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The 2013/14 Private Sector
Post Budget Analysis
FridayFriday
JuneJune 14, 201314, 2013
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Outline of Presentation1. The Macro Environment
2. Private Sector Vs Government Priorities 2013/14
3. A synthesis of Budget Response to Private Sector
Proposals
4. Budget Commentary
5. Some Tax Comparisons across EAC6. Conclusions
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The Macro Environment
Real GDP Growth: increased from 3.2% to % - 5.1%
Agriculture Sector - annual growth of 4.4%
Resource Envelope - 13,169BN with an 81%; 19% mix
Inflation; peaked at 18.6%%, reduced to 3.6%, May 2013
Exchange rates: volatility subsided now at Ush2575
Interest rates: remain high, 24% - 30%(crowding out private sector)
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EAC Comparisons (%)
Uganda Kenya Tanzania Rwanda
GDP Growth 5.1% 4.6% 6.9% 8%
AnnualAverageInflation
3.6% 5% 8.3% 3.3%
GDPPERCAPITA
(PPP) USD
1300 1774 1500 1400
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Private Sector Priorities for
2013/14
1. Infrastructural Devt [Energy, Transport & ICT]
2. Skills, Education and Health for improved Labour Productivity
3. Cost of Biz Finance for SMEs credit to PS
4. Legal & Regulatory FW including Commercial Laws Reform
5. Rural Devt & Industrial ization
6. Tax Policy Issues
7. SMEs Devt
8. Support for Buy/Bui ld Uganda
9. Regional Integration
10. Implementation of Agreed Issues
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Budget Priorities 2013/14
Theme: Theme: The Journey Continues: Towards Socio-
Economic Transformation for Uganda.
Aggressively continue to invest in infrastructure developmentparticularly in Transportand Energy;
Support Increased Agricultural production and enhancingproductivity
Enhance scientific Innovation for Industrialization and Private Sector
Competitiveness Improve the Quality and Access in Social Service Provision in
Health Waterand Education; and
Enhance Transparency and Accountability to improve Value forMoneyand fight Corruption vigorously in Public Service Delivery
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Budget Response to
Private Sector
Priorities
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Budget Response to Private
Sector Priorities1. Infrastructural Development
P/Sector Proposal Budget Response
I. Energy Infrastructurea) Sustain Govts commitment to Energyfund
b) Implement all interventions required to
increase power supply
c) Manage the issues surrounding the delay in
the commencement of 600 MW Karuma
dam;
d) Minimize energy losses to under 20%;
e) Avoid increasing Energy Costs through
Tariff adjustments
a) Have Commissioned a number of small
renewable hydropower projects of 68.5 MW to
the national grid
b) Completed feasibility studies for Hydro Power
Projects; Isimba, Ayago
c) To commence construction of Karuma in the
next FY
d) Launched the GETFiTEast Africa Pilot Project tosupport construction of 15 mini-HP projects with
a total of 125MW
e) More investment in Rural Electrification Scheme
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Budget Response to Private
Sector Priorities1. Infrastructural Development
P/Sector Proposal Budget Response
I. Energy Infrastructurea) Further step up investment in RuralElectrification
b) PPP approach to develop energy with
insurance of bonds
c) Provide incentives to energy producers
ready to upload over 500MW to the grid
d) Minimize energy loses to under 20%
a) Umemeto install pre paid meters and reduce
power loses
b) allocated an additional Ushs 25.73bn tothe Rural Electrification Programme
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Budget Response to Private
Sector Priorities1. Infrastructural Development cont..
P/Sector Proposal Budget Response
II. Transport InfrastructureRailwaysa) Re-acquire and support RVR to increasing
operating capacity
b) More emphasis to enable
operationalisation of Alternative route thru
Dar
c) Step up dialogue with the Tanzanian Govt
d) Emphasize and implement Rail way
extension to Western and Northern
Uganda
a)accelerate efforts to rehabilitate the countrys railway
network,
b)Fast-tracking the rehabilitation of Tororo-Packwach and Kampala Kasese railway linesc) Commence design of Gulu Atiak Nimule
J uba railway, to be constructed jointly by UGVs.SSd) Complete design of the Standard-GaugeKampalaMalaba railway line (251km).
