FULL BUDGET SPEECH: Govt Says Economy is not in Recession, Divides Shs 29 Trillion National Cake

Rt. Hon. Speaker, in accordance with Article 155(1) of the Constitution of the Republic of Uganda, I am honoured to present the Budget for Financial Year 2017/18, on behalf of His Excellency, the President.

The Financial Year 2017/18 Budget was approved by Parliament on 31st May 2017, in line with the Public Finance Management Act 2015.

Madam Speaker, today I commend Parliament for the approval of the Financial Year 2017/18 Budget, the highlight of which I will give later in my speech. In my presentation today I will therefore cover the following :- i) Report on the state of the economy, and spell out the immediate and medium term strategies to stimulate economy and propel Uganda into Middle Income Status; ii) Update Parliament on the performance of key selected sectors in financial year 2016/17 Budget, and priorities for the next financial year; and iii) Highlight the financial year 2017/18 revenue and expenditure framework and measures for enhancing domestic revenue mobilization.

Madam Speaker, Uganda’s development achievements provide renewed confidence in the NRM Government’s strategy to transform Uganda from a low income country to a prosperous one. Many Ugandans are now living longer and better lives.

Life expectancy today is 63 years, up from 48 years in 2002. This increase in life expectancy is a result of the NRM Government’s delivery of better socioeconomic outcomes such as the provision of education, health and water. Literacy rates for adults now stand at 74% rising from 68% in 2002. 79% of the population now accesses safe water compared to 59% in the same year.

Immunization of children against measles is now 82% up from 62% fifteen years ago. Per capita incomes have more than doubled to USD 637 in 2016 rising from USD to USD 250 in 2002, notwithstanding an increase in population from 26 million to 41 million people over the same period.

Madam Speaker, despite progress on these socio-economic outcomes, a lot more needs to be done. The growth of average Incomes has stagnated in the face of declining economic growth and a fast growing population.

There is growing unemployment, especially among the youth. We are increasingly faced with the prolonged droughts as a result of environmental damage such as the destruction of wetlands and deforestation. Land fragmentation is another problem.

Agriculture, the mainstay of the vast majority of Ugandans, is now at risk due because of excessive reliance on rain-fed farming. These challenges require immediate redress.

Madam Speaker, Government plans to turnaround the economy by enhancing agriculture production and productivity and the pace of industrialization.

The vagaries of climate change that impede realization of agriculture’s potential will be tackled by fast-track irrigation. In order to tackle unemployment, Government will promote industrialization by supporting value addition. Value addition especially in agro-processing will utilize agricultural output and also create more jobs, thereby benefiting the vast majority of Ugandans, particularly the youth and women.

Accordingly, the theme for the Financial Year 2017/18 Budget is ‘Industrialization for Job Creation and Shared Prosperity’.


  1. Madam Speaker, before I report on sector performance and spell out the priorities for next year, let me give an account the state of our economy today. Uganda’s economic and social progress, and future prospects have been affected by global, regional and domestic developments.

Global Factors

Global factors that have negatively impacted on our economy include the following:- i) slow economic recovery in Europe has translated into lower demand for our export commodities. ii) economic recovery in the USA has led to a reduction in capital flows to Africa, as investors prefer to invest in US markets. iii) A rise in global Interest rates globally has resulted in high cost of capital and borrowing.

Regional and Domestic Factors

Madam Speaker, regional and domestic development that have affected the state of the economy include the following:- i) Civil conflict in parts of the East African region, have disrupted export markets for our goods and services. These conflicts have also led to influx of refugees into Uganda, putting pressure on our social amenities; ii) The effects of climate change and environmental degradation have threatened food security and economic growth; iii) Private sector growth has been constrained with high interest rates and non-performing assets;

  1. iv) Delays and inefficiency in the implementation of Government programmes and projects have dampened their anticipated positive impact on the economy; and v) Corruption and inefficient Implementation of Government projects and programmes, which have hampered overall service delivery.

Madam Speaker, despite these challenges, Uganda’s economy is not in recession but growing moderately. The size of the economy this financial year is projected to rise to Shs 90.6 trillion, equivalent to USD 26.2 billion.

This represents a real annual economic growth rate of 3.9%. Although this is lower than the target growth of 5.5%, Uganda’s performance is higher than the average Sub-Saharan Africa growth rate this year, which is projected to be 1.4%. Growth in agricultural output slowed to 1.3% this year compared to growth of 2.8% in the previous year, as result of the unusually prolonged drought. The Industrial sector growth also dropped to 3.4% this year as against 4.7% last fiscal year.

Growth in Services also slowed to 5.1% compared to 5.9% last year. However, Aggregate demand, while subdued, has grown at 2.7% this year, compared to 1.0% last financial year. 12. Madam Speaker, while the financial sector remains well-capitalized, a sharp rise in interest rates in 2013 led to increased non-performing loans which peaked at 10.5% of total loans in December 2016, but have reduced to 6.3% as at March 2017. Public Debt

Madam Speaker, Uganda’s external and domestic Public debt amounted to USD 8.7 billion. In nominal terms this is equivalent to 34% of our GDP. When future debt payment obligations are discounted to today’s value, our Public Debt to GDP ratio stands at 27%, much lower than the threshold of 50% beyond which public debt becomes unsustainable. Uganda’s public debt is therefore sustainable over the medium to long term.

