of industries to continue working.
The industry sector is comprised of such sub-sectors as manufacturing, mining and quarrying, and construction. The dismal performance means less production, less employment, fewer taxes for the economy.
Manufacturing activities, for instance, grew at only 1.4 percent in 2019/2020 compared to 7.8 percent in 2018/19, reports Uganda Bureau of Statistics (UBOS).
Mining and quarrying declined by 2.8 percent in 2019/2020 financial year compared to 33.4 percent growth in the previous year.
On the other hand, construction activities registered a slowdown growth of 5.4 percent in 2019/2020 compared to the 14.2 percent growth in the 2018/19.
Mobile Money transactions contributed the Shillings 7.2 trillion in March 2020 from Shillings 3.4 trillion in 2016 according to Kasaija meaning the Information, Communication and Technology (ICT) sector performed well since internet users have increased from 7.5 million in 2016 to 11 million as of March 2020. telephone subscriptions, which constitute 60 percent mobile subscriptions, increased from 21 million in 2016 to 28 million by the end of January 2020.
Governments has also ensured that the National Backbone Infrastructure reached to 49 districts, 480 Ministries, Agencies and Local Governments and 7 border posts.
The monthly average unit cost of internet bandwidth for One Megabite per second (1Mbps) on the Backbone has reduced from US Dollars 300 to US Dollars 70. The 500-seater ICT Innovation Hub at Nakawa was also completed during the year.
Furthermore, 172 ICT Innovators were supported under the National ICT Initiatives Programme (NIISP) to develop e-Solutions. Some of their software applications have been used for business continuity during the Corona Virus lockdown,” he said.
On the side of electricity the country’s electricity generation capacity now stands at 1,254 Megawatts, with the completion of the 42 Mega Watt Agago-Achwa II, the 76 Mega Watt Kyambura and the 5.9 Mega Watt Ndugutu Power projects. The 183 Mega Watt Isimba Power Project and its transmission lines were commissioned and the 600 Mega Watt Karuma Power Project is 98 percent complete and is due for commissioning in November 2020. The Karuma – Kawanda Transmission Line is also 82 percent complete.
In the budget that is mainly devoid of the usual pomp that Kasaija displayed in previous budgets, he said the economy managed to grow by just 3.1%, down from the earlier projected growth of 6%.
In this growth, Agriculture played a critical role, growing at the highest rate than any other sector. Agriculture expanded at 4%, Kasaija said.
The size of the economy is now Shs 138 trillion (USD 37bn) in 2019/20, up from Shs 109 trillion (USD 29.5bn) in the 2018/19.
The 2020/21 budget under the theme, stimulating the economy to safeguard livelihoods, jobs, businesses and industrial recovery, will be defined by what business survives or fails in the next few months.
In the Shillings 45.5 trillion shillings budget, the government intends to raise 32.9 trillion Shs locally and another 12.52 trillion Shs from external sources.
The budget has increased by 12.3 percent from the current 40.5 trillion budget for 2019/20.
Part of the 32.9 trillion shillings will be raised locally; Shillings 21.7 trillion is predicted to come from domestic revenue while 3.5 trillion from domestic financing.
Meanwhile, Shillings 7.4 trillion will be raised for debt-refinancing and another 215.6 billion will be from revenue for local governments. Regarding external Budget support, the government expects 2.9 trillion and another 9.6 trillion from project support.
The biggest chunk of the Shillings 45.5 trillion budget will go to the Works and Transport Sector with Shillings 5.84 trillion, followed by Security with 4.5 trillion, Education 3.62 trillion, Health 2.77 trillion, Energy 2.6 trillion, Justice, Law and Order sector 2.02 trillion, Agriculture 1.32 trillion and others.
External Debt Repayment is taking Shillings 1.2 trillion and domestic refinancing will take 7.5 trillion.