Thursday, May 06, 2021

    High-level Policy Dialogue on Uganda's Economy

    Economic Recovery

    ACODE) and the Civil Society Budget Advocacy Group (CSBAG) in partnership with the Ministries of Finance, Health, Local Government and Education are organizing a High-Level policy dialogue on the Economy under the theme, "Economic Recovery and Re-igniting Economic Growth". The dialogue seeks to provide a platform for different stakeholders to discuss alternative policy options for economic recovery and put back the economy on a sustainable growth path. The dialogue will also provide a platform for the launch of the national budget month which aims at popularizing the budget and increasing participation in the budget process. The dialogue is scheduled to take place on Thursday, May 6, 2021 from 08:30am to 12:30pm at Serena Kampala Hotel - Katonga Hall. The proceedings of the dialogue will be telecast live on television and streamed on social media.

    Background and Rationale
    Though the country has so far been shielded from the worst in terms of the health impact, the sharp global downturn in economic activity and containment measures put in place as a result of COVID-19 pandemic have come at an enormous cost to the economy. Severe limitations on international transport have reduced exports and tourism and have further restricted access to key industrial inputs. At the same time, the collapse in the world economy has lowered remittances from Ugandans living abroad. Lockdown measures have compounded economic difficulties by preventing people from working, constituting another supply shock and a strain on people's livelihoods. Recent estimates suggest that as a result of the global crisis and lockdown measures, 3.3 million people fell into poverty and 9.1% of monthly GDP was lost during the lockdown.

    As a result, economic growth is estimated to have fallen drastically to 3.1% in 2019-20. A survey conducted by Economic Policy Research Centre (EPRC) in April 2020 highlights that small businesses have been hit particularly hard, with close to 600,000 jobs lost temporarily, of which more than 80% of job losses were in the service sector. While there has been some recovery in economic activity since June, this has not been met with a commensurate increase in employment. At the same time, government revenues have dramatically fallen at a time when additional support has become most important. The country therefore urgently needs interventions for economic recovery and growth. This dialogue will focus on five aspects that could alleviate the situation i.e. budget efficiency and effectiveness, harnessing urbanization for economic growth, effective debt management; and sustainability and accountability in the management of emergency response.

    Implementing and financing the National Development Plan (FY 2020/21 - FY 2024/25)
    The budget for FY2021/22 is the second under the NDPIII and is expected to usher in program-based planning in earnest. The budget is projected to be UGX 45,658.2 trillion with domestic revenue contributing UGX 21,693.2 (47.5%). The deficit is expected to be covered through both domestic and external financing. There is anxiety about adequacy of resources for implementation of NDPIII and attainment of the country's development goals. At the same time, an economic stimulus package of up to UGX 1tn will be paid to boost economic growth over the medium term. However, there is concern that the management of the fund has hitherto not been transparent. There is also furthermore, there is disquiet about the potential of the stimulus to affect the economy. The discussion during the dialogue on this area will focus on budget allocations to the different programs and measures for budget efficiency and effectiveness as well as the expected effects of the economic stimulus package.

    Harnessing urbanization for economic growth
    The newly created cities could potentially leverage other economic empowerment and recovery efforts in the country. The cities could act as important growth centers under Local Economic Development initiative. Currently, focus has been put on the resources required to operationalize the cities which has been deemed too high given competing priorities. The discussion under this area will focus on potentials of the cities to improve effectiveness of economic empowerment programs and service delivery.

    Effective debt management and sustainability
    Uganda's stock of public debt grew by 21% to US$ 15.27 billion over one year (June 2019 to June 2020). This is equivalent to 41% of GDP in nominal terms and 31.8 % in present value terms. The debt constitutes US$ 10.45 billion (68.4%) external debt and US$ 4.82 billion (31.6%) domestic debt. While public debt remains sustainable, it is expected to increase to 49.9% of GDP by the end of 2021 and 54.1% in 2022. The key driver for the projected increase in debt is the need for extra borrowing to cover revenue short falls, Covid-19 related expenditure as well as support for economic recovery. The discussion at the dialogue will specifically focus on effective and efficient utilization of debt and measures to strengthen debt accountability.

    Financing emergency response in Uganda
    Reports of misuse of Covid-19 funds have caused public uproar in Uganda. It is estimated that the government raised US$ 888 million in loans, grants and donations to fight the Covid-19 pandemic. However, reports of gross irregularities, poor planning raise questions about the country's capacity to manage emergency response. There has been limited transparency and accountability in the utilization of Covid-19 funds. The discussions on this issue will focus on financing emergency response with emphasis on transparency and accountability.

    Financing gender and equity interventions
    Gender and Equity compliance at the national level improved from 61% in FY 2019/20 to 68.9% in FY 2020/21 while that of Local Governments improved from 42.49% in the FY 2019/20 to 58.07% in FY 2020/21 as indicated in the Second Local Government Assessment for FY 2020/21. The Equal Opportunities Commission (EOC) and the Ministry of Finance have adhered to the Public Finance Management Act, 2015 in assessing Ministries, Departments and Agencies (MDAs) on their compliance to incorporate gender and equity in their plans and budgets every financial year. However, the persistent challenges like the limited capacity of LG technocrats in gender and equity budgeting, limited knowledge on ways to incorporate gender and equity are contributing to the gender inequality gap which should be addressed for development. This discussion will therefore focus on incorporating gender and equity interventions in national budgets especially at the local government level.

    Modalities of the Dialogue
    The dialogue will involve a keynote presentation, a panel of eminent professionals and plenary discussions. In line with the COVID-19 health guidelines, the meeting will be attended in person by not more than 60 people to in order to observe the COVID-19 SOPs including social distancing. Other participants will participate through teleconferencing. The proceedings will be broadcast live on various media channels including radio, television and the internet.

    The presenters and panelists will be drawn from the entire spectrum of stakeholders including Government Ministries, Departments and Agencies, Parliament, development partners, academia, private sector, Civil Society and the General public.

    Expected Outputs

    1. A synthesis report of the proceedings
    2. Four policy memos on each of the areas of focus of the dialogue
    3. A feature on the dialogue to be published in the print media
    4. A video recording of the proceedings of the dialogue which will be edited and uploaded on Youtube