To reverse the worsening poverty indicators;there is need ...
REPORT OF THE BUDGET COMMITTEE ON THE NATIONAL BUDGET FRAMEWORK PAPER FOR THE FY 2018/19– 2022/23PARLIAMENT OF UGANDAKAMPALA, UGANDAJanuary 2018TABLE OF CONTENTS TOC \o "1-3" \h \z \u INTRODUCTION PAGEREF _Toc505076334 \h 1SCOPE PAGEREF _Toc505076335 \h 1METHODOLOGY PAGEREF _Toc505076336 \h 2COMPLIANCE OF THE BFP TO THE PFM 2015 AND THE CHARTER OF FISCAL RESPONSIBILITY (CFR) PAGEREF _Toc505076337 \h 2MISALIGNMENT WITH THE SECOND NATIONAL DEVELOPMENT PLAN PAGEREF _Toc505076338 \h 5INCONSISTENT OUTCOME INDICATORS PAGEREF _Toc505076339 \h 7MEDIUM TERM MACROECONOMIC POLICY GOAL PAGEREF _Toc505076340 \h 8NATIONAL DEVELOPMENT STRATEGY IMPLEMENTATION AND THE MEDIUM TERM MACROECONOMIC FORECASTS PAGEREF _Toc505076345 \h 10ACHIEVING THE DESIRABLE MACROECONOMIC OUTCOMES PAGEREF _Toc505076346 \h 14THE DISCONNECT BETWEEN MACROECONOMIC OBJECTIVES AND THE SECTORAL INTERVENTIONS/TARGETS PAGEREF _Toc505076347 \h 15RECENT DEVELOPMENTS AND THE IMPACT ON THE MEDIUM TERM MACROECONOMIC FRAMEWORK PAGEREF _Toc505076348 \h 15KEY MACROECONOMIC ASSUMPTIONS PAGEREF _Toc505076349 \h 17MEDIUM TERM FISCAL FORECASTS PAGEREF _Toc505076350 \h 20Revenue Outlook PAGEREF _Toc505076351 \h 20The Budget Deficit PAGEREF _Toc505076352 \h 22PROJECTED RESOURCE ENVELOPE FOR FY 2018/19 PAGEREF _Toc505076353 \h 23External Debt PAGEREF _Toc505076354 \h 25SECTOR MTEF ALLOCATIONS FY 2018/19 PAGEREF _Toc505076355 \h 26STATEMENT OF POLICY MEASURES PAGEREF _Toc505076356 \h 27SECTORAL PRIORITIES PAGEREF _Toc505076357 \h 28OTHER GENERAL OBSERVATIONS PAGEREF _Toc505076358 \h 32CONCLUSION PAGEREF _Toc505076359 \h 33PART2: SECTORAL PLANS AND EXPENDITURE: OBSERVATIONS AND RECOMMENDATIONS PAGEREF _Toc505076360 \h 35I.PRESIDENTIAL AFFAIRS PAGEREF _Toc505076361 \h 36II.AGRICULTURE SECTOR PAGEREF _Toc505076362 \h 38III.FOREIGN AFFAIRS PAGEREF _Toc505076363 \h 41IV.NATURAL RESOURCES PAGEREF _Toc505076364 \h 42V.PUBLIC SERVICE AND LOCAL GOVERNMENT PAGEREF _Toc505076365 \h 49VI.LEGAL AND PARLIAMENTARY AFFAIRS PAGEREF _Toc505076366 \h 50VII.ICT AND NATIONAL GUIDANCE PAGEREF _Toc505076367 \h 58VIII.FINANCE, PLANNING AND ECONOMIC DEVELOPMENT PAGEREF _Toc505076368 \h 60IX.DEFENCE AND INTERNAL AFFAIRS PAGEREF _Toc505076369 \h 68X.TRADE, TOURISM AND INDUSTRY PAGEREF _Toc505076370 \h 73XI.EAST AFRICAN COMMUNITY AFFAIRS (MEACA) PAGEREF _Toc505076371 \h 75XII.HEALTH SECTOR PAGEREF _Toc505076372 \h 75XIII.EDUCATION AND SPORTS PAGEREF _Toc505076373 \h 78XIV.SCIENCE, TECHNOLOGY AND INNOVATION PAGEREF _Toc505076374 \h 78XV.PHYSICAL INFRASTRUCTURE PAGEREF _Toc505076375 \h 79XVI.SOCIAL DEVELOPMENT SECTOR PAGEREF _Toc505076376 \h 84INTRODUCTIONRt. Hon. Speaker, Hon. Members, In accordance with the provisions of Articles 90 and 155 (4) of the Constitution, Section 9(1) to 9(8) of the Public Finance Management Act 2015 and Rules 143 and 144 of the Rules of Procedure of Parliament, Committees are mandated to among other things, to consider, discuss and review the Budget Framework Papers and through the Budget Committee present a report to the House for approval by 1st February of each year.In compliance with above provisions, I beg to present a report of the Budget Committee on the National Budget Framework Paper for the Fiscal year 2018/19- 2022/23 for consideration and approval by the August House as required by section 9(8) of the PFMA 2015 and Rule 144(3).Also in accordance with Section 6E(2) and (4) of the Administration of Parliament (Amendment) Act, 2006 as well as Rule 52 of the Rules of Procedure, the Leader of Opposition in Parliament presented a Response to the Budget Committee on the National Budget Framework Paper FY2017/18 – 2021/22.On 20thDecember, 2017, the Executive complied with the PFMA 2015 by laying on table the National Budget Framework Paper (NBFP) for FY FY2017/18 – 2021/22 and subsequently on – January 2018 laid on Table the relevant Certificate of Gender and Equity Compliance. SCOPEThe Committee scrutinized the NBFP and the reports of the Sectoral Committees and has prepared a report structured in two parts:Part 1:Government Medium Term Macroeconomic Outlook, Medium Term Fiscal Framework, Policy Measures and Indicative Revenue FrameworkPart 2:The Sectoral Committees’ observationsand recommendations made thereon.METHODOLOGYMembers of the Committee analyzed the NBFP to acquaint themselves with the detailed contents of the document before interacting with the Sector Committees.The Committee held meetings with the Minister of Finance, Planning and Economic Development and all the Chairpersons of Sectoral Committees of Parliament and discussed their observations and recommendations on the components of the NBFP under their jurisdictions. The Committee received and held a lengthy discussion on the presentation by the Leader of OppositionThe Committee also held meetings with the National Planning Authority, UNRA and the Ministry of Works and Transport.Section 9(4) and Schedule 3 of the PFM Act 2015, prescribes the format of the NBFP. The Committee analyzed the compliance of the NBFP to the provisions of the PLIANCE OF THE BFP TO THE PFM 2015 AND THE CHARTER OF FISCAL RESPONSIBILITY (CFR)The BFP for FY 2018/19 – FY 2022/23, to a large extent, conforms to the requirements of Schedule 3 under the PFM (2015) Act as summarized in Table 1, below. This is the third BFP, since the PFM Act was enacted and the Executive has made good progress towards compliance to the requirements of law and to improve on the contents of the BFP.Table 1: Compliance of the BFP to the PFM (2015) ActRequirements /FormatAssessmentConclusionBFP RequirementsBFP - Date of Submission is by 31st December (section 9(5))BFP was Submitted on 20th December, 2017PassMinister to Issue a Gender and Equity certificate (section 9(6))Gender and Equity Certificate was Issued by the Minister on 17th January, 2018.PassAssessment of Gender and Equity certificate (section 9(6))National Assessment was 61%, (Pass mark is 50%); 16 out of the 17 sectors scored above 50%.PassBFP Consistent with the Charter of Fiscal Responsibility (section 9(3))Objective 1 - Fiscal Balance: The Government fiscal balance (including grants) is reduced to a deficit of no greater than 3% of GDP by FY2020/21, consistent with the Performance Convergence Criteria under the EAC Monetary Union Protocol.PassObjective 2 - Public Debt: Public debt in net present value terms is maintained below 50% of GDP; of which the net present value of external debt is maintained below 30% of GDP and the net present value of domestic debt maintained below 20% of GDP.PassBFP Consistent with the NDPII (section 9(3))BFP is Consistent with the NDPII.PassImplementation of the Key NDP II Flagship projects on course, such as Hydro Electricity power projects, Irrigation projects, Oil pipeline and Refinery projects and Oil related infrastructure in the Albertine region.???BFP Format (refer to Schedule 3 of the PFM (2015) Act)Medium Term Macroeconomic forecasts: BFP should indicate the actual, estimated and projections covering the previous two Fys, the current FY and the next five FysPrevious 2 years, current year and the next 5 year forecasts of;Fail·???????? the average and year end gross domestic product; (Fail)·???????? the rate of inflation (average and year-end); (Fail)·???????? the rate of employment and unemployment; (NIL)·???????? the average and year end exchange rate; (NIL)·???????? the interest rates; and(NIL)·???????? the money supply. (NIL)Medium Term Fiscal Framework: Targets of Government for variables which are subject of Fiscal Objectives under the CFRPresented and Demonstrated under Section 1.2.PassMedium Term Fiscal Forecast: Covering the previous two Fys, the current FY and the next five Fys.Presented and Demonstrated under Section 1.3 and Section 1.2.PassCompliance with the CRFPresented under Section 1.4PassStatement of the resource for the annual budget for the next financial yearPresented under Section 1.5, read together with Table 2PassStatement of policy measuresThe statement of Policy measures is provided under section 1.7PassMedium-Term Expenditure FrameworkProjections of Government expenditure in respect of each Vote (and each Programme) for the financial year and the next financial year(s), split into current expenditure and investment expenditure are provided under Annex 1 and Annex 2PassFiscal Risks StatementStatement of the main sources of risk to the fiscal objectives of Government and a quantified estimation of the fiscal impact of these risks is provided under Section 1.8PassSource: BFP 2018/19 – FY 2022/23 and Parliament CompilationThe Committee was concerned that the Ministry had consistently failed to provide data on actual estimates and projections covering the previous two Financial years, current Financial year and next five Financial Years on the following macro indicators as required by the PFMA 2015:The average and year end gross domestic products;The rate of the inflation (average and year –end);The rate of employment and unemployment;The average and year end exchange rate;The interest rates; andThe money supplyIn his response the Minister explained that “the GDP gross rate and inflation rate were provided. That the rate of employment and unemployment are not collected on a regular basis and are therefore not available. The average and annual exchange rate are not provided to avoid speculation on foreign exchange movement. That interest rate and money supply will be provided by Bank of Uganda (BOU) in due course”.The committee observed, that the indicators the Minister failed to provide, arecentral in monitoring the performance of the interventions in the budget. The absence of these indicators renders the analysis of the performance and forecast of the budget practically difficult. The Committee recommends that next FY; the Ministry should have no more excuse for non-compliance, for the Law has been in place long enough to have put in place systems to comply with all the legal requirements. Regarding the concern the committee raised on the link between input, outputs and outcomes under the Program Based Budgeting structure used to present the BFP, the Minister responded that “Program Based Budgeting (PBB) is using the existing infrastructure under Output Oriented Budgeting (OOB) by providing a link between inputs, outputs and the results /intermediate outcomes. PBB requires MDA’s to define what they intend to achieve with the allocated resources in terms of strategic objectives, policy priorities and results. This will help to better align resources to priorities and service deliveryresults which in the long run will help to ascertain attainment of long term outcomes and the desired impact”.The committee was further informed by the Minister that the description of activities and corresponding output indicators which do not appear in the BFP can be traced from the Sector Budget Framework Papers.The committee recommends that to maintain the linkage between the activities, inputs, outputs and outcomes the Minister shall in future be required to lay on table all the seventeen Sector BFP’s alongside the national BFP to ensure that Parliament has a full record of all these commitments. The BFP for FY 2018/19 – 2022/23 is consistent with the CFR to the extent that the Fiscal