UGANDA 2012/13 BUDGET

Uganda Budget 2012 By Maria Kiwanuka- Minister of Finance

I. INTRODUCTION  

1. Madam Speaker, in fulfillment of Article 155(1) of the Constitution, I beg 

to move that Parliament resolves itself into a Committee of Supply for 

consideration of: 

i. The Revised Revenue and Expenditure Estimates for the 

Financial Year 2011/2012 and  

ii. Proposals for the Estimates of Revenue and Expenditure for 

the Financial Year 2012/2013. 

2. Madam Speaker, Article 155(1) of the Constitution provides that the 

President shall cause to be prepared and laid before Parliament 

estimates of revenue and expenditure for each financial year. I am 

accordingly performing this duty on behalf of the President, for which I 

am thankful.  

3. Madam Speaker the Budget Act 2001 requires that the national budget is 

prepared following comprehensive consultations with all stakeholders 

which obligation, I have fulfilled. 

4. Madam Speaker, in the State of the Nation Address a week ago, His 

Excellency the President discussed the National Resistance Movement 

Government’s vision for the future of this country and clearly laid out the 

challenges to development we face today. In addressing these challenges 

and in support of His Excellency the President’s vision, the theme for the 

budget for next financial year is “Priorities for Renewed Economic 

Growth and Development”.  

5. Madam Speaker, last October, I stood before this august House and 

asked for your support as we tackled the challenges facing us. I wish to 

thank you, and the people of Uganda, for the support Government 

received when we had to implement strict measures to combat a series of 

economic shocks. These strict measures included both tightening fiscal 

and monetary policy. I am happy to report that inflation is easing and the 

exchange rate of the Uganda Shilling has stabilised. 

II. ECONOMIC PERFORMANCE AND OUTLOOK 

Economic Performance 

6. Madam Speaker, the key macroeconomic and sector developments over 

the last year are elaborated in the Background to the Budget 2012/13. I 

will therefore first highlight the performance of the economy over the last 

year. This serves as a backdrop to the key challenges, Budget strategy 

and priorities for renewed growth and economic development in the next 

financial year. Fiscal policy will support monetary policy to maintain 

macroeconomic stability, while at the same time increase resources 

available to address the binding constraints to growth.  

Economic Growth 

7. Madam Speaker, Uganda has faced both global and domestic economic 

challenges over the past year. Real GDP growth is estimated at 3.2% this 

financial year. However, there are signs that the economy is turning 

around, but requires addressing the challenges on the supply side of the 

economy. This involves budget prioritization, improving value for money, 

and better coordination across sectors. Given Uganda’s population 

growth of 3.5% per annum, it is imperative that we quickly return to 

faster, more inclusive and sustainable economic growth.  

8. The slowdown in growth this financial year was due to drought, weaker 

demand of our exports, high international fuel prices, and imported 

inflation coupled with the weak shilling due to a strong dollar globally. 

Growth in the services sector slowed to 3.1%, with trade, financial, 

education and health services sector registering negative annual growth 

rates. The growth in industrial production slowed to 1.1% during the 

year. The hardest hit industrial sub-sector was formal manufacturing 

sub sector, where growth contracted by 4.4%.   

9. Madam Speaker, I am happy to report that the agricultural sector has 

performed much better, recording annual growth of 3.0%. This shows 

that agriculture can perform well given our climatic advantage. The 

performance of the Agricultural sector has been spurred by cash and 

food crop production following favourable rains in the first planting 

season of the last year. The hotel and restaurant sub sector also 

rebounded, coupled with positive growth rates in transport and 

telecommunications, real estate activities and other business activities, 

as His Excellency the President highlighted in the State of Nation 

Address. 

External Sector Developments 

10. Madam Speaker, the Uganda Shilling depreciated against major 

international currencies earlier in the financial year now ending. The 

Uganda Shilling has recently been more stable. Depreciation of the 

shilling was a consequence of the widening balance of trade as imports 

continued to grow much faster than exports. Export of goods and 

services during the year totaled US$ 4.1 billion, compared to imports of 

goods which amounted to US$ 5.31 billion. In addition, Services 

payments were recorded at US$ 2.23 billion. However, the overall 

balance of payments was positive, on account of increased inflows of 

remittances amounting to US$ 2 billion, foreign direct investments 

amounting US$ 834 million, and portfolio flows amounting to US$ 274 

million.  

11. We must therefore continue to concentrate on export growth in order to 

reduce the gap between imports and exports which has been widening 

over the past years. This will entail increased production and exports of 

staple food to the region, and by shifting expenditures from imports to 

locally manufactured goods where this is feasible. Staple food exports 

have a sure regional market given high elasticity of demand and have 

lower transport costs in view of our neighbour’s proximity.  

Inflation and Interest Rates 

12. Madam Speaker, the economy has faced high inflation with prices rising 

over the early part of the financial year now ending. However, inflation 

has receded. Annual inflation peaked at 30.5% in October 2011 but has 

declined to 18.6 in May 2012. Food crop inflation that was 42.2% in May 

2011 has declined to 8%in May 2012.In order to achieve this, the Bank of Uganda had to pursue a tight monetary policy using the Central Bank 

Rate that led to a rise in interest rates. The Central Bank Rate will be 

eased as conditions improve. Tight monetary policy has succeeded in 

bringing down the price level and has restored macroeconomic stability. 

Supply side (or fiscal policy) and demand management (or monetary 

policy) policies are not alternatives; they complement each other and 

both are necessary for sound economic management. Tackling inflation 

remains Government’s overriding macroeconomic objective in order to 

protect macroeconomic stability. 