Monetary and External Sector 6/6/2017 5:44:00 PM 6 14. Madam Speaker, International reserves at end December 2016 stood at US$ 3 billion, equivalent to five and half months of future imports of goods and services. This is above the required level in the EAC monetary convergence of four and half months of imports. The exchange rate has remains broadly stable for much of the financial year, and inflation remained within single digit at 6.8% despite pressure from food crop prices.


Madam Speaker, Uganda aims to graduate to middle income status by 2020. Average incomes, or GDP per capita will therefore reach USD 1,039. Given a population estimate of about 45 million people in 2020, the size of the economy will need to grow by an additional USD 18 billion before 2020 for us to attain middle income status.

Madam Speaker, despite current slowdown in economic growth, projections are that the economy will rebound to a growth rate of 5.5% in FY 2017/18 and eventually to at least 7% in the medium term. This projection is based on improvements in agricultural production and productivity, and the recovery in aggregate domestic demand and private sector credit.

In addition, Infrastructure and oil sector investments will significantly contribute to this recovery in growth and consequently lead us into middle income status.

Madam Speaker, achieving middle income status will require addressing many of the challenges I have already enumerated. Dealing with climate change is key to agriculture in addition to reorganizing the sector. Financial sector reform is necessary to lower interest rates, and reduce the cost of capital to the private sector.

Delays in implementation of key Government projects and programmes must be eliminated. Corruption by elements of the public service that frustrate investors must be eradicated. Madam Speaker, restoring annual economic growth rates to at least 7% is the first step to attain middle income status.

Our economic recovery strategy therefore rests on four pillars. These are: i) Industrialization through Value Addition; ii) Increasing production and productivity in the key primary growth sectors of Agriculture, Tourism and Oil, Gas and Minerals; iii) Enhanced Private Sector Development; and iv) Increased Public Sector Efficiency.

Industrialization through Value Addition 19.Madam Speaker, Uganda’s industrialization will be anchored on agriculture, agro-processing and value addition. Linking agriculture to industry is the mechanism in which the economy will be transformed to deliver inclusive growth and development.

This process requires the implementation of the following strategies: i) Promoting processing of agricultural raw materials; ii) Building linkages between agro-industries and farms; iii) Adapting farmers to meet industrial and market needs by increasing production of quality raw materials; and iv) Developing Agro-industrial Clusters in agro-ecological zones,

Madam Speaker, to enable the implementation of these strategies the following measures will be undertaken:- i) Implement Agricultural zoning linked to industries. For example in Citrus and Mangoes can be zoned in Eastern and Northern Uganda; Cassava in the North & Eastern Uganda; Mangoes & Passion in Central & Western ii) Supporting innovations by building a critical mass of highly skilled ICT, science technology and engineering professionals to drive industrialization.

I have therefore provided Shs 43 billion to establish an Innovation Fund, of which Shs 13 billion will finance talented youth in the ICT Sector; iii) Provision of fully-serviced demarcated industrial and business parks with adequate electricity, water, telecommunications at Luzira, Jinja and Namanve/Bukasa; and iv) Improvement in Skills Training, Business Incubation, Work Space provision and financing SME Product Start-up Kits in order to promote value addition by Small and Medium-scale Enterprises (SMEs).

Production and Productivity in Key Primary Growth Sectors

Madam Speaker, the primary sectors where Uganda has competitive advantage are Agriculture, Tourism and Minerals, Oil and Gas. 22.In Agriculture, challenges which Government will address include the following : i) Climate change arising from destruction of wetlands and deforestation, which consequently results into prolonged drought in some cases floods; ii) Low survival rates of distributed seedlings at about 40%, because of poor quality inputs, mismatch between input distribution and planting seasons, weak extension services, and excessive dependence on rain-fed agriculture; iii)

Inadequate post-harvest handling infrastructure that accounts for over 30% loss of production; iv) Inadequate compliance with and enforcement of standards right from farms to processors; v) High cost of financing for agriculture enterprises with some agricultural projects being charged interest rates of as high as 30%; and vi) Lack of coordination among institutions in the Agricultural Sector.

In tourism the challenges are low hospitality skills, inadequate marketing and promotion of tourist products and insufficient coordination between tourist operators and Tourism sector institutions. The Minerals, Oil and Gas sector suffers from fragmented Minerals legal framework and consequently low investment to develop Uganda’s minerals, in addition to delayed implementation of key projects such as the Oil Refinery and the East Africa Crude Oil Pipeline.

Government will prioritize improvement in production and productivity in these sectors. Agriculture value chain reform will make Uganda food secure, enhance value addition to take up agriculture output, while creating jobs and increasing export earnings.

The strategic actions that Government will implement include reforestation, prevention of wetland destruction and enhancing irrigation to reduce reliance on rain-fed agriculture. In addition, reorganizing the procurement and distribution of planting material for better quality and timely delivery will be undertaken.

In Tourism measures include increased promotion and marketing of tourist products and building skills in the hospitality industry. To promote commercial production In the Minerals, Oil and Gas sector, the legal framework will be reviewed to improve governance and attract investment. The Oil Refinery and Crude Oil Pipeline projects will also be implemented urgently to enable production of first oil by 2020.

These actions is will enable the Minerals, Oil and Gas sector increase the resource base for economic growth. I will elaborate priority actions in these areas to enhance productivity in key primary growth sectors later in my presentation.