Strategy is still focused on maintaining a higher level of public investment, with an objective to create a long-term productive capacity and long term sustainable growth and debt sustainability.The Fiscal deficit which is projected at 5.4% of GDP in FY2018/19 should in the medium term reduce to 3% of GDP to attain the convergence with the CFR.MISALIGNMENT WITH THE SECOND NATIONAL DEVELOPMENT PLANIn line with Section 9(1) and (2) of the Public Finance Management Act 2015 accounting officers prepared and submitted their respective budget framework papers to the Minister to generate the National Budget Framework Paper.The Minister is expected to ensure that the National Budget Framework Paper is consistent with the National Development Plan as provided for in Section 9(3) of the Public Finance Management Act 2015. To the contrary it has been noted that although alignment at sectoral level is 81%, the alignment at service delivery centres i.e. Local Governments Ministries, Departments and Agencies is below 25% as indicated in table 2. There is a great mismatch in alignment of strategic plans of sectors, Ministries, Departments and Agencies as well as Local Governments to the National Development Plan. Hence the foundations of the National Budget Framework Paper FY2018/19 i.e. Local Governments Ministries, Departments and Agencies levels are inconsistent with the National Development Plan. This contravenes Section 9(3) of the Public Finance Management Act 2015.Table 2: Status of Alignment to the Second National Development PanSECTOR / AGENCYTOTALFULLY ALIGNED STRATEGIC PLANS TO NDPIIPERCENTAGESectors161381%Ministries, Departments and Agencies1273124%Local Governments1573321%Source: MoFPED and Parliament ComputationsThe committee recommends that in line with Section 9(8) and 78(1) of the Public Finance Management Act 2015, the following should be undertaken:Approve the Budget Framework Paper with conditions that Ministerial Policy Statements for Local Governments, Ministries, Departments and Agencies without aligned strategic plans should not be submitted to Parliament.Minister of Finance, Planning and Economic Development makes a report to Parliament why the National Budget Framework Paper was prepared based on submissions of votes that lack strategic plans aligned to the National Development Plan.As resolved by Parliament on 31st May 2017 through the adoption of the report of the Budget Committee on the Annual Budget Estimates FY2017/18:All sectors, Ministries, Departments and Agencies as well as local governments which have failed to produce strategic plans should be sanctioned through non approval of their annual budgets. Accounting Officers who have failed to produce strategic plans for their Ministries, Departments and Agencies as well as local governments should not be approved to manage public funds.INCONSISTENT OUTCOME INDICATORSUganda has developed a National Standard Indicator Framework to track progress towards attainment of middle-income status by 2020. An effective Programme Based Budgeting (PBB) arranges the budget around a set of programs and objectives that are clear and specific. The indicators and targets must also be concrete, realistic, and have credible baselines and timelines.However critical analysis of the outcome indicators contained in the budget framework paper across all sectors indicates a pronounced mismatch with National Standard Indicator Framework. It is extremely difficult to link the National Budget Framework Paper of FY2017/18 and that proposed for FY2018/19. The programme indicators are completely different hence making it almost impossible to track progress and quality of targets. Further, the Committee noted a total misalignment between the BFP sector outcomes and the various sector development plans. The following examples may illustrate the misalignment:Agriculture: All the sector BFP outcome indicators do not match the outcome indicators in the Agricultural Sector Strategic Plan (ASSP)Education: The sector outcome areas as extracted from the NBFP 2018/19 do not resonate with the sector outcomes set out in the Education and Sports Sector Strategic Plan.Health: The HSDP highlights 11 result areas and 41 indicators. However, the NBFP only points out 4 result areas which are not synchronized with the HSDP outcomes. The Ministry of Finance, Planning and Economic Development should urgently review and update the National Standard Indicator Framework 2016 so as to articulate clear, measurable, agreeable and concise indicators, key outputs and targets across sectors. This will facilitate adequate scrutiny, appropriate allocation of resources and ease government performance management.MEDIUM TERM MACROECONOMIC POLICY GOALThe overall medium term macroeconomic policy goal is to accelerate and sustain all-inclusive economic growth while maintaining macroeconomic stability and debt sustainability. The strategies to be employed to achieve the macroeconomic policy goal include: implementation of policies that foster efficiency in public investment, attract and crowd in private investment, increase domestic revenue mobilization efforts, achieve low and stable inflation, promote a competitive exchange rate and to build external foreign reserves.However, in the previous FYs, the pace of GDP growth rate, domestic revenue mobilization, budget execution (especially the development component), mode of budget financing, access to private sector credit and the instability in the banking sector, have to some extent, deviated from their anticipated levels. Although these factors have not compromised macroeconomic stability and debt sustainability, they could have contributed to income inequality and the increasing poverty. According to the BFP, the findings of Uganda National Household Survey Report of 2016/17, indicate, among others, that:poverty headcount has increased from 19.7% in 2012/13 to 21% in 2016/17; poverty depth increased from 5.2% to 6.8%; and, Poverty severity increased from 2% to 2.5% in the same period.The rural areas with about 76 percent of the population contribute 86 percent of national poverty. On the other hand, the urban areas represent 24 percent of the population and contribute 14 percent of national poverty.The number of poor persons increased from 6.6 million in 2012/13 to 10million in 2016/17.The findings point to a serious reversal in poverty indicators. It appears that the economic growth registered in the previous 10 years, has not generated the momentum needed to transform Uganda’s economy at the pace anticipated in the Uganda Vision 2040. The committee recommends that;Government should re-examine its macroeconomic policy framework; for the IMF projections indicate that Government’s commitment to achieve a middle income status by 2020 may not be realized (refer to figure1).Government should institute mechanisms to frequently monitor the changes in employment and the welfare of the population in the medium term. Fig 1: GDP per capita (nominal US$)Source: IMF, NPA and Parliament computationsTo reverse the worsening poverty indicators;there is need to balance social and infrastructure spending so as to ensure economic growth does not leave anyone behind. Towards this end, the planning and budgeting frameworks need to learn from what has gone wrong and where redirection is required. In this regard;The BFP should provide for Medium Term Review (MTR) of NDP for us to learn from what we are not doing well and reprioritize accordingly. This ought to be provided for in the budget.The BFP should adequately provide for other planning processes, the evaluation of NDPI, preparation of NDPIII and 10-year NDP.Relaxing the inflation targets to match the targets in NDPIINATIONAL DEVELOPMENT STRATEGY IMPLEMENTATIONAND THE MEDIUM TERM MACROECONOMIC FORECASTSThe FY 2018/19marks the fourth year of the implementation of the NDP II. Table 3, indicates the BFP macroeconomic forecasts as compared to the IMF and the NDP II forecasts. The medium term macroeconomic forecasts in the BFP are consistent with the IMF projections under the eighth review of the country’s Policy Support Instrument of July, 2017. Table 3: Medium Term Forecast for Selected Real and Monetary Economic Indicators??FY 2015/16FY 2016/17FY 2017/18FY 2018/19FY 2019/20FY 2020/21FY 2021/22Mid-Term ??Out turnOut turnProj.Proj.Proj.Proj.Proj.Avg.Real Sector(Annual percent change, unless otherwise indicated)Real GDP GrowthBFP4.74.05.05.56.06.56.75.9IMF4.73.95.05.56.06.56.55.9NDPII*5.85.96.46.66.8??6.6Annual Headline Inflation (Avg)BFP6.65.74.95.05.45.65.55.3IMF6.65.85.94.95.05.05.05.2NDPII*8.08.08.08.08.0??8.0Annual Core Inflation (Avg)BFP6.75.14.55.05.55.35.15.1IMF6.75.25.75.35.05.05.05.2NDPII* 5.0 5.0 5.0 5.0 5.0 ??5.0Money and Credit(Annual percent change, unless otherwise indicated)Broad Money (M3)BFP????????IMF7.112.713.71516.617.117.516.0NDPII*15.914.213.914.616.0??14.8M3/GDP (Ratio)BFP????????IMF21.121.922.423.224.325.526.824.4NDPII*22.423.123.724.425.5??24.5Credit to PrivateBFP????????IMF 4.0 8.5 12.6 13.6 15.6 16.7 17.0 15.1NDPII*16.312.417.415.413.9??15.6projections as in FY 2015/16*Source: MoFPED, IMF, NPA and PBO computationsThe BFP forecast on Real GDP growth (at 5.5% in FY 2018/19) is revised downwards compared to the NDP II forecast, and the revision has been persistent each year, indicating that the medium term projection of 6.6% under the NDP II, may not be realized (see Fig 2 below). Source: NBFP, IMF & ParliamentThe slower growth is officially attributed to the climate change which causes prolonged droughts and intermittent rainfall patterns, a slower than expected recovery in the provision of credit to the private sector by the banking system, slower than anticipated investment and developments in the production sectors of the economy, slower than anticipated pace in the execution of public infrastructure investment projects, disruptions to trade due to regional instability and the slower global economic growth in the previous two financial years. The committee further observes that in addition to the above factors, the slowdownin economic growth below the NDP proposed levels is attributed to the inappropriate strategy of prioritization of infrastructural development which is a support sector without corresponding investment in the productive sectors they are intended to support. For instance; whereas the proposed sector allocation to Tourism, Trade and Industry is UGX119bn the corresponding investment in Works & transport is UGX4,707bn in FY 2018/19 and the situation has been persistently the same over the past three decades. The same applies to agriculture, Minerals and ICT.The mismatch of prioritization constrains Uganda’s potential for import substitution and export development. This subsequently affects production, productivity and gainful employment hence the failure to attain middle income status. As a consequence the nation cannot harness self-growth to sufficiently support its own infrastructural developments and social services rather largely depends on borrowing. For instance in FY2018/19, it is projected that UGX 2.1trillion out of UGX 4.7 trillion which translates to 45% of the budget of works and transport sector will be funded by external sources. However, the mid-term forecasts of real GDP growth under the BFP and the IMF, indicate a recovery up to an average growth of 5.9%, core inflation is expected to revert back to 5.1% and credit to the private sector will grow at an average of 15.1% per annum.While the implementation of the NDP II core projects is indicated to be on course, the projects continue to face implementation and supervision challenges arising from insufficient technical and implementation capacity; inability to enforce contracts; lower provision of counterpart funds in the budget; lengthy procurement processes; delayed acquisition of right of way; unsatisfactory quality of works; poor project preparedness and; lack of inter-agency collaboration and synergy.The IMF forecasts in the Money and Credit Sectors indicate that, to a greater extent, they are consistent with the NDP II projections (Refer to Table 4). Under the NDP II, the Credit to the Private sector was expected to grow much fasterat the start of the NDP II and slow down towards FY 2019/20, which did not materialize, due to managerial constraints in the financial sector. However, credit to the private sector, has picked up and is expected to catch up with the NDP II projections in the medium term. Table 4: Medium Term Forecast for Selected Monetary sector variables??FY 2015/16FY 2016/17FY 2017/18FY 2018/19FY 2019/20FY 2020/21FY 2021/22Mid-Term ??Out turnOut turnProj.Proj.Proj.Proj.Proj.Avg.Money and Credit(Annual percent change, unless otherwise indicated)Broad Money (M3)BFP?