Financial Sector Developments 

13. Madam Speaker, new technology is driving our efforts to improve 

financial inclusion, especially in the area of electronic money transfer 

and agency banking. The necessary amendment to financial sector 

legislation to accommodate alternative banking approaches such as 

mobile banking, bank assurance, and Islamic Banking are being 

undertaken. The Bank of Uganda has licensed four Mobile Money 

network operators to offer mobile money services, as a means of bringing 

about greater financial inclusion with the move towards branchless 

banking. By February 2012, the operators had registered 2 million 

mobile money clients and 13.2 million transactions worth Shs.551.0 

billion had been processed between January and March 2012. In 

addition, Consumer Protection Guidelines were issued by the Bank of 

Uganda and are now part of the regulatory regime of all financial 

institutions. 

14. A significant development in financial inclusion in 2011 was a 60% 

increase in agricultural lending by commercial banks and other financial 

institutions. This lending was towards financing post-harvest activity and 

the purchase of equipment using the Agricultural Credit Facility. 

Government will continue to implement positive interventions to increase 

Agriculture lending through the banking system including the Uganda 

Development Bank.  

15. Madam Speaker, Government has undertaken reform of the pensions 

sector with the view to increasing private savings which can be leveraged 

to finance domestic investment on a sustainable basis. In this regard, 

legislation to provide oversight and regulation of the pension sector 

became effective on September 2011. The Retirement Benefits Regulatory 

Authority will be established in the next financial year. Pension reform 

when completed will be a key element in the development of our domestic 

debt market. 

Fiscal Developments  

16. Madam Speaker, as a result of lower economic growth, domestic 

revenues performed below target over the year, growing by 17.9% 

compared to the 21.6% growth recorded in the previous year. Total 

expenditure releases during the financial year were Shs137billion below 

the target of Shs. 9,869 billion, mainly because of delayed start to the 

construction of Karuma Hydro power station. 

Economic Outlook 

17. Madam Speaker, the outlook for the Uganda economy must take into 

account the risks faced by the global economy.  The Euro Zone is 

projected to enter a mild recession, while the United States economy has 

not yet shown signs of a return to robust economic growth. We must also 

be aware of the creeping exposure to global shocks arising from greater 

integration, which occurs through financial linkages, export receipts and 

workers remittances. 

Contrary to arguments that the country is disadvantaged by being land- 

locked, Uganda is actually land-linked with her neighbours who are 

providing significant demand for our products especially food. For 

Uganda to succeed in this global and regional economic environment, we 

must seize the opportunities which these challenges present and 

implement programs that will spur growth; accelerate social 

transformation; and ensure prosperity for all, within the context of East 

African Community integration. 

III. BUDGET STRATEGY FOR FINANCIAL YEAR 2012/13  

19. Madam Speaker, the Budget strategy underpinning next financial year’s 

proposals will focus Government’s scarce resources to unlock the most 

binding constraints to help restore faster economic growth, while 

promoting inclusion and sustainability. The budget proposals presents 

emerging thinking on our macroeconomic and sector challenges, drawing 

on ideas, feedback and observations from all walks of society and 

stakeholder consultations held throughout the past year. The proposals 

envisage that Government will focus its resources to improve Uganda’s 

business climate and its comparative advantage of a conducive 

agricultural climate, land linked location in the middle of East Africa and 

a young adaptable workforce, so as to truly undergo a structural change 

for economic transformation. Such a process has many challenges and 

needs unstinting policy support from across the entire Government and 

the Ugandan people. 

Macroeconomic Objectives  

20. Madam Speaker, the global, regional and domestic economic slow-down 

has constrained economic growth this year and affected macro-economic 

stability. It is urgent that the economy reverts to a more positive growth rate. Achieving this turnaround will require overcoming formidable 

challenges to share more equitably and sustainably. The budget strategy 

for Financial Year 2012/13 has been designed to renew economic growth 

to enable sustained and inclusive development. 

21. The macroeconomic objectives of Government are therefore as follows:- 

i. achieve a growth rate of at least 7% per annum in the 

medium term;  

ii. the return to single digit inflation rates; 

iii. improve Uganda’s Balance of Payments by reducing the 

current account deficit. 

22. Madam Speaker, Government recognizes that its own resources are 

limited and that the private sector is the principal partner in economic 

growth. Therefore, Government will leverage its resources to support 

private sector growth and development by lowering the cost of doing 

business in Uganda. Government will invest in infrastructure that 

unlocks the growth and development potential of the private sector. It 

will improve skills for competitiveness and ensure training matches 

requirements of the job market. 

23. Madam Speaker, by virtue of its geographical location and favorable 

climate, Uganda is capable of becoming the food basket and distribution 

hub of the region. This will require the diversification of our markets, in 

particular to increase inter-regional trade with our neighbours. We will 

therefore concentrate on producing for food security and exporting staple 

crops which have a sure market. This approach will benefit from cheaper 

transport. The budget strategy will therefore prioritize the removal of 

weaknesses that obstruct growth in the productive sectors and hinder 

the implementation of critical infrastructure. This strategy will maximize 

the economy’s growth potential. 

Madam Speaker, the four main strategies to lower the costs of doing 

business and marshal private sector investment in Uganda are:- 

i. Rehabilitation and expansion of road and electricity infrastructure to 

reduce transport costs and improve access to affordable energy to 

support the private sector as an engine of growth. 

ii. Research and Development to improve productivity, such as 

developing improved seeds and other inputs, provision of extension 

services in the field, and skilling our workforce to operate agro- 

processing industries e.g mechanics, electricians, machine 

operators, carpenters, plumbers, e.t.c. 

iii. Improving business efficiency by streamlining regulatory rules and 

business licensing reform. 

