According to the Uganda National Household Survey 2016/17, the national poverty rate has increased from 19.7% in 2012/13 to 27% in 2016/17. In absolute terms, the number of poor people increased from 6.6 million to 10.1 million in these years. This increase is attributed to effects of climate change that has affected agricultural production for a number of households that had previously been above the poverty line.
The 2016 Commitment to Equity report and the 2017 International Monetary Fund (IMF) Policy Support Instrument report highlight that public spending in Uganda is not being sufficiently redistributive in nature nor leading to inclusive growth.
This briefing paper and accompanying detailed report analyses Uganda’s 2017/18 budget, examining its objectives and assessing potential impacts from the perspective of the poorest. They look at the decisions in the context of the 2016/2017 budget to provide recommendations for action.
The analysis is useful for CSOs and citizens keen to know how the government’s budget supports its commitments; for individuals with interest in how the financing of specific services will impact the least well off; and for the decision makers responsible for addressing the needs of the poorest.
Key conclusions and recommendations
Government revenue mobilisation is below regional neighbours, which limits the resources it can allocate. In 2017/18, Uganda’s revenue was 15% of GDP; Rwanda’s was 17.6% and Kenya’s was 20.5%.
Government has continued to provide progressive reforms in areas that reduce the burden of taxation on the poorest people. VAT exceptions in such area as animal feed and irrigation systems, is one example.
Government is borrowing heavily from non-concessional sources to drive industrialisation policy.
Such a strategy requires the government ensure financing is appropriately used: unless the investment leads to increased growth, there is the potential for debt vulnerability and rising interest payments.
Focus on industrialisation
Uganda trails regional neighbours in funding sectors benefiting the poorest. In 2017/18 such sectors as education and agriculture have seen only marginal increases, with environment and water, social development and health sectors seeing funding cuts.
Development partner support
Overall, Government is reducing dependence on development partners; however, it continues to rely significantly on their support in sectors relevant to the poorest.
By supporting priority areas, disbursing in timely fashion and providing predictability of funding over the medium term, development partners will maximise their positive impact on government planning.