……?…?…?…?…?…?…?IMF7.112.713.71516.617.117.516.0NDPII*15.914.213.914.616??14.8M3/GDP (Ratio)BFP????????IMF21.121.922.423.224.325.526.824.4NDPII*22.423.123.724.425.5??24.5Credit to PrivateBFP????????IMF 4.0 8.5 12.6 13.6 15.6 16.7 17.0 15.1NDPII*16.312.417.415.413.9??15.6Source: MoFPED, IMF, NPA and PBO computationsACHIEVING THE DESIRABLE MACROECONOMIC OUTCOMESIt is prudent to note that the envisaged second national development plan macroeconomic outcomes i.e. sustained growth, keeping inflation below 5% and attaining of middle income status can only be achievable when emphasis is balanced between Enabling and complementaryand primary growth sectors. Resource allocation based on this categorization is illustrated by table 5 below.Based on this illustration, it may not be surprising that the Second National Development Plan targets cannot be achieved in its life time. The plan expires in FY2019/20.Table 5: Budget Share allocations according to social, primary growth, complementary and enabling sectorsSECTORSFY 2017/18FY 2018/19SOCIAL SECTORS20.50%19.20%Education11.40%11.00%Health8.30%7.40%Social Development0.80%0.80%PRIMARY GROWTH SECTORS18.80%20.20%Energy & Mineral Development10.50%11.50%Agriculture3.80%3.80%Water and Environment2.90%3.20%Lands, Housing &Urban Development0.60%0.70%Tourism, Trade and Industry0.50%0.50%ICT & National Guidance0.50%0.50%COMPLEMENTARY SECTORS21.10%21.70%Works & Transport20.80%21.40%Science, Tech. &Innovation0.30%0.30%ENABLING SECTORS39.60%38.80%Interest Payments12.00%12.30%Public Sector Management6.60%6.60%Security6.70%6.20%Justice/Law and Order5.10%5.00%Accountability4.40%3.90%Public Administration2.60%2.60%Legislature2.20%2.20%Source: MoFPED and ParliamentFigure 3: Sectoral Allocations between 2014/15 -2018/19Source: NBFP 2014/15-2018/19 and ParliamentThe poor budget prioritization is attributed to the fact that the Ministry of Finance, Planning and Economic Development has not given adequate room to the medium term plan (NDP) to influence resource allocation. The Committee recommends that National Planning Authority should be allowed to play a major role in guiding resource allocations while the Ministry’s (M0FPED) emphasis should be focused on resource mobilization and accountability. THE DISCONNECT BETWEEN MACROECONOMIC OBJECTIVES AND THE SECTORAL INTERVENTIONS/TARGETSThe Committee noted that Public investment is still lower than was planned in NDPII, which has translated into a less expansionary fiscal policy than was expected to boost the economy in NDPII. Further, the sectoral focus in BFP may not achieve the macro economic objectives as several expected investments that should support the macroeconomic objectives are missing. For instance, it is hard to see how the theme of industrialization for job creation will be achieved, since the interventions proposed seem unlikely to drive the theme.RECENT DEVELOPMENTS AND THE IMPACT ON THE MEDIUM TERM MACROECONOMIC FRAMEWORKDespite the lower than projected economic growth in FY 2016/17, the outlook for FY 2017/18and the medium term, points towards recovery and positive growth prospects. The Inflationary pressures have receded due to improved food supplies and the annual core inflation is projected to remain within the medium term target of 5%. The exchange rate is relatively stable and largely competitive in the region, and the exchange rate is expected to remain stable due to the anticipated increased Foreign Direct Investment in respect to Oil and Gas sector investments. Although the Financial Sector is shallow in Uganda, the monetary policy stance has been supportive in ensuring recovery of the private sector activities, including the lowering of interest rates. Government has been slow at recapitalizing the Uganda Development Bank (UDB), which has in turn constrained access to affordable long-term capital to the private sector.In FY 2017/18, the External Sector is expected to improve with the narrowing of the current account deficit due to increased exports and remittances. However, the projected rise in infrastructure related imports might affect the current account projections. Given the global uncertainty and shocks led by USA foreign policy changes, Brexit and EU issues, if the anticipated remittances and FDI do not materialize, then the country’s external position will negatively be affected.The rise in public investments will continue to drive economic growth prospects projected to reach 5% in FY 2017/18.Due to the need to maintain inflation at single digit, MDAs in FY 2018/19and the medium term are likely to experience fiscal policy restraint, through adjustments in recurrent expenditure, while maintaining the country’s investment programme.The inflation targeting framework that was introduced in 2011, has served well for Uganda. It is hoped that witha favorable inflation outlook, the Central Bank will continuewith its monetary easing program, as demonstrated in the reduction of the CBR from 15% in July 2016 to 9.5% in October 2017. However, while Treasury bill rates have continued to decline across all tenors in FY 2017/18 (Table 6), the reduction in the CBR has been slow to transmit to lending rates, reflecting tightening of lending standards and the asymmetry in the transmission of monetary policy. Commercial Banks have attributed high interest rates to high risks associated with lending due to lack of credible collateral on the part of Borrowers and overhead costs in form of utility costs, among others.The scope for further easing of monetary policy will depend on the exceptional coordination with the fiscal policy and the success of its implementation.Table 6: Treasury Bill Rates by Tenor (End period, percentage)Tenor/PeriodJun-14Jun-15Jun-16Jun-17Dec-1791-day9.513.815.210.78.4182-day11.315.116.611.88.5364-day11.916.317.513.69.0Source: Bank of UgandaAccumulation of Domestic arrears, especially from delayed clearance to the private sector that supply goods and services to Government, has constrained private sector growth. Whereas domestic arrears stood at about 3.2% of GDP by end June 2016, Government made a provision of just about 0.32% of GDP in the budget for FY 2017/18. It is not clear whether the provision of UShs. 300.9bn equivalent to 0.29% of GDP in FY 2018/19 is adequate to clear all verified domestic arrears.Going forward, Government should remain committed to prioritizing verification and clearance of domestic arrears in FY 2018/19.KEY MACROECONOMIC ASSUMPTIONSThe inflation targets in the medium term are premised on favorable food prices, as weather conditions improve; stability of the exchange rate and international commodity prices. The monetary authorities need to closely monitor risks arising from all sources of inflation to make timely interventions. During the previous two FY, Government has relied more on Bank of Uganda financing, in form of advances, instead of selling Government securities on domestic market (IMF, 2017). The practice is not consistent with an inflation targeting framework. The continued reliance on Bank of Uganda advances complicated the implementation of the inflation targeting regime.Given the inflation effects of the frequent droughts in the country, Government should consider developing the Irrigation infrastructure as a national priority. A well-established irrigation infrastructure in the entire country will ensure increased food production and productivity, hence stable food prices. The irrigation infrastructure will enhance GDP growth, create and stabilize jobs, ensure food security and increase domestic earnings and savings. Government should also restore and conserve all water resources (lakes, rivers, wetlands and underground waters). In addition, Government should institute measures that will address the continued encroachment, deforestation and degradation of the forest cover, countrywide. The fast declining forest cover, in the country contributes to the climate change. The Exchange Rate is projected to remain stable in the medium term supported by Foreign Direct Investments (FDI) especially from the Oil and Gas Sector. However, several development projects, especially in the Oil and Gas related infrastructure,seem to be over delayed which may cause instability in the monitory economy.Private sector credit growth projectionat 13.6% of GDP in FY 2018/19 is still below the NDP II projection of 15.4%, which was projected to be desirable in driving the economic growth to 6.6%. The growth in private sector credit may be possible if monetary policy easing continues and implementation of the public investment program generates the growth dividends envisaged in the domestic economy. In this case the local content policy need to be strictly adhered to, while also combating levels of corruption that has eroded economic gains. While commercial banks reduced their lending rates marginally from 24% in July 2016 to 21% in June, 2017, at the same time the commercial banks introduced stringent borrowing conditions in response to the deterioration in the quality of credit that commenced in FY 2015/16. Despite the reduced lending rates, there is limited financial depth with a limited proportion of the private sector having access to commercial and development loans. In the absence of long term capital for private sector investments, economic growth performance over the medium term will continue to be below potential levels. Government should therefore consider expediting pension reforms and adequate recapitalization of Uganda Development Bank which in turn should introduce financial products for supporting investors in Agriculture, Mining industry, Tourism and ICT in order to boost the country’s economic growth. Strategies in the BFP aimed at reducing the cost of credit by continuing to invest in UDB and Microfinance