25. Madam Speaker, in implementing the Budget strategy Government will 

ask the following key benchmark questions when making any investment 

decisions and prioritizing support activities:- 

i. Does the investment increase infrastructure stock? 

ii. Does the investment add value to the product or process?  

iii. Does the investment lower the cost of doing business? And if so by 

how much.  

26. I must reiterate that this focus on areas of Government comparative 

advantage emphasizes selectivity and not neglect of other sectors, that is 

“the greatest sustainable good for the greatest inclusive number”. 

27. Before I elaborate the priority interventions reinforcing the budget 

strategy for the Financial Year 2012/13, I will first outline the financing 

strategy that underpins the interventions I will propose later on. 

 Financing Strategy  

28. Madam Speaker, the interventions I am proposing today will be financed 

using the following strategy. 

i. Increased Revenue Mobilization from Domestic Sources 

ii. External Financing in form of Loans and Grants from 

development partners and private creditors 

iii. Public Private partnerships that mobilize private sector financing 

for public projects 

29. Madam Speaker, tax policy will be used to promote investment in the 

economy to enable recovery. Domestic revenues are likely to be affected 

by a number of opportunities and challenges, including development of 

the oil and gas sector, return to a conducive macroeconomic environment 

as Uganda returns to faster economic growth, and the integration of the 

East African Community. Government will maximize Non-Tax Revenues 

and improve tax administration at the Uganda Revenue Authority (URA) 

in order to ensure that Uganda is fully prepared to benefit from 

opportunities, such as development of the oil and gas sector and the 

integration of the East African Community. 

30. Madam Speaker, I propose to mobilize Grants and Loans amounting to 

Shs. 2,679billion, which represents 25% of the National Budget, and 

consists of project and budget support loans. Resources will be allocated 

towards counterpart financing of infrastructure projects and the 

improvement of service delivery. In addition, Government will borrow 

non-concessional loans to undertake major infrastructure projects that 

demonstrate the necessary commercial and economic benefits, for which 

other financing options are not available. 

31. Starting next financial year, Government will speed up project 

implementation and ensure that undisbursed borrowed funds will be 

utilized faster. Government will provide counterpart funding to unlock 

loan disbursements and will seek technical assistance where necessary.  

For future projects, the Ministry of Finance, Planning and Economic 

Development will undertake rigorous economic analysis and review the 

Public Investment Plan to ensure alignment with the National 

Development Plan. In addition, selected projects will have to be in line 

with national objectives and have satisfactory cost benefit analysis 

criteria.  

32. Madam Speaker, Government will implement the Public Private 

Partnership Policy which entails a streamlined framework for project 

appraisal and contracting with the private sector to achieve efficient and 

faster development and public infrastructure. The Public-Private 

Partnerships Bill will be presented to Parliament in the next financial 

year and I seek your support for its enactment. 

Debt Sustainability 

33. Madam Speaker, Uganda’s public debt is sustainable in both the 

medium and long term. The bulk of Uganda’s external debt portfolio has 

been contracted on concessional terms with a repayment period of 40-50 

years, a grace period of at least 5 years, and interest rates of not more 

than 0.75% per annum. 

34. Given that our investment programs require more resources that we can 

raise domestically, it is feasible to borrow externally and prudently on 

favourable terms. Next financial year, Government will implement a 

policy that uses contractor facilitated financing as a means of raising 

resources for infrastructure projects. Guidelines will be issued to 

operationalize this policy. However, these borrowed resources must be 

utilised to boost productive capacity of the economy to increase 

competitiveness. This will enable our economy to generate the necessary

resources to service debt sustainably over the long term. To achieve this 

objective, Government will focus on improving efficiency in the use of 

public funds and ensure value-for-money for all Government spending. 

Resource Framework for FY 2012/13 

35. Madam Speaker, the total amount of resources available in financial year 

2012/13 is estimated at Shs11,157 billion.  Domestically mobilised 

resources, including tax collections and domestic borrowing will finance 

about 75% of the budget during 2012/13, whilst 25% will be provided by 

development partners. This represents a rise in domestic financing of our 

budget. Revenue collections for next financial year are projected at 

Shs7,251 billion.  Total debt service including interest payments are 

projected to amount to Shs1,101 billion in financial year 2012/13. This 

means that Shs10,057 billion will be available to support economic and 

social development programmes.  

IV. KEY SECTOR PRIORITIES FOR FINANCIAL YEAR 2012/13 

36. Madam Speaker, in line with the objectives of the National Development 

Plan and the long-term vision of the socio-economic transformation of 

Uganda, the budget priorities in next financial year will seek to achieve 

the following: 

i. Removing infrastructure constraints in transport and energy to 

facilitate private sector development as the engine of growth;  

ii. Promoting support to the critical productive sectors of the 

economy including Agriculture, Tourism in order to generate 

employment and increase production; 

iii. Improving the quality of social services focusing on education, 

health and access to water; andiv. Strengthening Public Sector Management for efficient service 

delivery. 

A. INFRASTRUCTURE 

Road Transport  

37. Madam Speaker, road transport accounts for about 97% of the freight 

cargo in Uganda. Government will lower high vehicle operating costs and 

reduce time delays by improving the national road transport network. 

The priorities in the road sector are:-  

i. Rehabilitation and expansion of the road network with special 

emphasis on roads in agricultural areas and export routes; and 

ii. developing alternative access routes to the sea through both the 

southern and northern corridors. 

