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Sunday, June 17, 2012

Uganda 2012 Budget Speech by President Museveni



As you heard, the economy grew by 3.2% this 
Financial Year.   This is one of the lowest rates of 
growth in the last 25 years.   Inflation had also gone 
up to 30%.  It has now come down to 18% of all.  Food 
inflation has gone back to 8%.  As I have told you in all 
 2 
my previous speeches, this is due to a confluence of 
two sets of factors – the global problems on the one 
hand and our own mistakes within Uganda, on the 
other hand. 

The global problems are well known to those who 
watch Western media channels such as CNN, BBC, 
Aljazeera, etc., as well as those who watch the Russian 
Television channel – RT.   The economies in Europe 
and the USA are in trouble with failed banks, high 
level of indebtedness, high unemployment rates, etc.   
Consequently, domestic demand in the EU declined by 
4.2% (2009).   This has affected our exports to Europe.  
Demand for flowers, for instance, has declined by 
about 70%, demand for fish has declined by about 
40%. 

Nevertheless, the economy of Uganda is not just glued 
to the economies of Europe and the USA.  Fortunately, 
we have got our own internal and regional markets.  
Aggregate demand here in Uganda has not been as 
adversely affected.   

Uganda exported to the Region goods and services 
worth US$ 654 million in 2009/2010, US$ 873 million 
in 2010/2011 and US$ 1,170 million in 2011/2012.  
Therefore, demand in the region has not been as low 
as in Europe.  We could have performed better if it had 
not been due to the mistakes by some of our actors in 
respect of delaying some projects such as Bujagali, the 
sugar projects of Amuru and Lugazi, the beef project 
by the Egyptians, the Nakawa-Naguru housing 
projects, Palm oil projects in Buvuma, etc.    

It is this self-illusory arrogance and ignorance of 
various actors that is part of the problem.  It would 
help our long-suffering country and continent if all the 
actors were to realize that as far as the economy is 
concerned, there are two sovereign actors: the 
consumer (the one who buys a product or a service) 
 4 
and the investor.   All the other players, high sounding 
titles notwithstanding, are of no ultimate importance.   
If enough buyers (local and foreign) do not buy what 
you produce, that is the end of your business.   If an 
investor does not agree to put his or her money, skills 
and entrepreneurship in your country and goes 
somewhere else, that is the end of that effort.    

Ignorance, however, misleads many actors to think 
that Presidents, Ministers, Members of Parliament, 
bureaucrats, etc, are the most important actors as far 
as the economy is concerned.   This is dangerous self- 
deception.   You have seen Governments and systems 
collapse because one set of the two primary actors has 
malfunctioned - the consumers and the investors. 

With a country, owning natural resources, it gives it 
an importance provided those natural resources are of 
a unique and strategic nature and are to be found only 
in our country.  We have coffee, for example.   
  
However, coffee is not only in Uganda.  Therefore, 
international coffee-roasters are not bothered to come 
to Uganda.  They roast coffee from all over the world in 
other places.  We have to roast the coffee ourselves. 
This has not been easy because our people did not 
have capital, technical know how and entrepreneurial 
skills. 

This is what brings us to the issue of competitiveness 
of a country vis-à-vis other countries in terms of 
attracting investments and also winning markets.  You 
must treat investors well and also treat consumers 
well if you are to survive in the modern world.  You 
must ensure that investors have security, they have 
good infrastructure that will make their businesses 
profitable by lowering the costs of doing business in 
your country, they are not delayed by corrupt or self- 
important officials, etc.  This is where some actors 
have let down the people of Uganda by playing around 
with the two sovereign actors in the economy – the 
investor and the consumer.   

It is this failure, this arrogance, that has caused our 
economy to only grow at 3.2% this year.  Yes, the 
global economy is bad but our economy would have 
grown at a higher rate if it was not for this mistake.   

These actors also squander the contribution of Uganda 
Peoples Defence Forces (UPDF) and the people of 
Uganda in bringing about stability.  The peace we 
ushered in and the goodwill we have generated would 
have brought more development if all the actors were 
conscious of the two fundamental actors in a modern 
economy: the consumer and the investor; and if all of 
us were aware that our roles, high sounding titles not 
withstanding, is to search for, value and facilitate 
these two fundamental actors in a modern economy.  
With the correct handling of the two actors, then, you 
solve the problems of employment, widening the tax 
base, provision of goods and services, foreign exchange 
earnings, social services, etc. 

In spite of this obstruction, we have moved and we are 
now set to take off.  Through many struggles, Bujagali 
is now about to be completed.  We shall, for the first 
time since 2005, have no electricity deficit for, at least, 
the next two years.  This is an opportunity we are not 
going to miss again.  More mini-hydro stations will be 
built and they will generate 125 MW, we shall start 
using our crude oil to generate electricity, we shall 
build Isimba and start on Karuma.  We shall never get 
electricity shortage again.  
  
In my recent State of the Nation Address, I talked 
about the two categories (A and B) of roads that have 
been listed by the Ministry of Works to be worked on.  
We are determined to work on all the 19 roads under 
category A. 

With the full knowledge of the importance of the 
investors to the economy, I will reactivate the 
Presidential Economic Council (PEC) that will be 
meeting once every two months under my 
chairmanship or that of the Vice President, in case I 
am not present. 

Mr. Stephen Muyingo, my Senior Private Secretary in- 
charge of Economic Affairs, will be the Secretary to the 
Council.  The Chairman of the Uganda Manufacturers 
Association (UMA) and that of the Private Sector 
Foundation as well as a number of other Private Sector 
players will be members.  This is in order to eliminate 
once and for all the arrogance of the civil servants 
when they are designing policies.  They always ignore 
the views of the Private Sector, as I pointed out above; 
yet they are the prime movers of the economy.  
Officials, in many cases, act against the interests of 
our private sector.  I have been told, for instance, that 
somebody licensed the import of poultry meat.  Yet I 
have been promoting chicken production in the 
country.  What is the interest of such an official? 

PEC will harmonize such disharmonies.  The Minister 
of Finance touched on the issue of nucleus farmers.  
These will be helped to provide tractor hire services to 
their neighbours.  Also working with the private sector, 
we are going to ensure milling of maize within Uganda 
so that we export maize flour instead of exporting 
grains and, at the same time, produce poultry and 
animal feeds within the country.   

I have instructed the Minister of Finance to study the 
usefulness of giving tax incentives to manufacturers 
who locate their factories up-country. 

In conclusion, apart from the victory in the electricity 
field as well as the intensified battle in the sector of 
roads, the following measures will help to stimulate 
production and consumption: 

(i) providing seeds and seedlings to the farmers for 
the eleven selected crops; 
(ii) working with nucleus farmers to provide tractor 
hire services to farmers; 

(iii) working with the private sector to ensure that 
maize is milled within Uganda so as to add 
value to it and also produce animal feeds within 
the country; 

(iv) studying the possibility of giving tax incentives 
to factories that locate up-country; 

(v) raising the tax threshold to 235,000 shillings so 
as to stimulate savings and consumption; and 

(vi) integrating the private sector in policy 
formulation in the form of re-activating the 
Presidential Economic Council to which leaders 
of the Private Sector will belong. 

Remember that while under feudalism, Kings, Princes 
and Generals were the cardinal actors, in modern 
economies the cardinal actors are the consumers and 
the investors.  Governments are mere facilitators by 
providing peace, infrastructure and a conducive policy 
as well as regulatory framework. 

I thank you. 

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