support Centre alone, are weak and are unlikely to achieve the required impact. Largely missing is reforming of the pension sector. In addition to reviewing restrictions on the NSSF Act, the BFP should provide for Pension sector wide reforms that are key to the development of the Capital markets and boosting national savings to provide finance for long term investments. Indeed, with weak private sector credit and lack of long term investment financing, reforming the pension sector is an issue of national concern.The 2016/17 Uganda National Household Survey indicates that Unemployment in Uganda stands at 9.2% compared to 11.1% in 2012/13.Unemployment in the urban areas is higher, at 14.4% compared to the rural areas at 6.2%. Unemployment is higher with the female at 13.1% compared to the male at 5.8%. Future manpower requirements in the public and private sectors, point at an annual growth rate of 20%, due to the growing demand (expansion) and replacements factors in the medium term.The agriculture sector still employs the highestlabour force in the country, and the structure of the economy has remained agricultural based. The structural transformation stagnation towards manufacturing is resulting from limited skills in the labour market, high cost of production leading to the slow growth of factories. While the youth livelihood programme has benefited over 80,000 youth, they are still in the agriculture or trade sectors that require less skilled labour force, which is unable to trigger socio-economic transformation. The committee recommends;That the government urgently considers measures for restoring skill based training institutions that deliver technicians and other factory workers in a bid to attract new manufacturing industries in ernment should hasten measures to establish, equip and manage technical and vocational institutes in each constituency as a measure to contribute to the transformation of the informal sector into a highly productive formal sector. The relevant resource allocation be made over the medium term.Establish a national skills inventory that should be complemented by a comprehensive curriculum reform to address skills mismatch.MEDIUM TERM FISCAL FORECASTSRevenue OutlookTable 7, shows that the BFP forecast of the Revenue and Grants in the medium term is higher (at 16% of GDP) than what was anticipated by the NDP II (15.5% of GDP). However, it is lower compared to the IMF (17.4% of GDP). The Revenues will be driven by Tax and Non-tax collections, as Grants will decline in the medium term. The tax to GDP ratio is expected to grow at 0.5% per annum in the medium term.The medium term fiscal framework presented in the BFP indicates that total revenue and grants is estimated to grow by Shs.830bn from UShs.15,979billionapproved in FY 2017/18 to UShs.16,809 billion in FY 2018/19. This translated into an improvement of 0.4% of GDP from 15.5% estimated for FY 2017/18 to 15.9% projected in FY 2018/19. The improvement is premised on the anticipated growth in tax revenue to GDP ratio from 13.6% estimated for FY 2017/18 to 14.3% projected for FY 2018/19. The medium term tax revenue to GDP will average 15.1%.Despite implementation of various tax policy and administration measures over the years, the trends in net tax collections, as a percentage of GDP, have remained fairly stagnant and much below the Sub-Saharan average of 20% (IMF, 2012) and the OECD countries average of 34.3% as at 2015. Stagnation of tax revenues to GDP is attributed to existence of a large informal sector that constitutes 43 percent of GDP, narrow tax-base composed of a few tax payers coupled with a weak tax exemptions regime and high costs of tax administration.??Table 7: Medium Term Forecast for Selected Fiscal indicators????FY 2015/16FY 2016/17FY 2017/18FY 2018/19FY 2019/20FY 2020/21FY 2021/22FY 2022/23Mid-Term ??Out turnOut turnProj.Proj.Proj.Proj.Proj.Proj.ernment Budget (percent of GDP, unless otherwise indicated)??Revenue & grantsBFP14.314.315.515.916.016.116.316.916.0IMF15.215.516.516.817.517.718.5?17.4NDPII*14.514.815.215.515.8???15.5???????????ExpenditureBFP19.218.221.721.320.719.119.219.720.4IMF20.119.020.222.321.520.720.1?21.0NDPII*21.923.022.521.820.8???22.0???????????Government Fiscal Deficit (Incl. grants)BFP-4.9-3.9-6.2-5.4-4.7-3.0-2.9-2.8-4.4IMF-5.3-3.5-3.7-5.5-4.0-3.0-1.6?-3.6NDPII*-7.0-7.4-7.7-6.5-4.3???-6.2Source: MoFPED, IMF, NPA and Parliament computationsExpenditure OutlookThe BFP forecast of the Expenditure (Table7) in the medium term is lower (at 20.4% of GDP) than was projected by the NDP II (at 22% of GDP); however it is within range of the IMF forecast (at 21% of GDP). In the medium term, Government expenditure will annually grow at 8.57%, which is beyond the inflation projection of 5.2%.Total recurrent budget will amount to UShs.11,098 billion while development expenditure is projected to amount to UShs.10,178 billion. As a share of GDP, development expenditure will account for 9.6 percent of GDP compared to 10.5% for the recurrent budget category. Expenditure outlook will largely be driven by scaling-up of public investment in infrastructure (NDP II core projects) such as opening up new roads, the standard gauge railway, the Oil refinery and related infrastructure in the Albertine region as well as electricity transmission projects that began in FY 2017/ernment’s interest payments are projected at UGX 2,701 billion next financial year, of which UGX 2,279 billion is interest on domestic securities (Treasury bills and bonds) and the rest is interest on external debt. Interest payments due are projected to rise by 35% in the FY 2018/19 compared to FY2017/18.Table 8: Medium term Fiscal Framework FY 2017/18 and FY 2018/19CategoryOut turnProjProjProjGrowth% of GDP2016/172017/182018/192019/20nominal%tageTotal Revenue and Grants13,66815,97916,80919,3618305.2%15.9%Revenue12,94714,40315,54818,2781,1457.9%14.7%Tax Revenue12,46314,02315,13017,8121,1077.9%14.3%Non-Tax Revenue3543804184663810.0%0.4%Oil Revenues130----0.0%Grants7211,5761,2611,083(315)-20.0%1.2%Budget Support3134-(34)-100.0%0.0%Project grants6901,5421,2611,083(281)-18.2%1.2%Expenditure and Net Lending17,40222,35222,52025,0591680.8%21.3%Recurrent Expenditures9,95910,93211,09813,0421661.5%10.5%Development Expenditures6,7189,88310,17811,0942953.0%9.6%Net Lending and Investment5411,236943813(293)-23.7%0.9%Other Spending184301301110-0.0%0.3%Overall Balance(3,734)(6,373)(5,711)(5,698)662-10.4%-5.4%Financing3,7336,3735,7115,697(662)-10.4%5.4%External Financing (net)2,8014,5624,7715,0862094.6%4.5%Domestic Financing (net)6031,811940611(871)-48.1%0.9%E & O329---0Source: BFP 2018/19 – FY 2022/23The Budget DeficitThe overall fiscal deficit is projected to contract marginally by UShs.662 billion (0.8 percent of GDP) from UShs.6,373 billion in FY 2017/18 (6.2 percent of GDP) to UShs.5,711billion (5.4 percent of GDP) in FY 2018/19. The observed reduction is attributed to the expected phasing-out of some of the completed key infrastructure undertakings in FY 2017/18, such as; completion of Karuma and Isimba hydroelectric power projects. Domestic borrowing is projected to reduce by UShs.14.3billion (1.5 percent) from UShs.954.2billion approved in FY 2017/18 to UShs.940 billion in line with the overall fiscal framework strategy. This projected outlook will boost private sector credit growth from 12.6 percent of GDP in FY 2016/17 to IMF’s estimate of 13.6 percent in FY 2018/19.The fiscal deficit projection of 5.4 percent of GDP for FY 2018/19 is above the CFR and EAC monetary convergence criteria of 3 percent of GDP. Government will have to adopt austerity measures to minimize resource wastage as well as promoting efficient use of resources in order to meet the CFR and EAC monetary criteria threshold on fiscal deficit.The financing framework proposed in BFP requires further re-examination. The BFP concentrates more on the expenditure side but weak on how revenue will be mobilized. Except for strengthening efforts on tax administration and compliance, the BFP lacks a medium term strategy to strengthen revenue mobilization. Also, alternative financing mechanisms proposed in NDP seem not to be targeted, for instance;While the NDPII proposed leveraging PPP financing source, the BFP does not provide for modalities to build capacity for adequate structuring of PPP projects. While the BFP aims to strengthen management of Non-Tax Revenues (including Appropriation in Aid, AIA), this is an area where more focus is required to ensure that AIA revenues are aligned to national development objectives.The Ministry of Finance should formulate a medium term revenue mobilization strategy aimed at widening the tax base as well as attracting high value investment.PROJECTED RESOURCE ENVELOPE FOR FY 2018/19The total resource inflow for FY 2018/19 is projected to increase by 0.9% from Ushs. 29,008.5 billion in FY 2017/18 to Ushs. 29.274.0 billion (table 8). The increase in resource inflow is attributed to increase in Domestic tax revenues (by Ushs. 448 billion) and budget support (by Ushs. 117.9 billion).The increasing budget support may indicate that the donor community is slowly re-gaining confidence in thecountry’s reformed financial management systems. However, as a ratio to GDP, the total resource inflow is projected to decline from 28.2% of GDP in FY 2017/18 to 27.4% of GDP in FY 2018/19. The projected growth in total resource inflow (of 0.9%) is much lower than the projected growth in the economy (of 5%). This calls for more tightening in financial management and budget implementation, in order to effectively utilize the available resources for higher economic growth. Project support is projected to decline by Ushs. 301.4 billion fromUshs. 7,075.4 billion (6.9% of GDP) in FY 2017/18 to Ushs. 6,774.0 billion(6.7% of GDP) in FY 2018/19.The external debt repayments are projected to decrease by Ushs. 55.6 billion fromUshs. 