Members of Civil Society Organisations under their umbrella, the Civil Society Budget Advocacy Group (CSBAG), held a press conference to give their insights on the FY 2025/26 National Budget Framework Paper, and raised a number of concerns.
The press conference was held on sunday 12th, January 2025 at the office of Pelum Uganda in Ntinda.
concers raised include;
Low revenue mobilisation.
“We commend the government for hitting the half-year target (FY2024/25) target of UGX 14.93 trillion by UGX 332 billion, achieving a surplus of 2.16%. This is a notable improvement compared to the same period in the previous year, where there was a shortfall of UGX 152.52 billion against a target of UGX 13,142.15 billion. Despite this achievement, URA has experienced a shortfall in revenue collections over the past year and has only reached 48% of the UGX 31.98 trillion target set for the current fiscal year.” Said, Mr. Pascal Muhangi, an economist at CSBAG.
He noted that this could be attributed to the issue of tax exemptions and incentives in Uganda, considering the country’s fiscal challenges. In FY 2022/23, the value of revenue forgone due to tax exemptions amounted to UGX 2.97 trillion. , which is equivalent to approximately 11.4% of UGX 26.041 trillion revenue collection as of November 2024.
“Our main concern is the lack of clear and transparent procedures for accessing, monitoring, and reporting on these exemptions.” He added, adding that up to 51 percent of Uganda’s GDP is generated from the informal economy (World Bank and ILOSTAT, 2022). Informal business operations tend to operate outside the formal regulatory frameworks, which pose challenges to effective tax revenue collection and compliance. Further to this is limited tax awareness, which greatly hinges on tax compliance.
He stressed that the government should review the tax governance expenditure framework that establishes criteria and conduct periodic reviews of existing tax incentives and exemptions to evaluate the effectiveness and impact on revenue collection. “URA should fast-track the generation of comprehensive revenue for more accurate revenue projections by source in a given financial year.”
According to him, CSOs propose that the government should establish an independent local government revenue collection unit. Further to this, URA should partner with local government to combat smuggling, improve rental tax collection, and improve tax compliance in LGs.
The Resource Envelope.
The projected resource envelope for FY 2025/26 is set to reduce by UGX 14.695 trillion (20% decline). That is from UGX 57.441 trillion in FY2025/26 from UGX 72.137 trillion in FY2024/25. The decline is attributed to significant reductions such as the Petroleum Fund, which is to reduce by UGX 115.4 billion; budget support is reduced by UGX 1.36 trillion, domestic borrowing is reduced by UGX 4.956 trillion, and debt refinancing is reduced by UGX 5.41 trillion.
On the other side, domestic revenue projections in FY2025/26 are set to increase by a modest 5% (UGX 1.5 trillion) to UGX 33.682 trillion from UGX 31.982 trillion in FY2024/25. This increase is due to the anticipated gains from higher economic growth and full implementation of the Domestic Revenue Mobilisation Strategy. UGX 30.573 trillion in tax revenue and UGX 3.109 trillion in non-tax revenue.
Misalignment of the FY2025/2026 budget with the NDP IV.
“We note with concern the UGX 10.4 trillion shortfall in the FY2025/26 projected budget of UGX 57.4 trillion compared to the NDP IV target allocation of UGX 67.8 trillion. Consequently, while the ATMs target in NDP IV is UGX 4.7 trillion, they face a shortfall of UGX 2 trillion (44%), given that the NBFP projected allocation is only UGX 2.7 trillion for these growth pillars.” Said, Mr. Muhsngi.
According to him, they have also observed that some programs, such as Development Plan Implementation and Sustainable Urbanisation and Housing, have projected allocations that exceed the NDP IV targeted allocations. Without proper alignment, these discrepancies can lead to resource misallocation, fragmented efforts, and a divergence from the core goals of NDP IV. See table one in the annex for details.
Inadequate allocation to settle domestic arrears.
“Whereas we appreciate the government’s commitment to addressing domestic arrears, as demonstrated by the UGX 199.9 billion released in the first two quarters of FY2024/25, this is insufficient. According to the OAG report, domestic arrears have increased by 34.4% from UGX 8.049 trillion in 2022 to UGX 10.818 trillion in 2023. At this rate, it will take approximately 54 years to clear the arrears if no new ones are incurred. This deprives the private sector of liquidity, hampers job growth, and reduces tax revenue. Alternative recovery processes like litigation are costly.” Members emphasized, adding that the government should therefore operationalise the 2021 strategy to clear and prevent domestic arrears, enforce fiscal discipline by penalising accounting officers who continue to accumulate domestic arrears, and prioritise the clearance of domestic arrears by allocating at least UGX 1 trillion to this cause.
Rising Cost of Education in Nongovernment-Aided Non-UPE and USE Government Grant-Aided and Private Schools
Rising education costs in Uganda are forcing many children out of school, with 67.7% of boys and 62.1% of girls dropping out due to unaffordability (UNHS, 2019/20). In FY 2019/20, household expenditure on education was 3.2% of GDP, higher than the government’s 2.2% and above the global average of 1.9%. And that of neighbouring countries like Ethiopia (0.3%) and Tanzania (1.4%). Simply put, for every UGX 1,000 the government spends on education, a household spends UGX 1,450. This is mainly due to the high fees charged by non-government-aided primary and secondary schools. Although in February 2024, the Cabinet banned the charging of some school requirements such as PTA, SMC/BOG, foundation body fees, and admission fees effective Term II of the school calendar year of 2024, the resolution is yet to be enforced.
