Private Sector Post Budget Analysis Pbl Presentation 140613 2

7/28/2019 Private Sector Post Budget Analysis Pbl Presentation 140613 2

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The 2013/14 Private Sector

Post Budget Analysis

FridayFriday

JuneJune 14, 201314, 2013


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Outline of Presentation1. The Macro Environment

2. Private Sector Vs Government Priorities 2013/14

3. A synthesis of Budget Response to Private Sector

Proposals

4. Budget Commentary

5. Some Tax Comparisons across EAC6. Conclusions


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The Macro Environment

Real GDP Growth: increased from 3.2% to % - 5.1%

Agriculture Sector - annual growth of 4.4%

Resource Envelope - 13,169BN with an 81%; 19% mix

Inflation; peaked at 18.6%%, reduced to 3.6%, May 2013

Exchange rates: volatility subsided now at Ush2575

Interest rates: remain high, 24% - 30%(crowding out private sector)


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EAC Comparisons (%)

Uganda Kenya Tanzania Rwanda

GDP Growth 5.1% 4.6% 6.9% 8%

AnnualAverageInflation

3.6% 5% 8.3% 3.3%

GDPPERCAPITA

(PPP) USD

1300 1774 1500 1400


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Private Sector Priorities for

2013/14

1. Infrastructural Devt [Energy, Transport & ICT]

2. Skills, Education and Health for improved Labour Productivity

3. Cost of Biz Finance for SMEs credit to PS

4. Legal & Regulatory FW including Commercial Laws Reform

5. Rural Devt & Industrial ization

6. Tax Policy Issues

7. SMEs Devt

8. Support for Buy/Bui ld Uganda

9. Regional Integration

10. Implementation of Agreed Issues


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Budget Priorities 2013/14

Theme: Theme: The Journey Continues: Towards Socio-

Economic Transformation for Uganda.

Aggressively continue to invest in infrastructure developmentparticularly in Transportand Energy;

Support Increased Agricultural production and enhancingproductivity

Enhance scientific Innovation for Industrialization and Private Sector

Competitiveness Improve the Quality and Access in Social Service Provision in

Health Waterand Education; and

Enhance Transparency and Accountability to improve Value forMoneyand fight Corruption vigorously in Public Service Delivery


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Budget Response to

Private Sector

Priorities


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Budget Response to Private

Sector Priorities1. Infrastructural Development

P/Sector Proposal Budget Response

I. Energy Infrastructurea) Sustain Govts commitment to Energyfund

b) Implement all interventions required to

increase power supply

c) Manage the issues surrounding the delay in

the commencement of 600 MW Karuma

dam;

d) Minimize energy losses to under 20%;

e) Avoid increasing Energy Costs through

Tariff adjustments

a) Have Commissioned a number of small

renewable hydropower projects of 68.5 MW to

the national grid

b) Completed feasibility studies for Hydro Power

Projects; Isimba, Ayago

c) To commence construction of Karuma in the

next FY

d) Launched the GETFiTEast Africa Pilot Project tosupport construction of 15 mini-HP projects with

a total of 125MW

e) More investment in Rural Electrification Scheme


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Sector Priorities1. Infrastructural Development


I. Energy Infrastructurea) Further step up investment in RuralElectrification

b) PPP approach to develop energy with

insurance of bonds

c) Provide incentives to energy producers

ready to upload over 500MW to the grid

d) Minimize energy loses to under 20%

a) Umemeto install pre paid meters and reduce

power loses

b) allocated an additional Ushs 25.73bn tothe Rural Electrification Programme


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Sector Priorities1. Infrastructural Development cont..