949.6 billion in FY 2017/18 to Ushs. 894 billion in FY 2018/19.Table 9: Summary of the Resource Envelope for the FY 2017/18 and FY 2018/19 (Ushs. Billion)S/N Source FY 2016/17FY 2017/18 FY2018/19FY2017/18 - 2018/19As %age of GDP??BudgetBudgetprojChangeGrowth(%)FY 2017/18FY 2018/19Change1Domestic Revenues 12,947.0 15,187.0 15,547.8 360.8 2.4%14.8%14.4%-0.4%? o/w URA Revenue 12,463.0 14,682.0 15,130.0 448.0 3.1%14.3%13.9%-0.4%? o/w Non-Tax Revenue 354.0 380.0 417.8 37.8 9.9%0.4%0.4%0.0%?o/w Oil Revenue 130.0 - - - ?0.0%0.0%0.0%? o/w Petroleum Fund - 125.0 - (125.0)-100.0%0.1%0.1%0.0%2AiA - 757.5 872.9 115.4 15.2%0.7%0.7%0.0%3Budget Support 31.0 34.9 152.8 117.9 337.8%0.0%0.0%0.0%4Net Domestic Financing (Borrowing) 5,323.3 5,953.7 5,926.5 (27.2)-0.5%5.8%5.6%-0.2%? o/w Domestic Refinancing 4,977.7 4,998.7 4,986.6 (12.1)-0.2%4.9%4.7%-0.1%5Project Support 6,524.5 7,075.4 6,774.0 (301.4)-4.3%6.9%6.7%-0.2%?Total Resource Inflow (1+2+3+4+5) 24,825.8 29,008.5 29,274.0 265.5 0.9%28.2%27.4%-0.8%6External Debt Repayments (169.2) (949.6) (894.0) 55.6 -5.9%-0.9%-0.9%0.0%7GoU Resource Envelope Less External Debt Repayments 24,656.6 28,058.9 28,380.0 321.1 1.1%27.3%26.5%-0.8%8Domestic Arrears Payment (111.0) (300.1) (300.9) (0.8)0.3%-0.3%-0.3%0.0%9GoU Resource Envelope Less External Debt Payment and Arrears 24,545.6 27,758.8 28,079.1 320.3 1.2%27.0%26.2%-0.8%10Project Support (6,524.5) (7,075.4) (6,774.0) 301.4 -4.3%-6.9%-6.7%0.2%11GoU Resource Envelope Less External Debt Payment, Arrears and Projects 18,021.1 20,683.4 21,305.1 621.7 3.0%20.1%19.6%-0.6%12Domestic refinancing (4,977.7) (4,998.7) (4,986.6) 12.1 -0.2%-4.9%-4.7%0.1%13Interest payments (2,193.5) (2,635.4) (2,700.7) (65.3)2.5%-2.6%-2.5%0.1%14AIA - (757.5) (872.9) (115.4)15.2%-0.7%-0.7%0.0%15GoU Resource Envelope Less External Debt Repayments, Interest payments,AIA, Arrears, Projectsupport, domestic refinancing 10,849.9 12,291.8 12,744.9 453.1 3.7%12.0%11.6%-0.3%?Nominal GDP95,744 102,790 105,759 ?????Source: BFP 2018/19 – FY 20122/23 and Parliament computationsThe domestic resource inflow is projected to grow 2.1%, from Ushs. 21,898.2 billion in FY 2017/18 to Ushs. 22,347.2 billion in FY 2018/19. The domestic resource inflow is projected to move from a percentage share of 75.5 % of the total inflows in FY 2017/18 to 76.3% of the total inflows in FY 2018/19. The increasing trend in the percentage share of domestic resource in total inflowsis consistent and in-line with the country’s goal of self-reliance (refer to Table 9).The external resource envelop indicated in table 9 suggests that Government will continue to rely on external sources to finance its investment programme. External support to the budget will largely come through borrowing and this will increase the country’s external debt exposure. The discretionary resources available for Government expenditure will grow by 3.7% from Ushs. 12,291.8 billion in FY 2017/18 to Ushs. 12,744.9 billion FY 2018/19, hence an increase in discretionary expenditure space by Ushs. 453.1 billion. However, as a share of GDP, the discretionary resource will drop from 12% of GDP to 11.6% of GDP over the same period.Table 9: Summary of the Resource Inflow, FY 2017/18 and FY 2018/19SourceFY 2017/18FY 2018/19FY2017/18 - 2018/19Amount (shs. bn)%age ShareAmount (shs. bn)%age ShareChange (shs. bn)GrowthDomestic 21,898.2 75.5% 22,347.2 76.3% 449.0 2.1%External 7,110.3 24.5% 6,926.8 23.7% (183.5)-2.6%Total 29,008.50 100.0% 29,274.00 100.0% 265.5 0.9%Source: BFP 2018/19 – FY 2022/23External DebtAccording to the BFP, External debt constitutes 66 percent of total public debt of US$ 10.74 Billion projected for FY 2017/18. In FY 2018/19, the mode of financing projects in the country will largely (81%) be through external borrowing, while 19% will be through grants in FY 2018/19. Among the external borrowings for projects, only 47% of the financing will be on concessional or cheaper terms. The remaining funds (53%) will be obtained on more expensive terms and the share will increase in the medium term to average at 79%. Government will access more expensive external credit to finance its investment plan in the medium term. Uganda faces heightened risks to this approach of external financing given that the PV of external debt to exports of goods and services may worsen from 77.5% in FY 2016/17 to peak at 112.7% in FY 2021/22, increasing the vulnerability of the country’s external position in event of any export shock.SECTOR MTEF ALLOCATIONS FY 2018/19The total sectoral allocation (excluding Domestic Arrears) is projected to grow by 0.1% in FY 2018/19; however, as a share of GDP, total sectoral allocation will drop from 27.9% in FY 2017/18 to 27.2% in FY 2018/19 (refer to Table 10). The highest growth in allocation will favour the Water and Environment (12.8%), followed by Energy and Mineral Development (8.7%), Trade, Tourism and Industry (8%) and Works and Transport (2.6%). On the other hand, there will be decline in the following sectors: Accountability (-11.3%), Security (-8.2%), Health (-7.4%) and ICT (-3.5%). Table 10: Sector Shares for the FY 2017/18 and FY 2018/19 (Excl. Dom. Arrears)SectorAmount shs. bnShare of the TotalY-to-Y growth (%)As %age of GDP2017/18 Budget2018/19 ProjectionFY 2017/18FY 2018/19FY 2017/18FY 2018/19Works And Transport 4,589.574,709.0116.0%16.4%2.6%4.5%4.5%Energy and Mineral Devt2,370.282,575.838.3%9.0%8.7%2.3%2.4%Education 2,808.552,776.539.8%9.7%-1.1%2.7%2.6%Interest Payments / Treasury Operations8,583.688,581.3229.9%29.9%0.0%8.4%8.1%Security 1,474.271,353.105.1%4.7%-8.2%1.4%1.3%Health 1,850.901,714.266.4%6.0%-7.4%1.8%1.6%Accountability 979.49868.953.4%3.0%-11.3%1.0%0.8%Justice Law & Order 1,174.841,171.314.1%4.1%-0.3%1.1%1.1%Public Sector Management 1,539.571,535.495.4%5.3%-0.3%1.5%1.5%Agriculture 865.20873.593.0%3.0%1.0%0.8%0.8%Water and Environment 678.40765.212.4%2.7%12.8%0.7%0.7%Public Administration 568.06572.612.0%2.0%0.8%0.6%0.5%Legislature 483.76483.761.7%1.7%0.0%0.5%0.5%Lands, Housing & Urban Dev’t151.55152.380.5%0.5%0.6%0.1%0.1%Social Development 177.62177.430.6%0.6%-0.1%0.2%0.2%Tourism, Trade &Industry 206.98223.480.7%0.8%8.0%0.2%0.2%ICT133.26128.590.5%0.4%-3.5%0.1%0.1%Science, Tech. & Innovation72.1172.090.3%0.3%0.0%0.1%0.1%Grand Total 28,708.0628,734.94100.0%100.0%0.1%27.9%27.2%Nominal GDP102,790.32105,759.26Source: BFP 2018/19 – FY 20122/23 and ParliamentSTATEMENT OF POLICY MEASURESREVENUE MEASURESIn the medium to long term, revenue mobilization effort is going to focus on strengthening tax administration and compliance of tax payers. It is anticipated that growth in tax revenue during FY 2018/19 will largely result from improvement in compliance of taxpayers and strengthening of tax administration through the following administrative measures:Expansion of the scope of withholding tax agents;Strengthen business intelligence function of URA to detect non-compliance;Strengthen the risk management function and deploy the enterprise risk tool to all critical stations;Expand block management system to cover other potential revenue geographical areas beyond Kampala;Enhance arrears management structures to recover more debt and dedicate more staff to arrears enforcement;Implement valuation controls; and Attachment of staff as attaches to embassies of China, India, and Dubai (UAE). The committee observes that the current tax regime does not provide a conducive incentive structure to encourage manufacturing at the low stages of the value chain. The regime is uniform to all manufacturing regardless of stage of value addition along the value chain. As such, it favors importation of manufactured inputs that are at the high stage value addition. Indeed, it disfavors use of local inputs and investing in more stages of value addition.Given this problem, Uganda’s ability to attract manufacturing industries that offer significant value addition to our raw materials and creating jobs has been heavily compromised. This should be the reason for instance; why Uganda continues to export almost 100% of its cotton, coffee, hides & skins, minerals in a raw form. Uganda’s FDI inflows have in the past few years been declining. To reverse this trend, the committee recommends that:Government seizes the opportunity of the Investment bill currently before Parliament to offer an incentive regime intended to attract high value adding enterprises.Explore other incentives that could be offered under other existing laws such as the VAT ActThe committee also noted the growing threat imposed by the frequent droughts to the country’s agricultural potential and the national gross domestic product. The committee recommends that in order to maintain all year round production, all irrigation related equipment and materials should be exempt from tax to avert the worsening poverty situation in the country attributed to vulnerability due to climate change. SECTORAL PRIORITIESThe key BFP sectoral priorities for FY2018/19 include the following:-Increasing production and productivityEnhancing industrialization to support job creation and exportsInvestment promotion and private sector growthInfrastructure development: Energy, Transport & ICTHarnessing tourism potentialImproving service delivery (health & education)Improving Governance (pay reform, restructuring government institutions; JLOS and public investment management)Agriculture: The BFP is commended in providing for investment in Rwebitaba for tea research and NaCCORI for coffee, however, it is weak in showing how production and productivity in other areas will be improved, as follows;The BFP rightly focusses on Irrigation, particularly dealing with mandate, policy and strategy issues. However, the BFP must show what milestones/targets will be achieved with the planned investments in irrigation. How much will be achieved with the BFP investments and what will be done in the medium term.The BFP should prioritize the use of the voucher system instead of direct distribution of inputs by NAADS/OWC. This will improve the distribution of inputs to ensure that beneficiary farmers receive the right inputs at the right time to reduce wastage and corruption through issuance of vouchers that can be cashed at an appropriate time by the farmer. This will ensure that only interested farmers get the vouchers and the vouchers will be cashed when the farmer is ready to plant. NAADS/OWC can build on the on-going work under the Agricultural Cluster Development Project of MAAIF where an electronic voucher management system is being implemented.The BFP should provide for strengthening the Department of crop inspection and certification under MAAIF to enhance certification, enforcement and quality assurance of agricultural inputs. There is need to recruit additional staff, renovate and equip certification laboratory facilities at Namalere and Kawanda with advanced equipment such as high chromatographic machines, autoclaves, cold rooms, cold trucks, green houses, and operational resources for inspection and training of agro-input dealers. This will enable the Department effectively certify and track all nurseries and other input suppliers.The BFP should provide for District Local Governments to scale up Agriculture Extension Services. There is need to facilitate the recruited agricultural extension staff to effectively provide extension services in all the sub-counties in the country. This would enhance adoption of improved technologies and increase agricultural productivity.The BFP should provide for NaGRIC and NARO to enhance genetic improvement of cattle herds for dairy and beef. This will enable establishment of necessary infrastructure, acquisition and installation of artificial insemination facilities at 9 regional centers throughout the country. NGRC & DB, MAAIF, NARO and all LGs should coordinate this.Oil and Gas: The BFP should be focused on ensuring that the country achieves maximum benefits from the development phase of the oil investments. To this end, the BFP should prioritize the following; Fast tracking the certification of middle level skills personnel for the Oil and Gas sector. Investing in certification will enable the country provide the required manpower needs for the development phase of oil and gas. This is currently missing in the BFP and as such the country will have to rely on foreign manpower and thus lose revenue and foreign exchange from the sector. Towards this end, Ministry of Energy and Education budgets need to be reconfigured to provide for the skills gap and certification.Further, there is need to build capacity to benefit from value addition on inputs required in the sector. For instance, capacity should be acquired to coat