Private Sector Development

Madam Speaker, Government will support Uganda’s private sector to become more competitive at national, regional, and international levels. The private sector, as we all know, plays a key role in production, trade, export promotion and employment creation. Therefore resolving private sector constraints is key to stimulating the economy.

Madam Speaker, tremendous progress has been made in reducing cost of doing business and therefore improving trade. Port transit and border clearance times have improved significantly.

Clearance of goods at Mombasa Port has been reduced from 13 to 5 days, and the transit time for goods from Kenya has reduced from 4 to 2 days. It now takes an average of 4 hours to clear through Malaba compared to 24 hours previously.

On the downside, private sector activity has slowed in the recent past with a number of businesses suffering distress. The key causes include the following:- i) High cost of capital coupled with the absence of Long Term Financing; ii) Insufficient local content especially in major infrastructural projects; and iii) Slowdown in domestic aggregate demand for goods and services; iv) Continued accumulation of domestic arrears by Government departments; v) High cost of transport that make our exports uncompetitive regionally; and vi) High costs of electricity that makes manufacturing unprofitable.

Madam Speaker, in order to provide an immediate boost to the economy, Government will spend the domestic arrears budget in the first quarter of next financial year to settle verified arrears it owes to private suppliers. I have provided U. Shs. 300 bn for this purpose.

I have also established a hotline at the Ministry of Finance for suppliers to report delays in approved and verified payments. Releases to Government departments delaying payments for goods and services supplied to Government for more than fourteen (14) days will be withheld until such payments have been made.

The One Stop Centre will also be fully operationalized to increase efficiency of business licensing and registration. Madam Speaker, whereas Government’s domestic borrowing is essential for the development of our capital markets, excessive domestic borrowing constrains private sector growth because it raises the cost of borrowing, making businesses unprofitable.

In addition, financing the Government budget from this source has proven much more expensive compared to other sources of financing. To support private sector growth, Government will reduce domestic borrowing from 2% of GDP to 1% of GDP in the short to medium term. Achieving this objective will require implementing measures to boost domestic tax and Non-tax revenues, which I will elaborate later.

Madam Speaker, Uganda’s savings rate remain low in relation to investment needs which requires development of a sustainable National Financing framework. Government will reform the pensions and insurance sectors to 6/6/2017 5:44:00 PM 11 mobilize long term capital.

This should in turn lead to a reduction in interest rates as long term financing becomes available. In order to increase the availability of long-term capital for the private sector, I have provided the Uganda Development Bank Limited (UDBL) with an additional UGX 50 billion, and Government has also guaranteed a $26 million loan from the Islamic Development Bank (IDB).

The Financial Institutions Act has also been amended to provide for new financial products such as Islamic Banking and Agency/Mobile Banking. Madam Speaker, implementation of the local content strategy will be enhanced with the ‘Buy Uganda, Build Uganda’ initiative to allow local contractors to participate in infrastructure projects and other key Government investment programmes.

This will require amendments to the PPDA Act, for which consultations are being concluded. Madam Speaker, private sector activity and the provision of social services are greatly facilitated by adequate infrastructure, especially in energy and transport. Government will expedite the completion of ongoing projects and reduce the electricity and transport costs.

While the benefits investment in infrastructure will be realized in the medium term, they require concerted action now to ensure future results. I will return to the details of the priority actions to speed up infrastructure development later in my speech.

Public Sector Efficiency

Madam Speaker, inefficiency and corruption in our Public Sector institutions are key challenges to the delivery of public services, economic growth and poverty reduction. Government will continue to improve Public Sector efficiency through the following actions:- i) Amend the PPDA Act to eliminate delays in procurement which is one of the major causes of low absorption across MDAs, especially on major infrastructure projects.

In addition, disciplinary actions will be taken against Accounting Officers who either intentionally or out of negligence/incompetence delay procurement processes. ii) Enforce the preparation of and implementation of Sector Strategic Plans. Quarterly release of funds commencing next financial year shall be tied to the implementation of these Strategic Plans. iii) Performance Contracts of Accounting Officers will be linked to results to ensure accountability across Government.

In line with this, the Head of Public Service will appraise the Permanent Secretaries to ascertain their achievement of results in line with the NDPII and Sector Strategic Plans. iv) In order to improve Public Investment Management, all Government projects will be adequately prepared and appraised with feasibility studies before funds are allocated implementation.

Capacity will be built across Government to improve project selection, appraisal, implementation and monitoring. In addition, a database of bankable projects will be developed in line with the National Development Plan.


Madam Speaker, I now turn to the performance of key sectors for the Financial Year 2016/17 Budget, details of which are in the financial year 2017/18 Background to the Budget.

I will also elaborate the priority actions to enhance production and productivity in key primary sectors, and also detail priority actions that are required in supportive sectors such as infrastructure development and social service delivery.

Production and Productivity in Key Primary Sectors Agriculture

Madam Speaker, the Agriculture sector is key in providing food security and export earnings, in addition to creating gainful job opportunities for Ugandan youth and women. During the year, actions in the Agriculture sector have included distribution of inputs under Operation Wealth Creation (OWC), market 6/6/2017 5:44:00 PM 13 infrastructure development, and the rehabilitation of major irrigation schemes.