II. Transport InfrastructureRailwaysa) Re-acquire and support RVR to increasing

operating capacity

b) More emphasis to enable

operationalisation of Alternative route thru

Dar

c) Step up dialogue with the Tanzanian Govt

d) Emphasize and implement Rail way

extension to Western and Northern

Uganda

a)accelerate efforts to rehabilitate the countrys railway

network,

b)Fast-tracking the rehabilitation of Tororo-Packwach and Kampala Kasese railway linesc) Commence design of Gulu Atiak Nimule

J uba railway, to be constructed jointly by UGVs.SSd) Complete design of the Standard-GaugeKampalaMalaba railway line (251km).


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Sector Priorities1. Infrastructure Development cont..P/Sector Proposal Budget ResponseRoadsa) Sustain Govts commitment to

the Road Fund; allocatesometo

improvingcity roads,

b) Prioritize investment in roads

supportingAgric,Oil, Tourism,

c) Pave, tarmac roads and develop

dual carriagehighways

d) RevivetheSouthernroutee) Address road infrastructure

challengesat theIndustrialPark

a) construction and rehabilitation of majorstrategic national roads

b) Construction on Schedule for a total of

327km National roadsc) Maintenance of district and communityroads; to stimulate Agric, Tourism

d) Design for dualling key roadscompleted.

e) Kampala - J inja Expressway design infinal stages

f) Additional Ushs 72.7bn to Road Fund;

now totaling to Ushs 352.98bn


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Sector Priorities1. Infrastructure Development cont..


Water Ways

a)Expedite the repair of Vessels on L.Vic.b)Rehabilitate, insure and invest in new

ferries

Lake Victoria with 30 M Persons a

growth center in the EAC. Plan forinfrastracture to help tap this potential

a) improve the quality of water transport

on major water bodiesb) development of water transport on Lake

Vic.

c)Revitalization of Lake Vic. by rebuilding

port infrastructure

d)EAC taking this on to provide all therelevant infrastructure connecting the lake.


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Sector Priorities1. Infrastructure Development cont..


ICT

a)Prioritize laying of Fiber Optic Cable through

out the Country

b) Support investment in developing ICT park to

connect Uganda to the World and Vs. Versa

c) Explore use of a PPP approach to achieve theabove

a) To implement the 700km third phase of the

re-designed National Backbone

Infrastructure

b) Operationalize Cyber Laws

c) setting up Information Technology Parks to

host BPOs


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Sector Priorities2. Skills, Edn & Health for Improved Labour Pty


a)Urgently change the approach to skills devtb) to support production in the short run

c)Support Internships, industrial training and

attachments

d)Provide Tax incentives to employers training

labour

e)Allocate resources and attract Development

Parterners in Skilling Uganda

a)Budget allocation to education increasedfrom1,669 BN to1,801BN

b)Address the skills gap btnEdnsystem and

the Job Market

c)Re-aligning the curriculum and establishing

partnerships between the PS & education

institutions

d)Accelerate Government investment in

vocational andbusiness training

e) Supporting the PS to provide the youth with

therequisiteskillsfor jobcreation


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Sector Priorities2. Skills Development cont..

Private Sector Proposal Budget Response

a)Ensure asectoral approach in training thru PPP

b)VAT Zero rate the Health Sector

a) support skills training of critical tourism sector

human resources including the re-construction

of theUganda Hotel and Tourism Training

Institute at Jinja;


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Sector Priorities3. Cost of Biz Finance 4 SMEs & Credit to PS


a) Expand the Agric Credit facility toensure entire Value chain benefits

b) Introduce similar Fund to both Health

and Education

c) Further recapitalize UDB

d) Create Credit under UDB line for

Manufacturers

e) Venture Capital option could beexplored

a) To amend the Finance Act toenable devt of new products likeIslamic banking

b) Increase youth venture fundc) Out side budgetMicrofinance

Support center has announcedavailability of credit for SMEs.

Agriculture value addition,marketing and trade.