and produce paint for coating the crude oil pipe line. This will substantive benefits for the economy. Instead of importing already coated oil pipeline pipes, the cost can be significantly reduced if coating is done locally, providing significant savings that are potentially higher than the cost of the factory. And, it provides multiplier benefits on the economy in terms of jobs created and foreign exchange saved.Infrastructure: The BFP is commended for prioritizing road maintenance of the existing road network.Nevertheless, efforts to achieve this need to be strengthened. While a UShs.100 tax on fuel will be imposed to raise resources for road maintenance, there is need to earmark the funds to more innovative technologies such as the low cost sealing technology and financing model proposed by PROBASE company from Malaysia. This intervention will have the effect of drastically reducing muddy and dusty roads in Uganda (over 130,000 km) using part of the existing budget on maintaining the dusty roads; guaranteed over a concessional long-term financing model. Further, the BFP also has to:Deal with capacity challenges for new projects, both in financing and execution for example; UNRA’s absorption capacity challenges that have persisted for some time. UNRA was allocated UGX1,268,906,000,000 external financing to construct roads.Only 21.9%of this budget (UGX277.4 bn) was utilized citing procurement delays, constraints in land acquisition, inadequate counterpart funding (spread thinly to many different projects) and the slow rate of mobilization by the contractors. Almost Ushs 1 trillion of borrowed funds remains idle with severe consequences such as the huge interest burden, loss of fiscal space that would have otherwise been utilized for other equally important projects like irrigation.Deal with the inter-modal transport system, beyond roads. The BFP has continued to prioritize road transport at the expense of other modes of transportation. The BFP must balance all modes of transportation.Energy:The BFP should balance investing in Generation, Transmission and Distribution of electricity. Uganda has done well in building adequate electricity generation capacity; however, translating this generation capacity into demanded electricity has been a challenge. The sector is faced with a dilemma of having surplus supply on one hand with a deficit witnessed by consumers on the other hand. Amidst a surplus, several consumers continue to face depressed demand as electricity is load shaded due to low capacity to transmit and reliably distribute electricity generated. Further, while the country has invested in generation little is being done to boost potential demand. As such, the BFP needs to prioritize several efforts as follows:In the short term, there is need to invest in ensuring that all those who need electricity have it at all times (reliable supply). In this regard, the BFP should prioritize investments in adequate transmission and distribution capacity to ensure that industries and other consumers are supplied with consistent/reliable power. In the medium and long term, the BFP should prioritize investing in boosting demand for electricity. Towards this end, building adequate industrial parks and leveraging the iron industry for instance need to be prioritized. Indeed, investing in the iron ore industry alone would consume all Uganda’s electricity generated.Tourism: The BFP needs to strategically invest in key potential Tourism hot spots and low hanging fruits. Key among these is adequate investment in Source of the Nile, Namugongo shrines, Mt. Rwenzori and Domestic Air Transport (aerodromes and regional carrier). These have demonstrated their potential as Uganda’s tourism hot spots, however, the BFP has not provided for investment in these areas.Greater Kampala Metropolitan Area (GKMA): While the BFP aims to focus on efficient management of urbanization, it does not provide for explicit activities towards joint planning and execution of projects in Greater Kampala Metropolitan Area (GKMA). The BFP needs to leverage GKMA by explicitly defining joint planning and projects to be jointly executed in the area. It should be noted that GKMA is a driver of over 60% of Uganda’s GDP. As such, dealing with issues affecting the GKMA has a potential to boost Uganda’s economy.OTHER GENERAL OBSERVATIONSRestructuring Government InstitutionsThe committee shares the view that while the creation of the different government institutions was well intended, they have now resulted into over lapping mandates, poor coordination, wastage and increased cost of administration.The committee urges government to expedite the review of the existing Agencies, Ministries, Authorities and Departments with a view of reorganizing and merging those with similar mandates. However, this should be carefully handled to avoid huge compensations in form of terminal benefits that could have a big toll on the limited resources. Also government should ensure that the restructuring takes cognizance of the high unemployment rates in the country. Pay ReformIt should be recalled that over the years, there has been strong agitation and industrial action over low pay across different categories of government employees. Whereas government has realized the need to harmonize and enhance salaries across the service, there is no evidence of provision of funds to cater for this pay reform. A total of Ushs. 1.8 trillion has been indicated as required next Financial year. The Government has proposed that pay reform has to be done in a phased manner taking into account the available resources. To accommodate this requirement, the following trade-offs will require immediate action: freeze of all new recruitment except those on replacement basis, indefinitely halt operationalization of the 13 new districts and 200 town councils approved by Parliament and stop Government grant aiding of private schools, universities and hospitals coupled with a comprehensive restructuring of government. The committee observed that in considering these measures government should be mindful of the social implications to the population; for example; thehuge number of students who may drop out of school as a result of suspending the grant aiding of private schools and universities. The committee does not seem to foresee a quick resolution to these policy positions before the submission of the Budget estimates of FY 2018/19 and urges government to come out more clearly on this matter.The committee recommends that Government should implement the operationalization of the 13 districts and the 200 town councils in a phased manner as earlier agreed with Parliament.Proposed Adjustments to the Sector AllocationsSectorInstitution/MDA Funding Gap (bn)JustificationWorks and TransportMinistry of works50Intended to finance low cost sealing of roads (Over 500km). The country spends huge sums of money on maintaining dusty and muddy roadsWater and EnvironmentMinistry of Water and Environment50Implement innovative irrigation technologies amongst farmers to enhance production and productivityTotal100CONCLUSIONRt. Hon Speaker, Part 2 on Sectoral Observations and Recommendations is an integral part of this report and should be read as such. However, for now, I beg to conclude.The committee has identified some policy gaps and has made numerous recommendations which will require being incorporated to generate a revised Budget Framework Paper particularly reflecting observations and recommendations of Part 1 of this report and taking cognizance of the recommendations in Part 2.Rt. Hon Speaker, in accordance with Section 9(8) of the PFMA 2015 and Rule 144(3) of the Rules of Procedure of Parliament; the Committee requests Parliament to approve the proposed National Budget Framework Paper FY 2018/19 with the proposed amendments. PART 2SECTORAL PLANS AND EXPENDITURE: OBSERVATIONS AND RECOMMENDATIONSPART 2: SECTORAL PLANS AND EXPENDITURE: OBSERVATIONS AND RECOMMENDATIONS PRESIDENTIAL AFFAIRSVOTE 001 – OFFICE OF THE PRESIDENTBudgetary Provision to the Ministry for SecurityThe Committee notes with concern that the budget provision in the MTEF ceiling for Vote 001 to fund the planned activities is inadequate to enable execution of the envisaged mandate. The funding requirement for what the Committee considers very critical is Ushs. 13.98 bn and only Ushs. 3.98 bn is provided for in the MTEF ceiling of Vote 001 resulting into a funding gap of Ushs. 10.0 bn. The Committee recommends that Ushs. 10.0 bn be availed to enable the Ministry of Security mitigate threats of cyber insecurity, economic and financial surveillance and Oil & Gas related insecurity. Inadequate Budget Provision to the Manifesto Implementation UnitThe Committee observed that the budget provision in the MTEF ceiling for Vote 001 to fund the planned activities of the Manifesto Implementation Unit is inadequate to enable execution of the envisaged mandate. The funding requirement for the Manifesto Implementation Unit is Ushs. 4.571 bn and only Ushs. 1.14 bn is provided for in the MTEF ceiling of Vote 001 resulting into a funding gap of Ushs. 3.431bn. The current budget provision only enables the unit to assess only 51 Districts and 7 MDA’s on their implementation status of the manifesto commitments.The Committee recommends that Ushs. 3.431 bn be availed to enable the Manifesto implementation Unit effectively monitor the implementation of the commitments in the manifesto and the 23 strategic directives across all MDA’S as issued by the President.Facilitation for RDC’sThe Committee observed that facilitation to conduct effective monitoring of Government programs is underfunded to the tune of Ushs. 5.308 bn. Members noted that inadequate facilitation for RDC’s to monitor government programs leads to poor service delivery and poor implementation of Government programs.The Committee further observed a huge funding gap of Ushs. 17.76 bn to procure 120 vehicles for the RDCs and DRDCs as the cost of maintaining the old fleet is extremely exorbitant in addition to the desire to procure vehicles for RDCs in newly created Districts. The Committee further recommends that Ushs. 17.76 bn be provided to enable the office of the President procure the 120 vehicles both for replacement of the old fleet and for the new districtsVOTE 002 STATE HOUSEPoverty Alleviation Initiatives (Model Villages)The Committee appreciated the need to create more model villages across the Country and support to the existing ones. The Committee observed that there are only 21 model villages in existence and efforts to roll out this intervention in more areas whilst continuing with the support of the existing ones has an indicative allocation of Ushs. 1.0 bn against Ushs. 5.0 bn required leading to a funding gap of Ushs. 4.0 bn.The Committee now recommends that special considerations be accorded to this initiative and have Ushs. 4.0 bn provided to have the initiative fully funded. The Committee further recommends that a comprehensive work plan of the model village roll out to the entire Country be provided. VOTE 122 – KAMPALA CAPITAL CITY AUTHORITY (KCCA)Resettlement Action Plan for KIIDP 2Kampala Infrastructure and Institutional Development Project (KIIDP) II is among the interventions geared