Planting materials distributed include 72 million coffee plantlets, 148 million tea plantlets, 10 million citrus seedlings, 6 million mango seedlings and 4 million cocoa seedlings. In addition 7 urban markets have also been reconstructed and works on 11 additional markets will commence next year under the Market Improvement Programme (MATIP).

To further improve market access, 11,000 Km of new community access roads were constructed, covering 90 districts and 158 sub counties; 77 rural markets were constructed in 35 districts; and 297 agroprocessing facilities were established under Community Agriculture Infrastructure Improvement Project (CAIIP).

Madam Speaker, during this year an additional Shs. 23 billion was allocated for recruitment of Agricultural extension workers, bringing extension staffing levels to 78%. This will make Agricultural Extension system more effective in the promotion of appropriate farm level practices and also complement the continuing provision of inputs under Operation Wealth Creation.

Madam Speaker, next financial year, Government will address the adverse effects of climate change by commencing construction of irrigation schemes in 13 selected Districts where design studies have been concluded. These districts are Iganga, Bugiri, Pallisa, Tororo, Butaleja, Namutumba, Soroti, Serere, Dokolo, Lira, Amuru, Nwoya and Hoima.

In addition design studies for irrigation schemes will be completed in the Acomai River system in Sironko, Bukedea and Bulambuli districts and the Atari River system in Kween and Bulambuli districts. Solar-power water irrigation systems will also be established in all nine (9) Zonal Agricultural Research and Development Institutes as a pilot before replicating and rolling out across the country.

In addition, 520 valley tanks will be constructed to increase availability of water for agricultural production at farm level, with areas affected by the recent drought and food shortages given priority.

Government will also pilot fertilizer-provision to a targeted 10,000 farming households using subsidized electronic vouchers, in addition to continued distribution of planting and stocking materials. Madam Speaker, in order to add value to agricultural produce, Government will accelerate public investment in the entire value chain for strategic commodities.

Support will be provided to boost the processing of Milk and other dairy products, oil palm, oil seeds and cotton. Equipment for medium scale fruit processing, motorised maize milling, and rice milling will be purchased and distributed under NAADS. A new Cottonseed Processing Plant will be established by the Cotton Development Organisation (CDO) [CLARIFY WHERE].

Government will also increase productivity by implementing the following interventions:- i) Support the establishment of post-harvest handling storage by the private sector, together with cooperatives at parish-level; ii) Expand Bulk Water Irrigation Infrastructure on major lakes and rivers, and tackling climate-change through afforestation, and prevent wetland destruction; iii) Rollout the Agricultural Insurance across the country to subsidize agriculture insurance premiums for both small and large scale farmers; and iv) strengthen security of land tenure by formalizing land ownership and household acquisition of titles.

Madam Speaker, unleashing Agriculture’s potential can eliminate Uganda’s trade deficit currently at USD 2.8 billion. Immediately addressing commodity specific constraints faced in coffee, tea and fish sub-sectors alone can triple export earnings from USD 615 million today, to USD 1.8 billion annually. In this regard, Government will implement the following priority actions in the coffee, tea and fisheries sub-sectors.

In the coffee sub-sector, Government will:- i) Rehabilitate the existing 320,000 hectares of coffee with fertilizer application and irrigation, while intensifying agriculture extension for proper management of the 260,000 hectares of new coffee planted between 2009 and 2015; 6/6/2017 5:44:00 PM 15 ii) Generate sufficient disease-resistant clonal coffee plantlets in order to mitigate the coffee wilt disease (CWD); and iii) Mobilize smallholder farmers into groups to work with key market traders to meet export market demands and sustainably unlock the coffee value chain. This will be done in partnership with private sector organisations like the National Union of Coffee Agribusiness and Farm Enterprises (NUCAFE).

Madam Speaker, these actions will more than triple the national average coffee yield from the 600 kilograms per hectare today, to about 2,100 kgs per hectare. As a result coffee exports will increase to about 9- 12 million 60-kg bags by 2020, increasing Uganda’s earnings from coffee export to more than US$ 1 billion from the US$ 400 million today.

Madam Speaker, in the tea-subsector Government will work with the Uganda Tea Association (UTA) and other private stakeholders to increase the productivity of tea farmers. Priority actions include mobilizing small holder farmers to access high yielding clonal tea varieties, and increase extension services, with emphasis on greater fertilizer usage.

These actions will increase the average smallholder farmer productivity from 1.5 metric tonnes per hectare (MT/ha) today to at least the 2.5 metric tonnes per Hectare (MT/ha) obtained in tea estates.

Ugandan tea also needs branding and marketed to increase returns from international tea auction markets. Currently a kilo of Ugandan tea earns US Dollars 0.5 less than Kenyan tea because of the absence of Ugandan branded tea. 48.These actions will lead to a seven -fold increase in the coverage of tea planted from the 28,000 hectares today to potentially 200,000 hectares; and consequently increase exports from 60,000 Metric tonnes to more than 400,000 Metric tonnes in the medium term.

This increase would earn Uganda more than US$ 500 million in tea exports, compared to the US$ 80 million today. Madam Speaker, in the fisheries sub-sector industry productivity can be increased by employing new fish-farming technology such as aquaculture or cage fish farming. A fish-farmer using a cage-system can realize 48 metric tons per annum, twelve times more than from traditional capture fishing. Enforcement of regulations to prevent overfishing to restore fish stocks in lakes and rivers is also required.