38. I am proposing to increase the allocation to the Works and Transport 

sector to Shs 1,651billion in the next financial year from Shs1,291 billion 

in the year ending.  

39. Madam Speaker, this allocation will enable construction to continue on 

the following roads:- 

i. Fort-Portal-Bundibugyo (104km); 

ii. Busega-Masaka (116km); 

iii. Nyakahita-Kazo-Kamwenge (143km); 

iv. Kawempe-Kafu (166km); 

v. Malaba/Busia-Bugiri (82km); 

vi. Tororo-Mbale-Soroti (152km); 

vii. Mbarara-Katuna (124km); 

viii. Jinja-Kamuli (60km); 

ix. Mbarara-Kikagati-Murongo Bridge (75km); 

x. Hoima-Kaiso-Tonya (85km);  

xi. Vurra-Arua-Koboko-Oraba (92km); 

xii. Gulu-Atiak (74km); 

xiii. Ishaka-Kagamba (35.4km); 

xiv. Kabale-Kisoro-Bunagana/Kyanika (101km); 

xv. Masaka-Mbarara (154km). 

40. Madam Speaker, construction will be started on the following roads:- 

i. Kampala-Entebbe Expressway (51km); 

ii. Muyembe-Nakapiripirit-Moroto-Kotido (193 kms) 

iii. Dualing of Kampala Northern Bypass (17km); 

iv. Construction of Mbarara Bypass (40km);  

v. Upgrading of Kamwenge-Fort Portal (66km); 

vi. Upgrading of Atiak-Nimule (35km); 

vii. Kalangala Infrastructure Project. 

41. Madam Speaker, Government is in advanced stages of finalizing 

funding for the following priority road projects:- 

i. Olwiyo-Gulu-Kitgum (167 kms) 

ii. Moroto-Nakapiripirit (92 kms) 

iii. Soroti-Katakwi-Moroto-Lokitanyala (208 kms) 

iv. Kapchorwa-Suam (77 kms) 

v. Villa Maria-Sembabule (48 kms) 

vi. Mpigi-Maddu-Sembabule (135 kms) 

vii. Mukono-Kyetume-Katosi-Nyenga (74 kms) 

viii. Ntungamo-Kakitumba/Mirama Hills (37 kms) 

ix. Rukungiri-Kihihi-Kanungu-Ishasha  (74 kms) 

x. Kyenjojo (Kabwoya)-Hoima – Masindi- Kigumba (137 km) 

xi. Buwaya-Kasanje-Mpigi-Kibibi-Mityana (90 kms) 

xii. Hoima-Butiaba-Wanseko (111 kms) 

xiii. Kayunga-Galiraya-Bbale (88.5 kms) 

xiv. Kabale (Ikumba)-Kanungu-Buhoma (120.0 kms) 

xv. Ishasha-Katunguru (88.0 kms) 

xvi. Kabale-Bunyonyi (6.0 kms) 

xvii. Mbale-Lwakhakha (41.0 kms) 

xviii. Atiak-Adjumani-Moyo-Afoji (104.0 kms) 

xix. Masaka - Bukakata 

42. Madam Speaker, in addition, the construction works and repairs of the 

following bridges will be undertaken:- 

i. Commence construction of Second Nile Bridge at Jinja; 

ii. Complete Rehabilitation of Nalubaale-Kiira Bridge; 

iii. Complete Bulyamusenyu and Muzizi Bridges; 

iv. Complete 3 bridges on Atiak-Moyo-Afogi Road; 

v. Construct Kanyamateke (Kisoro), Karujumba (Kasese), Alala 

(Nebbi) and Kasaigi (Kibale) and Semuliki Bridges; 

vi. Construct bridges in North and North Eastern Uganda at 

Olyanai, Obalanga, Alito, Ajeliek, Ojanai, Opot, Aakol, Airong, 

Balla, Agali, Engeti, Kochi and Nyawa. 

43. Madam Speaker, in order to enhance road maintenance and 

rehabilitation at the district level, 142 units of road equipment have 

been procured for local governments. We expect that this equipment 

will ensure prompt and efficient road maintenance. 

Water Transport 

44. Madam Speaker, a sizable portion of Uganda’s population lives around 

our rivers and lakes. However,the utilization of water transport 

remains low. In the next financial year, the following projects will be 

implemented: 

i. In addition to the recently commissioned Obong (Moyo)- 

Sinyanya (Adjumani) ferry, construct the Laropi- 

Adjumani and Amuru –Rhino Camp ferries routes 

ii. Construction of the Lake Bisina and Lwampanga 

(Nakasongola)-Namasale (Amolatar) landing sites; 

iii. Design the Bukungu-Kagwara ferry; and 

iv. Repair the Marine Vessel (MV)Kaawa. 

Rail Transport 

45. Madam Speaker, in recognition of railway’s potential, Government will 

undertake the following actions in the next financial year.  

i. Complete the feasibility study to upgrade Kampala - 

Kasese railway; 

ii. Commence the preliminary engineering design for the 

Malaba - Kampala standard gauge railway line. 

Electricity  

46. Madam Speaker, access to electricity is essential for economic 

development especially for agricultural and industrial processing and 

production. Government will prioritize increased generation capacity, 

and expand the transmission and distribution network to reduce 

systems’ losses. This will result in higher efficiency in the electricity 

sector and better quality of power. In the next financial year, 

Government will undertake the following:- 

i. Fully commission the 250MW Bujagali Hydro Power 

Project; 

ii. Start construction of 600MW Karuma  Hydro Power 

Project; 

iii. Complete preliminary designs for the 600MW Ayago and 

140MW Isimba Hydro Power Projects; 

iv. Provide financial support in the construction of 125 MW of 

renewable Mini Hydro Projects; 

v. Further expand the Rural Electrification Programme to 

increase access to power; and 

vi. Ensure aggressive power loss reduction by rolling out pre- 

paid meters and investing in the distribution network. 