towards operationalizing the Kampala City Strategic Plan 2014/15 – 2018/19 and NDP II.The project has been faced with implementation challenges resulting from delays in the execution of the Resettlement Action Plan, delay in securing right of way for the handed over batch 1 sub projects especially Bakuli – Nakulabye – Kisubi where works have not started and delayed relocation of utilities along the handed over project sites (Kiira road, Mambule and Makerere Hill road) among others.The Committee observes with concern that Resettlement Action Plan for KIIDP 2 requires Ushs. 30.0 bn and only Ushs. 9.0 bn is provided within the MTEF ceiling resulting into a funding gap of Ushs. 21.0 bn.The Committee recommends that Ushs. 21.0 bn be provided to enable KCCA execute Resettlement Action Plan for KIIDP 2. The Committee further recommends that KCCA expedites the handling of the other challenges to enable the communities achieve the envisagedproject benefits.AGRICULTURE SECTORVOTE 010: AGRICULTURE Water for Agricultural ProductionThe Committee observed that Uganda’s agriculture has remained significantly rain fed and despite recent changes in weather; the country has not invested strategically in Irrigation despite the availability of water resources all over the country. Prolonged drought has in the past led to death of animals and crop failure leading to famine across the country. In spite of this, access to appropriate technologies for water for production among smallholders has remained a challenge.However water for production is among the unfunded priorities for FY 2018/19 to a tune of UGX 20 billion.The Committee recommends that Government provides the UGX 20 billion needed to provide appropriate small scale irrigation equipment/infrastructure at small holder level. Agricultural ResearchThe Committee observed that NARO has been able to build capacity to produce anti-tick vaccines which will save the Government a lot of money that has previously been spent on importation of these vaccines. NARO also plans to relocate the Livestock Research Institute from Sukulu hills to Maruzi in phased manner over 3years. However funds for this amounting to UGX 18 billion to enable the relocation and have not been provided. Furthermore, there’s a funding gap in the wage bill of National Research Organisation (NARO) for 902 staff to a tune of UGX 3.5 billion.The Committee further observed that ATAAS funding for NARO is expiring on 15th June 2018 which means that NARO will need increased to get more funding from Government in order for them o achieve their mandate.The Committee recommends that UGX 18 billion be provided to enable NARO relocate the Livestock Research Institute to Maruzi and to enable her start the production of anti-tick vaccines.The Committee further recommends that the UGX 3.5billion wage bill for the 902 NARO staff be provided to enable them perform more efficiently.Agriculture ExtensionThe Committee noted that recruitment of extension workers has been slow at 61% since the implementation of the single spine agricultural extensionsystem. Out of the targeted 5,000 extension workers, only 3,032 have been recruited leaving a gap of 1,968 extension workers (39%). Besides, out of the UGX 10 billion required to pilot the nuleus estate/ agriculture zoning model in the peri-urban districts, only UGX 2 billion has been provided.The Committee recommends that Ministry of Finance, Planning and Economic Development provides the UGX 16 billion to enable Ministry of Agriculture complete the recruitment of extension workers and the UGX 8 billion to pilot the nucleus estate/ agriculture zoning model in the peri-urban districts.Pest and disease controlThe Committee observed that the agriculture sector has been suffering a lot of losses due to an increase in pests and diseases especially the fall army worm, foot and mouth disease among others. For example about 50% of the districts are currently affected by Foot and Mouth disease. In spite of this, pest and disease control remains hugely unfunded to a tune of UGX 41.5 billion out of the required UGX 54 billion.The Committee recommends that MOFPED provides UGX 41.5 billion to enable MAAIF to fight pests and diseases which have become a huge threat to Uganda’s agricultural production and food security.Coffee developmentThe Committee noted that coffee remains Uganda’s main export and by June 2017, the value of coffee exports increased by 4.2%. MAAIF through Uganda Coffee Development Authority (UCDA) is committed to achieving the exportation of 20 million (60kg) bags of coffee per year by 2025. However, the sector is hugely underfunded to a tune of UGX 14 billion.The Committee recommends that Ministry of Finance, Planning and Economic Development provides UGX 14 billion needed to enable UCDA to achieve its mandate.Fisheries promotionThe Committee noted that the fisheries sub-sector has not been prioritized yet it is a huge contributor to the economy as evidenced by its contribution of $121.5 million from fish exports in 2016. While the sector requires UGX 4 billion to promote aquaculture through support to research to ensure the availability of the appropriate fish seed, breeds and feed on the market, no funds have been provided. Out of the UGX 27 billion required by the sector, only UGX 5 billion has been provided.The Committee recommends the fisheries sub-sector is availed with the required funds amounting to UGX 22 billion to enable it to improve and contribute more towards the growth of the economy. Value additionThe Committee observed that value addition to our products is very important if they are going to compete favourably on the world market. However, funds for value addition amounting to UGX 22 billion out of the required UGX 55 billion have not been provided.The Committee recommends that Ministry of Finance, Planning and Economic Development avails UGX 33 billion for value addition for agricultural products to enable them compete favourably on the world market.Regulation and certificationThe Committee noted that regulation and certification are among the unfunded priorities despite their importance in ensuring growth of the agriculture sector. Assessing compliance of agricultural exports and imports to the set national, regional and international standards and the quality of agricultural inputs is very critical to enabling increased productivity. Out of the UGX 6billion for this, only UGX 1.7 billion has been provided leaving a funding gap of UGX 4.3 billion.The Committee recommends that MOFPED provides UGX 4.3 billion to enable the sector carry out certification and regulation of its products.Diary developmentThe Committee noted that Diary Development Association (DDA) needs to set up 6 mini laboratories to analyse milk and milk product samples to further enhance the quality and safety of milk and dairy products and rehabilitate Entebbe Diary training school. There’s also need to pay CESS UGX 8 billion as directed by H.E The President. However out of the UGX 12.06 billion required, only UGX 0.372billion has been provided.The Committee recommends that Ministry of Finance Planning and Economic Development provides UGX 11.688 to facilitate DDA to improve the standard of milk and milk products on the market. NAGRIC and DBThe Committee observed that NAGRIC and DB has been facing a number of challenges the most significant including disease outbreaks and tick resistance, land encroachment, dilapidated infrastructure, inadequate salaries and wages. Out of the 91.729 billion required, only 6.169 has been provided.The Committee recommends that Ministry of Finance, Planning and Economic Development provides the necessary funds to enable NAGRIC and DB attain the set targets of genetic improvement in the country leading to increased production and productivity in the livestock sub sectorFOREIGN AFFAIRSBudgets for Missions AbroadThe Committee notes that under the new public financial reform of reporting using Programme Based Budgeting (PBB), the Missions Abroad now report directly to the Ministry of Finance Planning and Economic Development.The Committee recommends that that since the Missions Abroad are now independent Votes, the MoFPED should provide adequate funding to ensure that the Accounting Officers of all Missions Abroad are able to come before the Committee on Foreign Affairs to defend their budgets (Budget Framework Paper and Ministerial Policy Statements).Government Properties/Infrastructure at Missions AbroadThe Committee observes that most Missions’ infrastructure requires rehabilitation and repair while others require new constructions. In the NBFP, government has only recognized the funding gap of the Kenya Mission for the Uganda House, and indicated its potential to generate more Non-Tax Revenue at least by four times. The Committee further observes that Uganda’s Embassy in Washington has not relocated to the designated location for Diplomatic Missions.The Committee recommends that Parliament reviews the law on Private Public Partnerships (PPPs) to enable the Ministry of Finance, Planning and Economic Development explore the use of PPPs in a bid to find a lasting solution to the poor infrastructure at Uganda’s Foreign Missions and development/acquisition of land/properties abroad.Loss on PoundageThe Committee observes that loss on poundage has remained a perennial problem to Missions Abroad because of the foreign exchange volatility. The depreciation of the Shilling against major international currencies results in huge foreign exchange losses, and affected the operations of the Missions significantly.The Committee recommends that the 10% of the budget to absorb this should be built in the budget system annually to automatically offset the loss.Economic and Commercial DiplomacyThe Committee observes that, over time our foreign policy is changing towards promotion of economic and commercial diplomacy. This is in line with the NDP II and Vision 2040. However, this activity has remained unfunded, yet it has a strong relationship with the budget theme for the FY 2018/19, which is, “Industrialization for Job Creation and Shared Prosperity.”The Committee recommends that the MFPED reconsiders the allocation of the additional resources in the budget to at least find the Ushs. 8.00bn to roll out commercial and economic diplomacy to cover 16 Missions abroad under Phase Two in FY2018/19.Outstanding Arrears on Contributions To International OrganizationsThe Committee noted that the total annual budgetary requirement for contributions to International Organizations is UGX 21.5 Bn, yet the annual budget provision is UGX 9.1 bn. This has led to accumulation of arrears, and the Committee is concerned that the continued failure to meet Uganda’s subscription obligations to International Organizations not only erodes the Country’s stature on the international arena, but may as well limit the country’s participation in activities organized by those organizations besides posing the risk of penalties.The Committee was informed that each Ministry is responsible for international organizations that fall under its docket.The Committee strongly recommends that the MoFPED increases the annual budgetary allocation to this line item to forestall any further accrual of arrears, as well as save