These measures would almost triple fish export earnings to US$ 360 million per annum with cage fish farming compared to US$ 135 million earned today from capture fishing. Madam Speaker, using sector specific approaches and actions that address the challenges for each commodity enterprise as I have demonstrated for coffee, tea and fisheries, additional earnings can and must be generated from horticulture, diary and beef, grains and pulses.


Madam Speaker, tourism has developed rapidly. Uganda was ranked as one of the World’s top five tourist destinations in 2017 by CNN, and the best African country to visit and fourth best in the world. Tourist arrivals to Uganda have more than doubled to 1.3 million people in 2015, rising from 540,000 in 2006.

Tourism also employs 1.2 million people both directly and indirectly. Consequently, Uganda is targeting tourist arrivals to increase to 4 million visitors per year, and increase tourism earnings from USD 1.35 billion today to USD 2.7 billion by 2020. This will translate into significant jobs for Ugandans.

Madam Speaker, Uganda’s huge touristic potential is constrained because of poor infrastructure to access tourism sites, inadequate skills in the hospitality industry and low visibility to attract national and international tourists. In addition, tourist products are under developed and protected areas suffer human encroachment with wildlife endangered by illegal hunting and trade.

Madam Speaker, Uganda’s tourism potential will be harnessed. In addition to touristic infrastructure development that has been done, Government will develop the necessary skills in the hospitality industry, while marketing and promoting Uganda as a world-class tourist destination with appropriate tourist products.

In order to attract target tourists, the certification of hotels and 6/6/2017 5:44:00 PM 17 restaurants will also be concluded in 2018. I will address tax incentives for tourism later in my presentation.

Oil, Gas and Minerals

Madam Speaker, in Oil and Gas sector, 98% of land acquisition for the Oil Refinery has been completed. Government will also select a Lead Investor to partner with in the development of the Refinery. In addition, the Hoima-Tanga route was selected as the least cost route to transport Uganda’s crude oil to the East African Coast.

The Inter-Governmental Agreement to support the private sector develop the East Africa Crude Oil Pipeline’s was signed in May 2017. In addition, a total of eight (8) production licenses have been granted and further Oil Production licenses will be granted expeditiously.

Madam Speaker, the following priority actions in the Oil Gas and Mineral sector will be implemented starting next financial year and the medium term to provide a new and larger base for economic growth: i) Promote and monitor petroleum exploration and develop petroleum refining, pipeline, and bulk storage infrastructure so that commercial production of first oil occurs in 2020; ii) Review the regulatory framework in the minerals sector iii) promote mineral exploration, development, production and value addition; iv) Fully equip a modern Minerals Laboratory to test the quality of minerals; and v) Register artisanal miners and build capacity of small scale miners.

In order to facilitate development of the Oil and Gas sector, the following oil sector related infrastructure development activities will commence next financial year: i) Construction of the Kabaale International Airport in Hoima District; ii) Rehabilitation of the Tororo – Pakwach Railway Metre Gauge line to support delivery of equipment for Oil production; iii) Upgrading of Road Infrastructure that I detailed earlier; and iv) Development of Pakwach – Butiaba Ferry/barge water transport 6/6/2017 5:44:00 PM 18 II. Infrastructure Development Power 58.Madam Speaker, in the Power sub-Sector positive developments have been registered with electricity access increasing to 21% of households in 2016 compared to 11% in 2011.

During the year, Power infrastructure development has progressed with construction works at the Karuma and Isimba hydropower projects are at 51% and 63% respectively. In addition construction works are underway at 12 out of 17 projects, under the Global Energy Transfer Feed-in Tariff (GETFiT) Programme.

These include the 10MW Soroti Solar Plant which was commissioned in 2016 and Muvumbe Hydro Power Plant (6.5MW) commissioned in March 2017. Additional works continue at Siti I (6.1MW), Nkusi (9.6MW), Rwimi (5.5MW), Lubilia (5.4MW), Waki (4.8MW), Nyamwamba (9.2MW), Siti II (16MW), Sindila (5MW) and Kyambura (7.6MW). Consequently an additional 156MW will be commissioned by 2019 under the GETFiT renewable energy programme.

Regarding Rural Electrification, 113 out of 117 districts have been connected to the grid. 474.33Km of medium voltage and 240Km of low voltage lines have been constructed. The remaining 287 out of 1,500 sub-counties will be connected in the medium term. I have allocated …. to continue implementation of various Power projects.

Madam Speaker, in order to reduce power tariffs, Government is engaging the financiers of the Bujagali Hydropower Project to refinance its debt. Roads 61.Madam Speaker, the stock of paved Roads has increased from 3,317km in 2011/12 to 4,919km, just only 1,081Km short of the 2020 NDP II target of 6,000km.

While progress has been made in upgrading roads, road safety remains a challenge due to high rates of accidents on these roads. Madam Speaker, next financial year, Government will continue expansion of the paved national roads network.

In addition oil roads will be constructed to support commercial production of petroleum by 2020. The following Ten (10) Roads and 6/6/2017 5:44:00 PM 19 Two (2) Bridges will be upgraded in this respect: Hoima – Butiaba – Wanseko; Masindi – Biiso; Masindi – Bugungu via Murchison Falls; Kaseeta – Lweera via Bugoma Forest; Hohwa – Nyairongo – Kyarusesa; Wanseko – Bugungu; Buhimba – Nyarweyo – Kakindo – Kakumiro – Mubende; Lusalira – Kaibamba- NkongeSembabule; Kyotera – Rakai; Kabale- Kiziramfumbi; and Tangi and Emmi Bridges; 63.Madam Speaker, Government will also increase the maintenance of both the paved and unpaved road networks.