Oil and Gas 

47. Madam Speaker, with respect to the Oil and Gas sector, Government 

has presented legislation to Parliament for establishing a sound legal 

and regulatory framework, as well as the institutional arrangements 

for prudent management of the oil resource. The Bills before 

Parliament are 

i. The Petroleum (Exploration and Production) Bill 2012 

ii. The Petroleum (Refining, Gas Processing and Conversion, 

Transportation and Storage) Bill 2012 

iii. The Public Finance Bill 2012, which contains the 

petroleum revenue management framework

48. We look forward to Parliament’s expeditious enactment of these vital 

legislations. 

B. PRODUCTION SECTORS 

Agriculture 

49. Madam Speaker, the priorities in the agricultural sector is to ensure 

food security, provide raw materials and enhance export revenue. 

Therefore, the sector holds the key to Uganda’s economic 

transformation, job and wealth creation. To complement Government 

Agricultural Zoning Strategy, Government has adopted a commodity 

based approach which will focus on 11 selected commodities for 

increased exports to regional and international markets. Apart from 

traditional commodities of coffee and tea, other crops were selected for 

both their versatility as food security and export earning potential. 

50. Government will implement the following actions in the next financial 

year:- 

i. the provision of improved seed and farm inputs and 

implements to increase production and productivity of seven 

food security commodities of the 11 commodities, namely:- 

maize, beans, coffee, market fruits and vegetables, and fish;  

ii. supporting the seed industry and provision of improved 

breeding stock for the seven commodities; and 

iii. Completing the ongoing rehabilitation of irrigation schemes 

and embarking on establishing of new ones to increase the 

provision of water for irrigation, livestock and for aquaculture 

by partnering with the private sector. 

51. Madam Speaker, the commodity approach implemented with the 

zoning strategy will concentrate on a particular commodity in a specific 

zone. In this way, we will be able to produce sufficient quantities that 

will support domestic and regional trade, as well as agro- 

industrialization to add value and create non-farm jobs required for the 

youth. In addition concentrating in a specific zone will allow the 

efficient provision of relevant services such as extension services, road 

and electricity infrastructure and financial services. 

52. For instance maize farmers in specific zones in the country will be 

facilitated to access both improved seed, and also the means to access 

flour milling plants and equipment to add value to their produce. This 

will enable maize farmers to benefit from higher prices paid for maize 

flour instead of lower receipts earned from grain. 

53. Madam Speaker, in order to increase production, Government is 

consulting nucleus farmers in the private sector on how to provide cost 

effective agricultural mechanized support to small holder farmers. This 

will increase value addition, and therefore household income for small 

holders farmers across the country. 

54. Madam Speaker the total direct and indirect allocations to the 

agriculture sectors for the next financial year will amount to U. 

Shs585.3 billion. 

Tourism 

55. Madam Speaker, Uganda has emerged as a top tourist destination over 

the last year. Uganda is rich in flora and fauna, offering wildlife safaris, 

variety of bird species and has hospitable people.  

56. Government will use its resources, working with the private sector,  to 

undertake the following:- 

i. Improve accessibility to tourist sites by upgrading road 

infrastructure 

ii. Support enactment of hospitality standards through grading hotels 

and hospitality training  

iii. Promoting eco-tourism 

iv. Implementation of cost effective tourism promotion using tourist 

companies and on-line. 

Private Sector Competitiveness  

57. Madam Speaker, Government will continue to focus its efforts on 

improving Uganda’s private sector competitiveness by: 

i. Reducing physical costs in transport and electricity, among others); 

and 

ii. providing the necessary policy, legal and regulatory framework. 

58. Madam Speaker, I am pleased to announce that a comprehensive 

review of business licenses has been completed, and recommendations 

made to simplify requirements, reduce discretionary powers, and 

eliminate redundant procedures. As a result of the review, I will 

eliminate about 27 licenses all of which were found to be either 

obsolete or redundant. An electronic licenses registry that will serve as 

a repository for all approved business licensing in Uganda will be 

established. Implementation of the agreed recommendations is 

estimated to lead savings in excess of Shs 78.3 billion for the private 

sector. These measures will be implemented in the next financial year.  

59. Government will also establish a One Stop Centre to provide online 

registration services for the various licenses required to start a 

business. In addition, a Small and Medium Enterprises (SMEs) Business Guide has been developed to provide SMEs with information 

on available financial, business development services (BDSs), and 

business licensing information.  

60. Madam Speaker, the following bills which are aimed at improving 

further private sector competitiveness, are before Parliament for which 

I am requesting expeditious passage:- 

i. Counterfeit Bill 

ii. Anti-Money Laundering bill 

iii. Industrial Property Bill 

iv. Accountants Bill 

v. Uganda National Bureau of Standards Bill 

C. SOCIAL SERVICES  

Education Sector 

61. Madam Speaker, in the Education sector, Government will continue to 

enhance the quality and relevance of education at all levels. This will 

be achieved by improving the effectiveness and efficiency in the sector 

by reducing teacher and pupil absenteeism, provision of scholastic 

materials and enhancing school inspection. 

62. Madam Speaker, the education sector has the largest share of our 

national budget with a total provision increasing from Shs 1,418billion 

in the financial year ending, to Shs 1,669billion in the next financial 

year. This amounts to 17% of the total budget. The sector provision will 

also cater for includes salary increases for Primary School Teachers  

and Science Teachers in Post O-Level institutions. I have allocated Shs. 