_______________________a) Cheaper financing especially for

long-term need to be elaboratedfurther

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Sector Priorities4. Legal & Regulatory FW including CommercialLaws Reform


a) Implement the recommendations of theSsendaula comprehensive Business

LicensingReformwork

b) Finalize a legal FW issues related to land

accessesp. for mining

c) Remove all un necessary laws and

procedures

a) continue improving the businessclimate for better PS competitiveness

b) Continue further efforts in reforming thelicensing regime

c) Removal of unnecessary laws andregulations

d) Streamline and simplify the businessregistration & licensing processes

e) commenced implementation ofbusiness licensing reforms


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Sector Priorities4. Legal & Regulatory FW including CommercialLaws Reform Cont..


a) Fast track enactment of all critical

commercial laws

b) Electronic Land Information system ought to

bemade towork

a) Operationalized regulation of enactedkey commercial laws

b) Other key enabling legislations beforeParliament including the PPP Bill, Anti-counterfeiting bill, etc

c) Completed computerization of the land

registry


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Sector Priorities5. Rural Devt & Industrialization


a) Make targeted interventions tostimulate rural development through

industrialization.

b) Provide incentives for industries

establishing in rural areas and

providing ease of access to

investment land.

c) white elephants like the Kalangala icecooling plant, the Olweny Rice

Scheme facilities etc require GoUto

work with private sector to stimulate

production.

a) An additional Ushs25.73bn to the Rural

Electrification Programme

b) A total of 2,322 km of transmission lines were

laid under several Rural Electrification schemes.

c) implemented the Rural Financial Services

Programme since 2008


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Sector Priorities5. Rural Devt & Industrialization Cont..


a) infrastructure in form of power, waterand roads remain a common

denominator.

_________________________________

a) Remove VAT on agriculture related

support services

b) Remove VAT on tractor hireservices to spur investments in the

tractor services as a business

a) Olweny rice scheme to be revitalized.

No Mention in Budget?


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Sector Priorities6. Tax Policy IssuesPrivate Sector Proposal Budget Response

a) Broaden the Team on Tax decision

making

b) avoid introduction of new charges and

taxes to the Private Sector to create tax

policy predictability

c) Widen the tax base. Stop relying on 30%

tax payer to pay almost all taxes -90%

d) CET: Remove some products like the

steel sector from the Uganda list and afew other mentioned separately and

which had already been agreed to, but

leave others.

a) Proposed amendments to the tax laws to

improve tax administration and enhance

compliance

b) widening the scope of withholding agents to

capture non-compliant tax persons engaged in

economic activities and not registered for

income tax purposes.

c) Target Small Business through legal FW & work

together with URA/ URSB/ KCCA/ LocalGovernments


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Sector Priorities6. Tax Policy Issues Cont..


a) Derogate EAC Sensitive list, steel sector,

fruit juices from COMESA FTA

b) VAT on Edible oil sector be eliminated to

create level field especially for products

produced locally

c) Zero rate VAT in the health sector

Why mainly small? Licenses should not be turned to

revenue stream. It shd focus on regulation

a) Removed exemption on wheat/ flour

b) Working towards removing exemptions of VAT


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a) Remove VAT exemptions on: Wheat and Wheat flour Hotel accommodation Water for domestic use

Excise Duty

Increase : Fuel by 50 Shs Kerosenby 200/= per liter to avoid

adulteration Cigarrets Spirits at Import Level from 70% to

140%


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Efficiency of Revenue Collection

20% of Revenue of Promotional activities10% on Fees charged on Mobile Money

Transactions30,000/= Stamp duty for 3rd party PolicyInsuranceMotorcycle and Moto Vehicle registrationby 54% and 200,000/= respectively

International Call levy, in ward increasedNTR Rates increased by MDAs

Payment through Mobile MoneyUganda List Removed


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Sector Priorities7. SMEs Devt


a) Focus on SMEs financing; create arevolving fund, and work on Improving

access to long term financing

b) Focus on quality and standards

improvement support

c) Focus public procurement to support

SMEs

d) Streamline institutional support.