To this end, regional road equipment maintenance workshops will be operationalized. Railway Transport 64.Madam Speaker, 84.5% of acquisition of the Right of Way for the Malaba – Kampala Standard Gauge Railway project has been completed during the year.

Negotiations to conclude the financing for the construction of the SGR Project are also underway. Discussions with the Kenya Government are also underway to ensure the synchronization of the construction of the Kampala – Malaba SGR with the Naivasha – Kisumu- Malaba SGR segments. Water Transport 65.Madam Speaker, with respect to water transport, the Interim Master Plan for the New Kampala Port at Bukasa has been completed and initial preparatory works will begin in early 2018.

The design for the remodeling of the Portbell and Jinja Piers has been completed with construction due to commence in 2018/19. [PRIORITY ACTIONS REQUIRED] III. Improving Service Delivery and Human Capital Development Health

Madam Speaker, there has been progress in Health outcomes over the last five years, since 2011. Infant mortality has declined from 54 to 43 deaths per 1000 live births; and the under-five child mortality has declined from 90 to 64 deaths per 1000 live births. Maternal mortality has also declined from 438 to 336 deaths per 100,000 births respectively. Contributory factors for the decline in maternal mortality include the rise in the deliveries in a health facility which have increased from 57 to 73 percent of all births.

In addition, there has been a decline in the fertility rate from an average of 6.2 to 5.4 children per woman. The uptake of family planning has also increased with the share of married women aged 15 to 49 practicing family planning rising from 30 to 39 percent.

Madam Speaker, improvements with respect to disease burden have also been registered. In order to raise coverage of Long Lasting Insecticide Treated Nets (LLINs) from 75% to 100%, mass distribution of 24 million was undertaken. Malaria prevalence has reduced from 42% to 19% according to the 2015 Malaria Indicator Survey. Mother to Child HIV Transmission has also reduced with the number of new infections dropping from 22,000 in 2012 to 3,400 in 2016.

Madam Speaker, progress has been made in health infrastructure development. The Mulago National Referral Hospital extensive re-construction and equipping into a specialized facility is expected to be completed by August 2017. The Mulago National Hospital Project also includes construction of a new 320 bed Specialized Maternal and Neonatal Health Care which is due for completion in June 2017.

The construction of Kawempe and Kiruddu was completed and equipping is ongoing. The reconstruction and re-equipped Cancer Institute is also expected to be fully functional in July 2017. Just a week ago, construction of a specialized international hospital was launched by His Excellency the President at Lubowa.

Madam Speaker, despite these good milestones, the health system is inefficient in some critical areas. Drug stock-outs and mismatch of supplies to districts faced with specific disease prevalence remain. Cases of shoddy work in health infrastructure provision also occur at district and lower levels. There is weak supervision and monitoring as well as absenteeism of health workers at health facilities.

Madam Speaker, next financial year, priority will be placed on the following measures to improve health outcomes and remove inefficiency in health service delivery:- i) elimination of drug-stock-outs and Increased facility inspection to eradicate negligence of duty, corruption, and poor service delivery at health facilities; ii) Emergency rehabilitation of Health Units and general hospitals with stronger supervision to eliminate shoddy construction work in health infrastructure, especially at local government level; iii) Universalisation of access to maternal health through strengthening the Community Health Extension Workers (CHEWs); iv) Increased sensitization and awareness of the population to health living.


Madam Speaker, during the year, the completion rate at primary education improved to 61.6% in 2016 compared to 54% in 2010. The completion rate at Ordinary Secondary improved marginally to 40% in 2015 from 39% in 2010. The universalisation of education has continued with primary school enrolment increasing to 8.8 million pupils in 2016 compared to 8.1 million in 2011. Secondary school enrolment increased to 1.4 million students in 2016 from 1.3 million in 2011.

During the year Government fulfilled its pledge to increase Primary Teachers’ salaries by 50%. Salaries of both Teaching and Non-Teaching Staff across all the Public Universities were also enhanced and arrears for non-teaching staff settled. In addition, Lira and Kabale universities were taken over by Government and civil works at Soroti University will be completed to enable operations to commence next year.

In addition, 840 staff were recruited and posted to the 20 Technical Institutes under the Skilling Uganda programme. Madam Speaker, despite this progress challenges in education include declining proficiency in literacy and numeracy; skill gaps, infrastructure deficits, teachers’ absenteeism and cases of ‘ghost’ pupils/students that distort 6/6/2017 5:44:00 PM 22 budgeting for and release of capitation grant.

In order to improve education service delivery, the following interventions will be implemented:- i) Curriculum reform with an emphasis on science, competency and life skills; ii) Improvement of existing learning facilities at tertiary institutions including re-construction of laboratories and workshops; iii) Certification of non-formal training to enable acquisition of practical skills for youth without formal education; iv) Establishment of 12 seed secondary schools in sub-counties which lack these schools, for which I have provided Shs 8.58 billion; v) Rehabilitation of dilapidated primary schools and traditional secondary schools for which I have provided Shs. 15.23billion; and vi) Installation of lightening arrestors for 140 schools in the most lightening prone districts namely – Mubende, Ssembabule, Bushenyi, Lwengo, Bukomansimbi and Lyantonde; vii) Use National Identification to eliminate ghost students.