290 billion for teachers, scientists and other civil servants. 

Creating Employment Opportunities 

63. Madam Speaker, Government will work with the private sector to 

expand skills development to match labour market requirements as a 

key requirement under Business Technical and Vocational Training 

and Education (BTVET). Government recognizes that jobs will be 

created by the private sector, for which it will continue to support with 

skills development of the workforce. 

64. One such joint venture with the private sector is the Youth Venture 

Capital Fund for which Shs. 25 billion is being lent out to youth, with 

the help of participating financial institutions. I am happy to report 

that remarkable progress has been made in the first few months of the 

scheme’s implementation. To date, Shs. 8 billion has been disbursed to 

3,000 youth. In addition, a dedicated desk officer at a senior level has 

been appointed at the Ministry of Finance to deal with all youth 

venture capital matters and liaise with stakeholders. The Youth 

Venture Capital Fund progress report will be tabled when Parliament 

reconvenes. I am allocation an additional Shs 3.25 billion towards the 

scheme. 

65. Madam Speaker, to address the needs of graduates who have bankable 

project proposals but lack the requisite funding, I am establishing the 

Graduate Venture Capital Fund with an allocation Shs. 16 billion to be 

implemented with participating financial institutions. 

Health Sector 

66. Madam Speaker, the health sector has achieved progress by increasing 

availability of basic medicines, achieving immunization rates of 

children against major killer diseases of 90%. In addition, infant and 

maternal mortality rates have reduce to 54 per thousand persons and 

352 per hundred thousand persons, respectively. However, the health 

care delivery system still requires major improvements to ensure 

access to quality basic health care for all. 

67. Madam Speaker, Government’s objective in the next financial year is to 

address poor child and maternal health, weaknesses in the drug 

management system, inadequate health infrastructure and personnel 

constraints. The following specific actions will be implemented:- 

i. Motivate and retain health workers through gradual 

salary increases and construction of staff houses. With 

support from the Italian Government, 88 staff houses will 

be constructed in the Karamoja Region alone; 

ii. Commence rehabilitation of Mulago National Referral 

Hospital and construction of referral hospitals in Kirudu 

and Kawempe zones of Kampala, including finalisation of 

negotiations to construct a modern women’s hospital at 

Mulago. 

iii. Commence refurbishment of Kabale, Hoima and Fort 

Portal Regional Referral Hospitals 

iv. Rehabilitate Kawolo Hospital in Lugazi and Itojo Hospital 

in Ntungamo utilising support from the Spanish 

Government v. Provide solar powered fridges, Emergency Obstetric Care 

(EmONC) lifesaving medicines and kits, Family Planning 

equipment and commodities to health facilities 

countrywide  

vi. Conduct maternal and pre-natal death audits and  

undertake community sensitization and mobilization  

vii. Protect children from pneumonia and diarrhoea by 

introducing pneumococcal and Rotavirus vaccines. 

viii. Reduce the prevalence of malaria by conducting indoor 

residue spraying and use of Rapid Diagnostic Tests (RDTs) 

to improve diagnosis.  

ix. Mitigate the effects of HIV/AIDS by undertaking 

Prevention strategies such as ABC, Circumcision, and 

Elimination of Mother to Child Transmission, in addition 

to enrolling an additional 100,000 people infected with 

HIV/AIDS on Anti-Retroviral Treatment  

Water and Environment Sector 

68. Madam Speaker, Government’s priority in the Water sector will be to 

provide water for production. The component for bulk water supply 

previously under the Agricultural Sector has now been transferred to 

the water sector. As a result, the total allocation to the water sector in 

the FY 2012/13 has increased from Shs 271 billion to Shs 355 billion. 

69. Madam Speaker, in the next financial year, gravity flow schemes 

supplying Nabweya, Lirima and Kanyampaga and small piped water 

systems for Luanda, Kabumba and Ongino Rural Growth centers will 

be constructed, for improved rural water supply. Piped water systems 

will also be built in Lamwo, Agago and Nwoya, among many others. 

Piped water systems in Paidha, Patongo, Opit, Omugo and Agwegtownships will also be completed and construction of new 

systems in Moyo, Ibuye, Kalongo, Purongo and Akujo will commence. 

Further investments in urban water supply will include the following:- 

i. Completion of Nakaseke town water supply system and 

restoration of existing systems in Kakiri, Bukomansimbi 

and Wakiso towns; 

ii. Drilling of boreholes and construction of water supply 

systems in the towns of Ntwetwe (Kyankwanzi), Kasenje 

(Wakiso) and Zirobwe (Luwero); 

iii. Construction of new, expansion of existing and 

rehabilitation of water supply systems in Kaabong, Abim, 

Karenga, Namalu, Bukedea, Busia, Kapchorwa,Katakwi, 

Matany, Serere, Kachumbala, Namutumba, Kaliro and 

Bombo Townsand Alwi Dry Water Project. 

70. Madam Speaker, Government, through National Water and Sewerage 

Corporation, will also undertake the following projects:- 

i. Construction of Lubigi Water Treatment Plant; 

ii. Rehabilitation of Bugolobi Sewage Treatment Plant, and 

the construction of the Nakivubo and Kinawataka waste 

water management plant; 

iii. Emergency rehabilitation and upgrading of Gaba I and II 

intake to increase water production capacity to 300 

million litres per day; 

iv. Construction of a 4 million litres reservoir at Namasuba 

Hill. 