Dilapidated and inadequate infrastructure in UPE schools
Members said that “We commend the Ministry of Education and Sports for its efforts to improve secondary school infrastructure, where 200 secondary schools have been renovated or constructed in sub-counties without USE schools under the Uganda Intergovernmental Fiscal Transfers (UgIFT-II) and the Uganda Secondary Education Expansion Project (USEEP). Despite these efforts, the infrastructure in most Universal Primary Education (UPE) is deplorable. The OAG, 2023, reports that 40% of the schools lacked staff houses, while 60% of the schools assessed had staff houses. Of the 60% that staff houses, 50% were constructed using PTA funding and/or support from development partners. The limited infrastructure poses risks to the safety and health of learners and teachers.”
In this, thye recommend that both the MOES and LGs jointly assess the current infrastructure gap in UPE schools and, in a phased manner, plan and budget renovation and expansion of infrastructure in UPE schools. Furthermore, the Minister of Education should issue regulations to standardise the composition and role of Parents and Teachers Associations (PTAs) in schools.
Low Staffing Levels in Public Health Facilities.
The 2023 WHO-supported Health Labour Market Analysis indicates only 44.9% of the needed health workers are available. i.e., Uganda needs 342,832 health workers but has only 154,016, leaving a gap of over 188,816 workers.
Meanwhile, in August 2024, the ministry presented a report to Parliament on the issue of the medical interns. The report indicates that there were 2,706 medical interns eligible for deployment since 2023. However, the Ministry of Finance allocated UGX 35.661 billion less than UGX. 11.51 billion needed to deploy all the intern doctors. With the available funds, they could only deploy the cohort of 2023 and the previous years, totalling 1,435 medical interns.
There is a need for the Ministry of Finance, Planning, and Economic Development to identify funds to enable MoH to deploy all medical interns and the needed specialists to supervise them to cover the gap in the health workforce. In addition, MoFPED and MoH need to prioritise the recruitment of health workers to fill vacant positions as per the revised human resource structure.
Rising vulnerability of Uganda’s food safety and quality.
Uganda faces significant challenges with the quality of agricultural inputs. Efforts by the government, including the establishment of the Food, Animal, and Plant Health Authority and prioritising quality control infrastructure, are commendable. We also commend MAAIF for prioritising the enhancement of the quality control infrastructure for handling agricultural exports at inspection points in FY 2024/25 through the construction of a National Agricultural Food Safety Laboratory & Support Centre, Export Animal Quarantine Holding Ground, and abattoir facilities, Land Border Quarantine Stations, and Land Border Export Inspection facilities (NBFP FY 2024/25). However, the Uganda National Bureau of Standards remains underfunded and understaffed, resulting in weak enforcement of quality standards and exposing farmers to counterfeit products. For the past two financial years, UNBS has persistently received only UGX 940 million for FY 2023/24 and FY 2024/25. Therefore, the government should establish a national seed company to distribute quality seeds.
Enhancing Agri-food systems
To change agrifood systems, CSOs demand more funding for sustainable farming methods. In order to successfully guarantee high output from agrifood systems, a number of member CSOs under their umbrella organisations, CSBAG and PELUM, have emphasised the significance of increasing investments, fortifying policies, and practicing good governance. As stated in the Kampala CAADP declaration, Mr. Lawrence Kanakulya, the program officer in charge of advocacy, has underlined the necessity of implementing sustainable practices by preserving resources, safeguarding the ecosystem, and guaranteeing long-term productivity. He stated, “The Kampala Declaration commits to adopting sustainable agriculture practices to increase agrifood output by 45% by 2035.” In order to improve food security, environmental health, and community resilience, Mr. Lawrence urged the government to provide funds for sustainable agriculture practices like organic farming and agroecology.
The financial year 2025/26 is anchored on the theme, “Full Monetisation of the Ugandan Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation, and Market Access.” Members revealed in the statement.
The NBFP was tabled in Parliament on 20th December 2024 by the Minister for Finance, Planning, and Economic Development by Section 9 (3) of the Public Finance Management Act, 2015 (Amended). And for this, we commend the Ministry of Finance for consistently adhering to this legal requirement.
Public debt was also a key concern raised.
As of June 2024, Uganda’s total public debt stock stood at UGX 94.7 trillion, representing an 11.6% increase from UGX 84.8 trillion in June 2023. With external debt accounting for 57.2% and domestic debt for 42.8% of the UGX 94.7 trillion. Furthermore, the IMF forecasts that Uganda’s public debt will increase to approximately UGX 110.6 trillion by the end of FY2024/25, which raises concerns about the sustainability of Uganda’s debt. Conferring to the NBFP FY2025/26, over the past 11 years (2013-2024), the government has borrowed UGX 43.25 trillion. Of this amount, UGX 26.84 trillion has been spent, leaving UGX 16.4 trillion unspent. This indicates a lack of preparedness by the government before the acquisition of the debt. This implies that on average, every Ugandan is indebted up to the tune of UGX 2.1 million.
