By Mulengera Reporters
The Executive Director for National Planning Authority (NPA) Dr. Joseph Muvawala has called on government to devise legislative interventions that can make it a requirement for NGOs and CSOs to have all their programs aligned to the country’s development objectives as enshrined in the National Development Plans (NDPs).
Speaking at the 5th NPA/UNDP consultative breakfast meeting Thursday at Serena Conference Center where hundreds of stakeholders converged to discuss ways to improve revenue mobilization by government to fund NDP III (2020-2025), Dr. Muvawala said there is a lot of off-budget funding that is availed through the NGOs and CSOs to supplement government service delivery efforts. But because it’s off budget and not streamlined, Muvawala regretted, there is currently no way government can leverage on such money to enforce the realization of development objectives enshrined through the different NDPs aimed at achieving the Ugandan Vision 2040.
Renowned for his liberal views, Muvawala (a former Makerere University economics lecturer) said legislative intervention by government should be aimed at ensuring NGOs mandatorily align their programs to the NDPs as opposed to legislating to constraint their operations perceiving them as threats to the country’s security which many of them aren’t.
Currently the NGOs and CSOs, which receive lots of funding from Uganda’s development partners, spend on program interventions they consider appropriate without legally being required to pay any regard to what the government articulates as national development objectives in the NDPs.
And Muvawala argues that requiring them to align their programs to NDPs will ensure NGOs operate in a manner that directly contributes to the realization of Vision 2040 which basically is about total economic transformation of Uganda. Muvawala says total realization of development objectives enshrined in NDP III, for instance, will be possible once NGOs pull in the same direction with government MDAs regarding implemention of NDP III.
WHAT ELSE DID HE SAY?
Yet during the same presentation that lasted about 15 minutes, Muvawala highlighted many other things all related to how revenue mobilization can be improved to ensure adequate funding of NDP III which NPA Chairperson Prof Pamela Mbabazi says must in draft form be in place by end of September this year. The final document is what Parliament will base on to appropriate money for the next FY2020/2021 budget.
Mbabazi, who sits in cabinet as ex-officio, says from cabinet the draft document will be discussed at a subsequent high-level consultative meeting NPA is organizing later this year.
MUVAWALA OTHER VIEWS
Commending the Finance Ministry for availing more resources than had been anticipated under NDP II targets, Muvawala highlighted areas where the country should do better for better showing under NDP III. Being the pragmatic economist, he is, Muvawala ensured his presentation was full of thought-provoking questions which he said nobody had to answer.
He was setting the stage for a subsequent panel discussion during which Budgeting Director Kenneth Mugambe, WB’s Ivan Mwondha, URA’s James Odong, Financial Sector Deepening Uganda’s Rashmi Pillai, UNDP’s Workie Yemesrach and CMA’s Keith Kalyegira gave their views on how cash can be mobilized to finance the realization of NDP III priorities.
On the tax to GDP ratio, which now stands at 15.2%, Muvawala said though it’s desirable to have it grow to 27.2% in FY2020/21 as the GoU desires, that might come at a huge cost including triggering higher interest rates, higher taxes and inflation.
The Basoga Katukiro also cautioned against supplementary funding requests becoming too frequent of late. In the FY2018/19, supplementary budget request came to Shs1.685trn which was 4.6% of the initial budget clearly exceeding 3% which the Public Finance Management Act admits as the maximum.
Muvawala says this shows poor planning besides discrediting the budget. He suggested government should also leverage on the remittances from abroad (now standing at $1.234bn) which as of December 2018, equaled 4.5% of the budget. This is spectacular growth compared to 2011’s $816m and $902m it was in 2015.
Muvawala says this is an area the GoU should consider leveraging on to boost revenue mobilization. Options include issuing Diaspora Bonds which Kalyegira argued is way cheaper (in terms of interest) than issuing sovereign bonds which some in government are pushing for.
On the stock of public debt, Muvawala said whereas the level of government borrowing is still sustainable, there is need to prioritize concessional lenders and multilateral ones like IDA as opposed to bilateral lenders like China whose influence in the lending space has lately been growing. Concessional lending is desirable because it’s low interest and comes with longer repayment period.
But the truth is the Museveni government has preferred Chinese funding because it’s convenient as the Chinese don’t impose any governance and accountability requirements which Museveni calls interference. To Muvawala, we must all reflect on the sustainability of the current situation where interest payment is now among the four expenditure lines taking the largest share off the Shs40trn budget we have for FY2019/20. At Shs10trn, interest payment is accounting for 25% off the Shs40trn budget.
Muvawala also warned against pre-financing arrangements which he said show weaknesses in our Public Investments Management Systems (PIMS) besides making borrowing expensive.
When it comes to Capital Markets, Muvawala wondered why (despite USE being operational for now 20 years) not much revenue is being mobilized through that avenue with very few companies listing and being constrained by thin trading.
He also reflected on what he called redundant pension funds wondering why such huge potential isn’t leveraged upon to finance development programs. Saying he deliberately wanted to avoid using the word liberalization because of the resultant polarizing debate, Muvawala preferred to call it pension reforms which he said were long over due.
He said discomforting as they, pension reforms have to be undertaken to free up the trillions of shillings resident there in the pension sector. He said absence of long-term development financing had pushed many businesses into collapsing because investors have resorted to relying on short term financing to finance long term development projects.
On the energy sector, Muvawala disputed the wisdom in continuing to invest in generation of electricity which can’t be transmitted because of inadequate investment in transmission processes. Indeed, generation currently approximates to 1400 Mega Watts of which a whopping 500MWs remains unconsumed as there is no effective demand for it.
Muvawala also spoke about LG administrative units (decentralization) wondering why many continue being created without the annual budget allocations thereof being proportionately increased.
The 10% of the national budget that continues to be annually allocated to the LGs largely goes into wage bill at the expense of actual service delivery which has always been the official NRM government justification for such rampant creations. Muvawala also called on participants to look into reasons why microfinance and social development program funds haven’t delivered the desired transformation among vulnerable groups despite the billions being sunk into sunk interventions. He also called for increased investment into infrastructure to support refugee-hosting communities since Uganda now is pursuing open policy when it comes to refugees. (For comments, call, text or whatsapp us on 0703164755 or email us at Mulengera2040@gmail.com).