71. In order to address constraints in water for production, the following 

projects will be undertaken during the year:- i. Construction of Andibo dam in Nebbi district, Kajodi 

Valley Dam in Mityana District, Nakabala and Nyamiringa 

(Kiboga). 

ii. Rehabilitation of Windmills in Karamoja Region; 

iii. Construction of Kitasi-Sanga-Kanyaryeru bulk water 

scheme in Kiruhura district; 

iv. Design of Rwengaaju irrigation scheme in Kabarole and 

Kulwodong dam in Abim District. 

D. IMPROVING GOVERNMENT EFFECTIVENESS  

72. Madam Speaker, experiences from the fastest growing world economies 

point to the important role an efficient public service plays in 

facilitating growth and development. An efficient and transparent 

public sector procurement process facilitates rapid private sector 

growth, and access to credit from financial institutions. An effective 

public sector facilitates the private sector to create jobs, supports 

forward and backward industrial linkages and ultimately leads to 

faster economic transformation. 

73. In order to attain our socio-economic transformation objectives faster, 

public sector efficiency and effectiveness service will therefore be of 

paramount importance starting next financial year. This is especially 

critical for six key service delivery sectors, namely –agriculture, roads, 

energy, health, education, and water. This is because the vast majority 

of infrastructure and social services provided to the bulk of the 

population are delivered by these sectors. These sectors also take a 

substantial share of the National Budget, and form the major focus of the National Development Plan (NDP) strategies. In order to improve 

service delivery, the following actions will be emphasized;- 

i. Further alignment of sector priorities and allocation of 

resources across the board towards strategic interventions 

of the National Development Plan (NDP). This means that 

resources will only be allocated to programmes and 

projects that have the highest impact on unlocking the 

binding constraints to socio-economic transformation as 

identified in the NDP. 

ii. Enhance implementation of the first phase of the National 

Identity Card Project by allowing economically active 

Ugandans to pay for the Identity Cards on a cost sharing 

basis 

iii. Strengthened Performance and Contract management 

across the whole of government with emphasis on the six 

service delivery sectors,  

iv. ring fencing of allocations and quarterly progress 

reporting on budget implementation to Cabinet for closer 

oversight of performance of the six service delivery sectors 

to ensure the growth stimulus is attained.   

v. Enhancing the Cluster approach to planning, monitoring 

and evaluation to harness synergies between sectors; 

vi. Salary Enhancement for Public Servants with emphasis 

on Teachers and Scientists; The Ministry of Public Service 

is finalizing a paper to guide the establishment of a Salary 

Review Commission to address issues of wage disparities 

across Government vii. Continued implementation of measures to eliminate 

inefficiency and wastage in public expenditure by 

minimising allocations to consumptive areas such as 

allowances, printing, workshops and seminars. 

viii. Review the entire budget to allocate more resources 

towards the critical growth sectors of the economy as 

identified in the National Development Plan (NDP). 

ix. Strengthen Public Financial Management by automation of 

Government financial management, payroll and procurement  

processes and systems, 

x. support anti-corruption agencies to tackle corruption in all 

Government agencies by strengthening controls and 

enforcement to reduce opportunities for corrupt practices. 

74. Madam Speaker and Honourable Members of Parliament, in view of the 

substantial resources allocated to the Roads, Energy, Water, Health, 

Education and Agriculture sectors, respective votes will be required to 

submit quarterly reports to Cabinet to provide progress 

implementation of agreed work plans. V. CONSTITUTIONAL SELF ACCOUNTING BODIES  

75. Madam Speaker, the budgetary proposals of the following Self 

Accounting Bodies have been submitted in compliance with Article 

155(2) of the Constitution. 

(i)  Courts of Judicature 

(ii)  Electoral Commission 

(iii)  Inspectorate of Government 

(iv)  Parliamentary Commission 

(v) Uganda Law Reform Commission 

(vi)  Uganda Human Rights Commission 

(vii)  Uganda Aids Commission 

(viii)  National Planning Authority 

(ix)  Office of the Auditor General 

76. In accordance with Article 155(3) of the Constitution, Government has 

made recommendations on these proposals. I hereby lay both the 

budgetary proposals and the recommendations of Government before 

this august House, as required by Constitution 

77. In order for me to submit a fully financed National Budget for your 

consideration in accordance with Article 155(1) of the Constitution, the 

budget provisions of these Self Accounting bodies are in accordance 

with the resource envelope conveyed to them in the course of budget 

preparation, including the presentation of the National Budget 

Framework Paper to Parliament, in accordance with the Budget Act 

2001. 

VI. TAXATION AND REVENUE MEASURES 

78. Madam Speaker, the objectives of the Revenue measures for the 

Financial Year 2012/13 are for revenue generation, reform of the tax 

laws, enhancing taxpayer compliance and to support tax 

administration. 

79. Madam Speaker, I will also announce some of the decisions agreed 

upon by the Sectoral Council on Finance and Economic Affairs held on 

18th May 2012 in Kampala. 

Income Tax 

Income derived from Treasury Bills and Bonds 

80. Madam Speaker, I propose to increase the withholding tax on income 

derived from Treasury Bills and Bonds from 15% to 20% as a final tax. 

This measure will generate Shs.16.3bn.  The details are contained in 

the Income Tax (Amendment Bill) 2012. 

PAYE Threshold  

81.  Madam Speaker, Hon. Members, I am proposing to increase the PAYE 

threshold from Shs.130,000 to Shs.235,000 per month and the tax 

bands will be adjusted accordingly. The details are contained in 

Income Tax (Amendment Bill) 2012. 

82. Madam Speaker, I am also proposing that an additional 10% be 

imposed on individuals with chargeable income of Shs.120 million and 

above, per year.  The details are contained in the Income Tax 

(Amendment Bill) 2012. 