Water, Environment and Sanitation

Madam Speaker, during the year, access to Safe Water nationwide improved with rural coverage improving to 68% in 2016 from 67% in 2015. Urban safe water access also improved from to 74.5% in 2016 from 73% in 2015. However, these access rates are still below the NDP-II target of 100% by 2020.

Furthermore, access to hand-washing facilities remains significantly below the national target of 50% and is a major cause for preventable diseases such as Diarrhea and Dysentery. Functionality of sanitation facilities has also declined from 92% in the previous FY to 90% in 2016. Critical aspects that Government plans to address include improving functionality of water and sanitation facilities.

Social Empowerment Programmes 6/6/2017 5:44:00 PM 23 75.Madam Speaker, Government has supported the implementation of Youth Livelihood Programme fund Projects proposed by Youth for funding. These Projects will create jobs for the youth.

A total of 120,000 youth have received skills and financial support that enabled them to generate 9,500 projects worth Shs. 68.41 billion. Repayments under the programme have also improved. Of the Ushs. 14.80 billion due for repayment, Ushs. 8.92 billion has been paid.

In order to strengthen the economic empowerment of Women, implementation of the Uganda Women Entrepreneurship Programme was scaled up to cover all Local governments. 577 women groups have now been covered and 7,380 women have had projects worth Ushs 2.95billion financed. The Uganda Women Entrepreneurship Programme will be rolled out to cover an additional 3,500 women.

Improving Governance

Madam Speaker, in the justice system, the disposal rate of cases is being addressed with a case backlog reduction strategy. Access to justice for juveniles has improved with juvenile cases being fast-tracked and 71% receiving noncustodial sentences. Furthermore, 98% of infrastructure to be built under the Justice Sector Strategic Plan have been completed and will be commissioned by December 2017.

In addition, Government amended the Leadership Code to permit confiscation of properties acquired through corruption. In order to eliminate corruption in public offices, the Inspectorate of Government has established a directorate to specifically handle high profile corruption cases.

Its core function is to expeditiously and efficiently investigate alleged cases of high profile and syndicated corruption in the public offices resulting into prosecutions, asset recovery and administrative Sanctions. This will mainly focus on cases coming from key sectors of roads, transport and infrastructure, education, health, 6/6/2017 5:44:00 PM 24 Agriculture and cases of high public interest and impact and which require highly specialized knowledge, skills and tools to investigate.

Madam Speaker, Government has strengthened the enforcement of the leadership code through implementation of the online wealth declaration system. This is aimed at easing the processing of declaration and analysis.

The Financial Intelligence Authority has also been strengthened to deliver on AntiMoney laundering targets and strong collaboration with institutions implementing the Financial Action Task Force (FATF) on Counter terrorism financing measures.


Domestic Revenue Mobilization

Madam Speaker, domestic resources that finance our development needs remain low. At only 13% of GDP, our tax revenue is inadequate to fund critical development programmes and projects. Major projects especially in transport, energy and ICT are therefore financed through borrowing, both externally and domestically. As a result of this, public debt has increased in recent years. Nonetheless, the public infrastructure assets being created will significantly increase production, productivity and competitiveness of our country.

Government’s resource mobilization strategy is to boost domestic tax revenue in order for critical investments to be financed by domestic revenue. The Uganda Revenue Authority (URA) has been provided increased financial resources to improve administration.

Non-Tax Revenue and Appropriation in Aid present a potential source of financing the budget. Preliminary assessment of Non-Tax Revenue performance shows poor governance. In view of this, all Non-Tax Revenue and Appropriation in Aid shall be collected by the Uganda Revenue Authority and shall be remitted to the Uganda Consolidated Fund in accordance with the 2015 Public Finance Management (PFM) Act.

Allocation of these resources to the various activities of MDAs will be done through the National Budget process. 6/6/2017 5:44:00 PM 25 Revenue Performance 82. Madam Speaker, revenue performance this year has been subdued as a result of constrained economic growth. Tax collections for the year now ending are projected to amount to Shs 12,882.3 billion, against a budgeted figure of Shs. ……., reflecting a shortfall of Shs. 377.02 billion.

The shortfall has been caused by declining import volumes which grew marginally by only 0.79% against a target of 9.1%. This decline in import volumes is a result of the depreciation of the Uganda shilling. Major tax collection heads reflected this trend with direct taxes on business, employment and property incomes, registering a shortfall of Shs 96.04 billion by April 2017.

Despite the tax collection shortfalls I have mentioned, this year’s revenue performance, however, represents a 13.6 % increase over the previous year. As a contribution to total resource envelope, we have witnessed improvements in revenue mobilization effort, with tax revenue increasing from 48% in 1998/99 to the current 67%.

The improvement in revenue collection is attributable to the growing size of the economy over the years, and reforms in tax policy and administration. Madam Speaker, in the forthcoming year, Government’s revenue mobilization strategy will focus on enhancing tax administration by building a stronger compliance culture.

Hence tax rates have been kept unchanged, with only modification being made to close loopholes. Tax administration will be enhanced through strengthening detection of non-complaint taxpayers, recovery of tax arrears and combating smuggling, undervaluation and under declaration.