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Budget Response to Private
Sector Priorities1. Infrastructure Development cont..P/Sector Proposal Budget ResponseRoadsa) Sustain Govts commitment to
the Road Fund; allocatesometo
improvingcity roads,
b) Prioritize investment in roads
supportingAgric,Oil, Tourism,
c) Pave, tarmac roads and develop
dual carriagehighways
d) RevivetheSouthernroutee) Address road infrastructure
challengesat theIndustrialPark
a) construction and rehabilitation of majorstrategic national roads
b) Construction on Schedule for a total of
327km National roadsc) Maintenance of district and communityroads; to stimulate Agric, Tourism
d) Design for dualling key roadscompleted.
e) Kampala - J inja Expressway design infinal stages
f) Additional Ushs 72.7bn to Road Fund;
now totaling to Ushs 352.98bn
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Budget Response to Private
Sector Priorities1. Infrastructure Development cont..
P/Sector Proposal Budget Response
Water Ways
a)Expedite the repair of Vessels on L.Vic.b)Rehabilitate, insure and invest in new
ferries
Lake Victoria with 30 M Persons a
growth center in the EAC. Plan forinfrastracture to help tap this potential
a) improve the quality of water transport
on major water bodiesb) development of water transport on Lake
Vic.
c)Revitalization of Lake Vic. by rebuilding
port infrastructure
d)EAC taking this on to provide all therelevant infrastructure connecting the lake.
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Budget Response to Private
Sector Priorities1. Infrastructure Development cont..
P/Sector Proposal Budget Response
ICT
a)Prioritize laying of Fiber Optic Cable through
out the Country
b) Support investment in developing ICT park to
connect Uganda to the World and Vs. Versa
c) Explore use of a PPP approach to achieve theabove
a) To implement the 700km third phase of the
re-designed National Backbone
Infrastructure
b) Operationalize Cyber Laws
c) setting up Information Technology Parks to
host BPOs
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Budget Response to Private
Sector Priorities2. Skills, Edn & Health for Improved Labour Pty
P/Sector Proposal Budget Response
a)Urgently change the approach to skills devtb) to support production in the short run
c)Support Internships, industrial training and
attachments
d)Provide Tax incentives to employers training
labour
e)Allocate resources and attract Development
Parterners in Skilling Uganda
a)Budget allocation to education increasedfrom1,669 BN to1,801BN
b)Address the skills gap btnEdnsystem and
the Job Market
c)Re-aligning the curriculum and establishing
partnerships between the PS & education
institutions
d)Accelerate Government investment in
vocational andbusiness training
e) Supporting the PS to provide the youth with
therequisiteskillsfor jobcreation
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Budget Response to Private
Sector Priorities2. Skills Development cont..
Private Sector Proposal Budget Response
a)Ensure asectoral approach in training thru PPP
b)VAT Zero rate the Health Sector
a) support skills training of critical tourism sector
human resources including the re-construction
of theUganda Hotel and Tourism Training
Institute at Jinja;
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Budget Response to Private
Sector Priorities3. Cost of Biz Finance 4 SMEs & Credit to PS
P/Sector Proposal Budget Response
a) Expand the Agric Credit facility toensure entire Value chain benefits
b) Introduce similar Fund to both Health
and Education
c) Further recapitalize UDB
d) Create Credit under UDB line for
Manufacturers
e) Venture Capital option could beexplored
a) To amend the Finance Act toenable devt of new products likeIslamic banking
b) Increase youth venture fundc) Out side budgetMicrofinance
Support center has announcedavailability of credit for SMEs.
Agriculture value addition,marketing and trade.
_______________________a) Cheaper financing especially for
long-term need to be elaboratedfurther
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Budget Response to Private
Sector Priorities4. Legal & Regulatory FW including CommercialLaws Reform
Private Sector Proposal Budget Response
a) Implement the recommendations of theSsendaula comprehensive Business
LicensingReformwork
b) Finalize a legal FW issues related to land
accessesp. for mining
c) Remove all un necessary laws and
procedures
a) continue improving the businessclimate for better PS competitiveness
b) Continue further efforts in reforming thelicensing regime
c) Removal of unnecessary laws andregulations
d) Streamline and simplify the businessregistration & licensing processes
e) commenced implementation ofbusiness licensing reforms
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Budget Response to Private
Sector Priorities4. Legal & Regulatory FW including CommercialLaws Reform Cont..
