Sectors with low absorption capacity — agriculture, health and education — will this year see a reduction in budgetary allocations, a problem that will mostly affect social sectors.

This is even as estimates announced earlier this month show Uganda’s budget will increase by 19.3 per cent, from Ush15 trillion ($5 billion) in the financial year that ends this June, to Ush18 trillion ($5.9 billion) for the 2015/16 financial year.

Energy, Roads, and Defence Ministries are expected to benefit from this increase.

Roads will see its budget increased from Ush2.4 trillion ($786.6 million) to Ush3.2 trillion ($1.1 billion) for the financial year that starts in July. 

The budget for the energy sector will grow by Ush953.3 billion ($313.8 million) to Ush2.8 trillion ($916 million).

Security will also receive a boost in financing from last year, on account of increased classified expenditure and on the war in South Sudan. The budget for the security sector will increase by Ush358.4 billion ($118 million), from Ush1.2 trillion ($381.6 million).

Classified expenditure will account for 40 per cent of the total funding allocated to the security sector. Sectors like health, agriculture, and education will on the other hand see a reduction in funding as a percentage of the budget, a fact that some parliamentarians and civil society organisations say indicates a lack of interest by government in improving the quality of life for Uganda’s population.

Budget estimates show that agriculture’s share of the budget will fall to 2.7 per cent in 2015/16, from 3.1 per cent. The health sector will have its budget slashed to 6.8 per cent, from 8.5 per cent, while education will see a 2 percentage point reduction from 13.5 to 11.2 per cent.  

Aston Kajara, the Minister of State in charge of Privatisation, said these social sectors are very poor at absorbing allocated funds, and this affects the country’s debt levels as well as economic growth.

Absorption for agriculture stands at 55 per cent; for education at 25 per cent, while the health sector performs better in this group at 77 per cent. Health, however, has departments like the Cancer Institute, whose absorption is at 24 per cent, making it difficult to make a case for increased funding at a time when low absorption of funds is a major worry for the government.

Dr Joseph Muvawala, executive director at the National Planning Authority, says that absorption failure increases the cost of funding, as the government will pay interest for longer.

Uganda has a low tax-to-GDP ratio of 13 per cent, making borrowing an important source of funding, since there has been a major reduction in donor funding.

Low absorption has already affected the disbursement of donor funding from lenders like the World Bank, the African Development Bank and the European Union.

Lending from these donors will shrink slightly from Ush1.03 trillion (341.9 million) to Ush994.02 billion (328.9 million). This will mostly affect social sectors like agriculture, health and education, since these sectors have long depended donors for development funding.

Budget support will also reduce in the coming financial year, to constitute just 0.2 per cent of the national budget.