The automation of online assessments and the electronic tracking of transit goods from Mombasa are also ongoing. Customs data will be synchronized with income tax returns. This will lead to improved systems, including implementation of automated customs border posts, ICT based verification of imports, and strengthened internal control systems to prevent leakages.

Income Tax

Madam Speaker, the Income Tax Act has been amended as follows:- i) Deductions for accelerated depreciation have been introduced as an incentive for upcountry investments.

This will allow recovery of costs of acquiring plant and machinery and construction of industrial buildings much faster before the payment of corporate income tax. ii) Lotteries and Gaming Tax has been rationalized by imposing withholding tax on winnings in order to prevent evasion.

This will deal with under-declaration of tax returns by some gaming houses claiming high winnings by gamblers. iii) Multinational enterprises will now be required to provide information in respect of their dealings with their associates. Multinational enterprises failing to comply will incur a penalty tax of shillings fifty million. iv) To limit disputes on rental income tax payable, estimates of rental rates will be based on the rating of rental property in a specific location, if the taxpayer does not file returns, or provides a misleading return.

I appeal to all rental income taxpayers to file their returns in a timely manner to avoid paying estimated rates. v) The Bujagali Energy Limited has been exempted from Corporate Income Tax to reduce the cost of power to end-users; vi) The income of a body established by an Act of Parliament to regulate the conduct of professionals, such as the Institute of Certified Public Accounts of Uganda, has been exempted; vii) The interest on outstanding tax and the penal tax has been limited to …… This measure will also apply to interest due as at 30th June viii) annual depreciation allowance of 35% on a motor vehicle provided to an employee for a private purpose.

Value Added Tax

Madam Speaker, the value Added Tax Act has been amended as follows:- 6/6/2017 5:44:00 PM 27 i) VAT on crop extension services, animal feeds and premixes, deep cycle batteries and composite lanterns, irrigation works, sprinklers and ready to use drip lines has now been exempted ii) interest on outstanding VAT and the penal tax as was done with the Income Tax Act is similarly limited to …..

Excise duty

Madam Speaker, the Excise Duty Act has been amended to introduce specific rates on beer and soft drinks that are equivalent to the current ad valorem rates. This will ease administration and reduce time and money spent in disputes especially as regards the cost, insurance and freight (CIF) value of imports.

Madam Speaker, as part of the campaign to reduce consumption of cigarettes, Parliament approved an increase in excise duty of cigarettes as follows; i) locally manufactured soft cap from Shs 50,000/= to Ushs 55,000/= per 1000 sticks and imported soft cap from Shs 50,000/= to Ushs 75,000/= per 1000 sticks; and ii) locally manufactured hinge lid from from Shs 75,000 to Ushs 80,000/= per 1000 sticks and imported hinge lid from Shs 75,000 to Ushs 100,000/= per 1000 sticks.

Tax Procedures Code

Madam Speaker, Tax Procedure will now require all persons to file a provisional return before the end of the first quarter and make payments on a quarterly basis. The only exception is for persons in Lotteries and Gaming who will be required to file weekly and provide monthly returns for income tax purposes. This change is aimed at easing payments and improving compliance.

Madam Speaker, goods that I will statutorily prescribe will henceforth be required to affix tax stamps, regardless of whether such goods are produced locally or imported. The tax stamps will minimize under declaration of such goods by both importers and local dealers, and boost tax collections.

Failure to affix tax stamps, the defacing of stamps, the possession of unstamped goods, or any attempt to acquire or sell stamps without authorization will lead to penalties as prescribed by law.

EAC Pre-Budget Consultations

Madam Speaker, under the East African Community, EAC Ministers of Finance held pre-budget consultative meetings and agreed measures with respect to the EAC common external tariff, details of which will be contained in the Gazette to be issued by the EAC Secretariat.

Revenue Enhancement Measures for LGs 92.Electronic business registration and revenue collection system (E-logrev) was piloted in Entebbe, Kira and Jinja municipalities with success. The E-logrev will be rolled out to 34 other municipalities to improve local government financing and access to information on revenue collection in real time.

Expenditure Framework

Madam Speaker, the total budget approved by Parliament for financial year 2017/18 amounts to Shs. 29 Trillion. Approved Recurrent Expenditures amount to Ushs 17.48 trillion. Shs. … has been allocated for Salaries and Wages and Shs… for Non-Wage Expenditurre. Development Expenditures amount to Shs 11.51 trillion.

Madam Speaker, in conclusion, Government has put in place measures to achieve higher rates of economic growth in the medium term. The anchors for renewed growth will be Agriculture, Tourism and Minerals Oil and Gas. 6/6/2017 5:44:00 PM 29 96.Government’s priority on Industrialization is linked to agriculture and agroprocess which will spur growth and create jobs.

In addition to investments in transport, power, and ICT infrastructure, Government will address implementation challenges and improving quality along the production, marketing and export chains.

Institutional reforms and strengthening will be implemented to decisively combat corruption and improve service delivery. To the business community and those engaged in the agriculture sector, the budget for FY 2017/18 carries a special promise which should increase your production and productivity and make you more competitive.

To all Ugandans, this means production will be boosted and more jobs created, especially for our youth and women. There will be improved access to opportunities for all to enable inclusive participation and collective contribution towards our shared prosperity.

Madam Speaker, I beg to move.

For God and my Country.