Uganda’s parliament recently approved a Ush45.4 trillion ($11.9 billion) budget for the financial year 2020/21, an increase of Ush4.9 trillion ($1.3 billion) from last year’s Ush40.5 trillion ($10.6 billion) as the government seeks more funds for health and security.
However, in the wake of the Covid-19 pandemic, there are no allocations for additional food relief required by distressed families that have been under lockdown, a fiscal stimulus package for struggling businesses, and anticipated domestic borrowing pressures.
The Health ministry was allocated Ush2.7 trillion ($706 million) and Security got Ush4.52 trillion ($1.2 billion) according to the latest budget data published by Uganda’s Finance Ministry.
The increased allocations are for emergency capacity expansion in the healthcare sector as the country prepares for a potential surge in coronavirus cases, and wider security enforcement efforts required at Uganda’s relatively porous borders amid the current lockdown.
The government’s failure to allocate more funds for food distribution for vulnerable groups has raised fears for families who may not be able to feed themselves having lost their jobs and exhausted their savings.
While Ush59 billion ($15.4 million) was approved by parliament for purchase of food for vulnerable persons under a Ush302 billion ($78.96 million) supplementary budget passed in April, the money was meant for the initial 14-day lockdown that commenced on April 1.
There have been challenges of slow food distribution in Kampala and neighbouring areas, cases of poor quality rations and weak co-ordination between the National Coronavirus Taskforce, the Uganda National Bureau of Standards and the Office of the Prime Minister.
The Works and Transport sector was allocated Ush5.88 trillion ($1.5 billion), Energy and Mineral Development received Ush2.6 trillion ($679.9 million) and Education was allocated Ush3.5 trillion ($915 million) for 2020/21.
Despite growing demands for a fiscal stimulus package for small businesses facing shrinking capital, the 2020/21 budget blueprint does not address this in spite of the government’s promises of reviving strong economic growth in the short term.
Almost 10,000 jobs have been lost in the tourism industry since March, while more than 50 per cent of sector players are on the brink of collapse.
“Many small and medium enterprises (SMEs) are struggling, people have lost jobs and it is clear we are headed for economic recession in the near future. We have proposed further reductions in the Central Bank Rate, lowering the Cash Reserve Ratio applied by commercial banks and rescheduling of loans in order to enable SMEs stay afloat at a very difficult time.
“An emergency injury guarantee fund with initial funding of around Ush50 billion ($13 million) could be used to lend money to distressed SMEs at zero interest rate for a few months so as to sustain their operations,” said John Walugembe, the executive director of the Federation of SMEs in Uganda.