Private Sector Proposal Budget Response
a) Fast track enactment of all critical
commercial laws
b) Electronic Land Information system ought to
bemade towork
a) Operationalized regulation of enactedkey commercial laws
b) Other key enabling legislations beforeParliament including the PPP Bill, Anti-counterfeiting bill, etc
c) Completed computerization of the land
registry
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Budget Response to Private
Sector Priorities5. Rural Devt & Industrialization
P/Sector Proposal Budget Response
a) Make targeted interventions tostimulate rural development through
industrialization.
b) Provide incentives for industries
establishing in rural areas and
providing ease of access to
investment land.
c) white elephants like the Kalangala icecooling plant, the Olweny Rice
Scheme facilities etc require GoUto
work with private sector to stimulate
production.
a) An additional Ushs25.73bn to the Rural
Electrification Programme
b) A total of 2,322 km of transmission lines were
laid under several Rural Electrification schemes.
c) implemented the Rural Financial Services
Programme since 2008
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Budget Response to Private
Sector Priorities5. Rural Devt & Industrialization Cont..
P/Sector Proposal Budget Response
a) infrastructure in form of power, waterand roads remain a common
denominator.
_________________________________
a) Remove VAT on agriculture related
support services
b) Remove VAT on tractor hireservices to spur investments in the
tractor services as a business
a) Olweny rice scheme to be revitalized.
No Mention in Budget?
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Budget Response to Private
Sector Priorities6. Tax Policy IssuesPrivate Sector Proposal Budget Response
a) Broaden the Team on Tax decision
making
b) avoid introduction of new charges and
taxes to the Private Sector to create tax
policy predictability
c) Widen the tax base. Stop relying on 30%
tax payer to pay almost all taxes -90%
d) CET: Remove some products like the
steel sector from the Uganda list and afew other mentioned separately and
which had already been agreed to, but
leave others.
a) Proposed amendments to the tax laws to
improve tax administration and enhance
compliance
b) widening the scope of withholding agents to
capture non-compliant tax persons engaged in
economic activities and not registered for
income tax purposes.
c) Target Small Business through legal FW & work
together with URA/ URSB/ KCCA/ LocalGovernments
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Budget Response to Private
Sector Priorities6. Tax Policy Issues Cont..
Private Sector Proposal Budget Response
a) Derogate EAC Sensitive list, steel sector,
fruit juices from COMESA FTA
b) VAT on Edible oil sector be eliminated to
create level field especially for products
produced locally
c) Zero rate VAT in the health sector
Why mainly small? Licenses should not be turned to
revenue stream. It shd focus on regulation
a) Removed exemption on wheat/ flour
b) Working towards removing exemptions of VAT
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Budget Response to Private
Sector Priorities6. Tax Policy Issues Cont..
Private Sector Proposal Budget Response
a) Remove VAT exemptions on: Wheat and Wheat flour Hotel accommodation Water for domestic use
Excise Duty
Increase : Fuel by 50 Shs Kerosenby 200/= per liter to avoid
adulteration Cigarrets Spirits at Import Level from 70% to
140%
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Budget Response to Private
Sector Priorities6. Tax Policy Issues Cont..
Private Sector Proposal Budget Response
Efficiency of Revenue Collection
20% of Revenue of Promotional activities10% on Fees charged on Mobile Money
Transactions30,000/= Stamp duty for 3rd party PolicyInsuranceMotorcycle and Moto Vehicle registrationby 54% and 200,000/= respectively
International Call levy, in ward increasedNTR Rates increased by MDAs
Payment through Mobile MoneyUganda List Removed
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Budget Response to Private
Sector Priorities7. SMEs Devt
Private Sector Proposal Budget Response
a) Focus on SMEs financing; create arevolving fund, and work on Improving
access to long term financing
b) Focus on quality and standards
improvement support
c) Focus public procurement to support
SMEs
d) Streamline institutional support.