a) Financial institutions law amendment tosupport newproducts

b) NAADS to provide agribusiness support and

alsoconfinetoextensionservices

c) Law on PPDA amended and regulation in

placetosupport this

d) Could be in the sectorial institutional policy

papers


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Sector Priorities8. Support for Buy/Build Uganda


a) Procurement Function of Government should

act as an agent of devt and wealth creation

thru support of the PS

b) Ensure transparent and easy procedures

c) Establish Administrative Measures providing

acceptable preferences for local firms

a) Handled during pre-budget period-

PPDA amendment act passed and the enablingregulation passed. Await implementation


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Sector Priorities9. Regional Integration


a) Maintain Uganda list save itemsseparately agreed for other rates(e.g. Steel sector)

b) Concentrate of removing SSconstraints

c) Aim to sign the EPAd) Caution on EAMU give time to pre

conditions

a) Removed the Uganda list and details in EAC

gazette.

b) High lighted in Budget priorities especially

infrastructure, skills etc

c) Not a budget issue

d) Not a budget issue- no response


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Sector Priorities10. Implementation of Agreed upon Policy Actions


a) Scale up monitoring and implementation of

agreed upon Policy Actions from absorption to

actual out puts including the beneficiaries; PS

b) Implore methods which can speed up actions

using a PPP approach

c) Forum like the Prime Ministers Private Sector

Forum and the Presidential Economic

Committee could partly detail itself on thismonitoring

a) PPP Bill in Parliament this FY

b) To align sector priorities and allocation of

resources across the board towards strategic

interventions of the Vision 2040

c) Strengthen the accountability and anti-corruption

institutions

d) Improve coordination, monitoring, inspection and

evaluation of Government programmes at alllevels

_________________________________________

Users or recipients of the services need to be part of

the planning and monitoring of the programs


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Trend of Budget Response to

P/Sector Priorities (2005 - 2014)

0

10

20

30

40

50

60

70

80

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

12.5

33

54.5

72.778.6 78.8 77.8 80 76.9


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EAC Budget Priorities

Kenya

Implementation of new constitution

Skills and Human resource

Job creation for Youth

Uganda

Productive infrastructure

Agricultural Pdn & Productivity

Skills and Human Resource

Tanzania

Infrastructure; Energy, Transport, ICT and Irrigation Agric and Industry

Human Resource and Skills

Tourism Trade, Financial Services

Social Services


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EAC Tax Highlights

Kenya

Exemption of duty Items used to facilitate railway transport

Increase CET on welding electoral roads from 10-25

Mill-storms and grind storms, 0-25

Plastic tubes for packaging cosmetics & paste 10-25

ImposeCustoms Ware house rent for gds remaining at Port exceeding 21days

Rwanda

No major tax changes

Tanzania

Increase Excise duty for non-utility vehicles aged above 10yrs fm 20-25% 5% Excise duty on utility vehicles aged more than 10yrs (HSCode 87.01/04)

Increased Tax on diesel by 2Tz Shs per litter frm215-217

Petrol increased by 61-400Tshs per Litter

Kerosene, no change


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Key Uganda Budget highlights

1. Commitment to resuscitate economy - THEME

2. Emphasis on Vision 2040 Priorities (Agriculture, Tourism,

Infrastructure etc)

3. Developing internal markets (Proudly Uganda Campaign)

4. Passion to support local industries

5. Incentives for Rural industrialization

6. Involvement of the Private Sector in Policy formulation


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Budget Challenges

Planning & Prioritisation

Budgeting and resourcemobilisation

Implementation of Budget Policy

Mechanisms to Monitor andEvaluate


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Conclusions

Ensure Implementationof planned activities

within the new Financial Year

Ensure Strict Budget Discipline(restrict

supplementary budgets)

Strengthen PPPin implementation and

strengthenCoordination


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Presentation TitleYour Subtitle

Thank you for a Private Sector

Centred Budget

Documents

Private Sector Post Budget Analysis Pbl Presentation 140613 2