31 

Value Added Tax (VAT) 

Re-instating VAT on the supply of water 

83. Madam Speaker, in this financial year, I propose to reinstate VAT on 

water at 18%. This measure will generate Shs.21.7bn. 

Standard rating of biodegradable packaging materials 

84.  Madam Speaker, Hon Members, I propose to reinstate VAT on the 

supply of biodegradable packaging materials which is currently 

exempt. This is to enable suppliers to claim input VAT related to their 

products produced. This measure will generate shs 2.2 billion. The 

details are contained in the Value Added Tax (Amendment) Bill 2012. 

Re-instating the VAT exemption on gambling and lottery services and 

Increasing the Gaming and Pool Betting tax 

85. Madam Speaker, Hon Members, since the introduction of  VAT on the 

supply of betting, lotteries and games of chance (Gambling), tax 

administration has encountered  challenges in application. I am 

therefore proposing to reinstate the VAT exemption on gambling but 

increase the Gaming and Pool Betting Tax from 15% to 20%. This 

measure will generate Shs.4.3bn.The details are contained in the VAT 

(Amendment Bill) 2012. 

Excise Duty 

Increasing excise Duty on spirits 

86. Madam Speaker, Hon Members, I am proposing to increase excise duty 

on spirits made from locally made raw materials from 45% to 60%. 

Madam Speaker, I am also proposing to introduce a specific rate and 

an ad valorem duty rate on undenatured spirits of Shs.2, 000 per litre 

or 80 per cent, respectively, whichever is higher, as a means to control undervaluation.  The measure will generate Shs.10.4 billion.  The 

details are contained in the Excise Tariff (Amendment) Bill 2012. 

Imposing Excise Duty on cosmetics and perfumes 

87. Madam Speaker, I am proposing to impose excise duty on cosmetics 

and perfumes at a rate of 10% as a revenue measure.  The details are 

contained in the Excise Tariff (Amendment) Bill 2012. This measure 

will generate Shs.4.1bn.  

Non Tax Revenue 

Other Fees and Charges  

88. Madam Speaker, Hon Members, I am proposing to vary various fees 

and charges for the provision of Government services, authorizations 

and permits so that they are commensurate with the cost of rendering 

the service. This measure will generate Shs.31.7bn.  The details are 

contained in the Finance Bill 2012. 

Review of Tax laws on Excise Duty, Stamp Duty and Lotteries and 

Gaming. 

89. Madam Speaker, I am proposing to reform the Excise Duty Law, the 

Stamps Act, the Lotteries, Pool Betting and Gaming Act and also 

introduce a Tax Procedure Code to improve compliance and ease 

 tax administration. These Bills will be introduced  to Parliament next 

Financial Year. 

Decisions made at EAC Pre-Budget Consultations  by the 

Ministers of Finance 

90. Madam Speaker, Hon. Members, the First Sectoral Council of Finance 

and Economic  Affairs considered Pre- Budget issues and the 

following  decisions, among others, were made and the details will be 

contained in the East African Community (EAC) Gazette. 

Duty Remission, exemption regimes and preferential trade schemes  

91. Madam Speaker, the Sectoral Council of Finance and Economic Affairs 

recognized the need to take stock and an analysis of the existing duty 

remission schemes within the region to ensure equity and uniform 

implementation of intra EAC trade regime.  

Set Top Boxes for analogue digital and terrestrial transmission 

92. Madam Speaker, to facilitate smooth transition from analogue to digital 

terrestrial transmission by use of Set Top Boxes, import duty on Set 

Top Boxes was reduced from 25 percent to 0 percent for a period of one 

year.  

Food supplements and mineral premix used in fortification  

93. Madam Speaker, given that food supplements and mineral premix are 

essential in improving nutritional deficiencies, the import duty was 

reduced from 25 percent to 0 percent for food supplements and 

mineral premix. 

Vacuum packing bags  

94. Madam Speaker, import duty was reduced from 25 percent to 10 

percent on vacuum packing bags for one year to ease packaging by the 

manufacturers.  95. Madam Speaker, all these measures will come into effect on 1st 

July 2012. 

VII. REPORT OF TAX EXPENDITURE FOR FY 2011/12 

96. Madam Speaker, Article 152 (2) of the Constitution requires me to 

periodically report to Parliament on  the exercise of powers 

conferred upon me by any law to waive or vary a tax imposed by that 

law. This is to report that this fiscal year, I have not exercised powers 

conferred by the Income Tax Act and Value Added Tax Act to waive any 

tax. 

97. Madam Speaker, Government has however paid Shillings eleven billion 

six hundred one million five hundred forty two thousand four hundred 

forty three only (11,601,542,443) for some institutions and Non- 

Government Organizations with tax exemptions clauses in their 

agreement. 

VIII. SCHEDULE OF INDEBTEDNESS 

98. Madam Speaker, article 159 (4), section 13 (1), (2) and (3) of the 

Budget Act 2001 require an account of the total indebtedness of 

Government. I therefore lay before the House a report reviewing all 

loans contracted and Grants extended to the Government. I wish to 

mention that Government did not extend any guarantees to any 

Agency, Company or Statutory Corporation in the FY 2011/12. 

IX. CONCLUSION 

99. Madam Speaker, this budget statement reflects mutual positions and a 

collective determination for renewed economic growth and addresses 

the key challenges to socio-economic transformation of Uganda. In 

conclusion, I commend this budget to all those Ugandans that have 

tirelessly worked and contributed to the economic transformation of 

our dear country.  

For God and My Country 

I beg to move.