a) Financial institutions law amendment tosupport newproducts
b) NAADS to provide agribusiness support and
alsoconfinetoextensionservices
c) Law on PPDA amended and regulation in
placetosupport this
d) Could be in the sectorial institutional policy
papers
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Budget Response to Private
Sector Priorities8. Support for Buy/Build Uganda
P/Sector Proposal Budget Response
a) Procurement Function of Government should
act as an agent of devt and wealth creation
thru support of the PS
b) Ensure transparent and easy procedures
c) Establish Administrative Measures providing
acceptable preferences for local firms
a) Handled during pre-budget period-
PPDA amendment act passed and the enablingregulation passed. Await implementation
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Budget Response to Private
Sector Priorities9. Regional Integration
P/Sector Proposal Budget Response
a) Maintain Uganda list save itemsseparately agreed for other rates(e.g. Steel sector)
b) Concentrate of removing SSconstraints
c) Aim to sign the EPAd) Caution on EAMU give time to pre
conditions
a) Removed the Uganda list and details in EAC
gazette.
b) High lighted in Budget priorities especially
infrastructure, skills etc
c) Not a budget issue
d) Not a budget issue- no response
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Budget Response to Private
Sector Priorities10. Implementation of Agreed upon Policy Actions
P/Sector Proposal Budget Response
a) Scale up monitoring and implementation of
agreed upon Policy Actions from absorption to
actual out puts including the beneficiaries; PS
b) Implore methods which can speed up actions
using a PPP approach
c) Forum like the Prime Ministers Private Sector
Forum and the Presidential Economic
Committee could partly detail itself on thismonitoring
a) PPP Bill in Parliament this FY
b) To align sector priorities and allocation of
resources across the board towards strategic
interventions of the Vision 2040
c) Strengthen the accountability and anti-corruption
institutions
d) Improve coordination, monitoring, inspection and
evaluation of Government programmes at alllevels
_________________________________________
Users or recipients of the services need to be part of
the planning and monitoring of the programs
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Trend of Budget Response to
P/Sector Priorities (2005 - 2014)
0
10
20
30
40
50
60
70
80
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
12.5
33
54.5
72.778.6 78.8 77.8 80 76.9
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EAC Budget Priorities
Kenya
Implementation of new constitution
Skills and Human resource
Job creation for Youth
Uganda
Productive infrastructure
Agricultural Pdn & Productivity
Skills and Human Resource
Tanzania
Infrastructure; Energy, Transport, ICT and Irrigation Agric and Industry
Human Resource and Skills
Tourism Trade, Financial Services
Social Services
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EAC Tax Highlights
Kenya
Exemption of duty Items used to facilitate railway transport
Increase CET on welding electoral roads from 10-25
Mill-storms and grind storms, 0-25
Plastic tubes for packaging cosmetics & paste 10-25
ImposeCustoms Ware house rent for gds remaining at Port exceeding 21days
Rwanda
No major tax changes
Tanzania
Increase Excise duty for non-utility vehicles aged above 10yrs fm 20-25% 5% Excise duty on utility vehicles aged more than 10yrs (HSCode 87.01/04)
Increased Tax on diesel by 2Tz Shs per litter frm215-217
Petrol increased by 61-400Tshs per Litter
Kerosene, no change
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Key Uganda Budget highlights
1. Commitment to resuscitate economy - THEME
2. Emphasis on Vision 2040 Priorities (Agriculture, Tourism,
Infrastructure etc)
3. Developing internal markets (Proudly Uganda Campaign)
4. Passion to support local industries
5. Incentives for Rural industrialization
6. Involvement of the Private Sector in Policy formulation
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Budget Challenges
Planning & Prioritisation
Budgeting and resourcemobilisation
Implementation of Budget Policy
Mechanisms to Monitor andEvaluate
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Conclusions
Ensure Implementationof planned activities
within the new Financial Year
Ensure Strict Budget Discipline(restrict
supplementary budgets)
Strengthen PPPin implementation and
strengthenCoordination
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Presentation TitleYour Subtitle
Thank you for a Private Sector
Centred Budget