and protect Uganda’s image and interests abroad.The Committee further recommends that Government carries out a cost-benefit analysis of Uganda’s participation in some international organizations, and considers withdrawing from some that are not crucial.NATURAL RESOURCESENERGY AND MINERALS SECTORLegal and Regulatory Framework for the Energy and Minerals SectorsThe Committee observed that the Ministry of Energy and Mineral Development needs to expedite review and formulation of sector laws and policies. These include The Electricity Act, 1999; The Mining Act, 2003; The Energy Policy for Uganda, 2002, The Mineral Policy of Uganda, 2000; Local Content Policy and the proposed Electricity Connection Policy among others. The laws and policies are paramount in attracting private investment and streamlining operations within the Energy and Minerals sectors that would consequentially result into improved efficiency in the management of sectors. The Committee notes that the review process for the Mining Act, Electricity Act and Minerals Policy has been on-going and should therefore be expedited and completed without further delay.The Committee recommends that the amendment of the Electricity Act, the Mining Act should be expedited and concluded within three months of this report.The Mineral Policy of Uganda, the Local Content Policy should be completed by June 2018.High Electricity TariffThe Committee noted that there was an increment of 4.9 percent in domestic user tariff from 685.6shs/kWh, which was the tariff of the fourth quarter of 2017 to 718.9shs/kWh in the first quarter of 2018. Overall a weighted average increase of 3.3 percent in approved base electricity end- user tariffs for 2018 relative to the tariffs of the fourth quarter of 2017 was realized. The Electricity Regulatory Authority attributed this increment to: the increase in investment related costs relative to the fourth quarter of 2017; the provision for transaction costs in respect to the debt refinancing of Bujagali Hydro Power Plant; and the depreciation of the Uganda Shilling against the United States Dollar, from Shs 3,600.38/US used in the determination of the tariffs for the fourth quarter of 2017to Shs 3,634.92/US as of 30thNovember 2017. The Committee further notes that electricity supply supercedes generation. For instance, in October 2017 supply was 597MW as compared to the country’s available 895.5MW. Failure to utilize the generation capacity (which is being paid for) leads to increase in tariff. There is therefore need to increase electricity uptake through increased number of connections.The Committee recommends that;Completion of planned industrial parks should be expedited so as to increase electricity demand.With the potential export demand at 690 MW to Burundi, Rwanda and Democratic Republic of Congo, regional interconnection should be fast tracked and their implementation aligned with commissioning dates of the power plants.There is need to evacuate all the generation capacity through reinforcement and expansion of the transmission and distribution networks.Negotiations for refinancing of the loan for Bujagali Power project should be completed and the debt restructured so as to reduce the cost of purchase of electrons from Bujagali which is the most expensive in the energy mix.Access to PowerThe Committee observed that although Government has invested heavily in the generation of electricity, access to electricity is still low and is estimated at 23%. According to Uganda Bureau of Statistics, there are 797,205 domestic customers with electricity (Statistical Abstract, 2017) out of the recorded 7,400,000 households. The Committee recommendations that;The Electricity Connection Policy should be expedited to offer avenues for reduction in the high connection costs. Connection subsidy projects through the Rural Electrification should be expedited to increase number of domestic connections which will consequently result into increased demand. Currently the ministry has committed funding from the French Development Agency, African Development Bank, World Bank, German Development Bank and Islamic Development Bank towards making more connections. Thermal GeneratorsDuring the consideration of the Budget for the FY2017/18 the Committee reallocated funds meant for Thermal Power Generation (61.6bn) because the country had excess capacity at peak demand and there was need to reduce the funds allocated to these plants which are currently only maintained as a standby option. The Committee has observed that the Supplementary expenditure Schedule 1 FY2017/18 indicates 106.87bn has been approved by Ministry of Finance Planning and Economic Development to cater for outstanding payment for capacity charges to Jacobsen Uganda Plant Limited and Electro-Maxx. The Committee also notes that the Electro-Maxx Contract will expire on 1st October 2018. The Committee recommends that;Government should not renew the contract for Electro-Maxx with the component of the capacity charges after 1st October 2018.MoFPED should plan to expeditiously dispose of the Euros 11.56 million loan balance to Nordea Bank for the Namanve Based Thermal Plant so as to revert the plant to GoU.Skills for the Oil and Gas SectorThe Committee observed that the Skills for Oil and Gas Project was initiated in 2016 to build capacity and improve skills for the local population in oil and gas management. Under the Workforce Skills Development Strategy and Plan, the Committee notes that the oil and gas sector envisages creation of 29,200 jobs (including sales) across the life cycle of the oil projects. Basic skills and entry level (level 1) will account for 11,531 jobs, trades and crafts (level 2), technicians (level 3) 4836 jobs and engineers (level 4) at 1810 jobs. This manpower demand is envisaged to peak in the second year, with 14000 jobs created in the construction phase (development) before gradually following away. These jobs will be mainly in the level 1 and 2 category which require a shorter training time for qualification. With Uganda set to achieve first oil by 2020, the country has a duty to fast track this as to maximize employment opportunities at these stages.The Committee recommends that the skilling programs for the sub-sector be adequately funded and expedited to ensure adequate skills development for Ugandans to benefit from the jobs that will be created in the early stages of development which is already underway. Operationalization of Institutions Created By the National Oil And Gas Policy The Committee observed that the institutions envisaged in the policy to manage and regulate the oil and gas resources have been put in place and started operations i.e Uganda National Oil Company (UNOC) and Petroleum Authority of Uganda (PAU). For the FY 2018/19, UGX 20bn for PAU has been allocated but falls short of the 80.36bn that is required for recruitment and purchase of ICT equipment and specialized software among other requirements. On the other hand UGX 10.2bn has been budgeted for leaving a funding gap of UGX 22.4bn. The Committee noted that underfunding of these institutions means that they will not be able to achieve their mandates and this will negatively affect our interests in the oil and gas industry.The Committee recommends that government allocates additional resources of Ushs 17.72 billion to these institutions to enable them achieve the planned activities for 2017/18 so that we benefit from oil and gas resources expected to start coming in by FY 2020/21Mineral Certification Infrastructure The Committee notes that the International Conference on the Great Lakes Region (ICGLR) Bill, 2016 was passed by Parliament on the 17th of May 2017 and awaits assent by the President. This Bill is to domesticate the Regional Certification Protocol, alongside other ICGLR protocols and the ICGLR Pact on security, stability and Development. The Regional Certification Protocol provides tools aimed at breaking the link between armed conflict and revenue from minerals that include Tin, Tungsten, Tantalite and gold, thus providing a system for tracking the chain of custody for these minerals which will consequentially safeguard the mineral revenues of processing, exporting and importing states of the Great Lakes Region. The Committee recommends that commensurate funding of UGX 2.4bn for the mineral certification infrastructure be provided.Underfunding of the Atomic Energy CouncilThe Committee observes that the Atomic Energy Council is mandated to regulate the use of ionizing radiation so as to protect and safeguard Ugandans from the dangers of this radiation and to provide for international safety compliance during its use and disposal of sources. The Council achieves this mandate through a number of undertakings such as registration, inspection of facilities using ionizing radiation, implantation of environmental radiation monitoring mechanism, monitoring of occupationally exposed radiation workers among others. Despite its mandate, the Committee noted that the Council is heavily underfunded and therefore cannot achieve its mandate thus posing a potential risk to the Ugandan the population to the danger of ionizing radiations. The proposed budget allocation to the Council for the coming financial year is UGX 6.62 billion against the required budget of UGX 23.14 billion. Unfunded items include employee contractual obligations (UGX 2m); establishment of nuclear security infrastructure (UGX 2bn deficit); management of orphaned sources (UGX 1.5bn deficit), environmental monitoring infrastructure (UGX4.92 bn) etc. It should be noted that the International Atomic Energy Agency requires governments to fund the regulatory bodies of Atomic Energy sufficiently to be able to achieve their mandate.The Committee recommends that government allocates at least an additional Ushs 2.00 billion to enable the council extend its activities to cover a larger part of the country.The Committee reiterates its earlier recommendation that the Atomic Energy Council be given a vote status to protect the Council budget from arbitrary budget cuts and effectively manage its budget. Currently the Authority receives a subvention through the Ministry of Energy and Minerals Development.RURAL ELECTRIFICATION AGENCYFailure to Remit Ugx 30.29 Billion By Uetcl To Rural Electrification Agency (REA)The Committee during the deliberation on the MTEF of the sector discovered that UETCL is withholding the 5% Levy due to REA for the period March 2017 to date amounting to UGX 30.29 billion. UETCL attributed this failure to UMEME invoking its rights under the Power Sales Agreements with Government to withhold payments to UETCL on account of supplied power. Amounts withheld by UMEME to UETCL account for failure of Government MDAs to meet their electricity bills.The Committee recommends that Government entities clear electricity arrears of UGX 30.29bn owed to UMEME. Consequently UETCL should remit transmission levy of 5% to REA. Shortfall in counterpart funding in the FY 2017/18- rural electrification agency The committee noted that there was a shortfall of UGX 30.22 bn as settlement for way leaves compensation arrears and expected claims during the course of the coming Financial year 2018/19. Government of Uganda has planned an allocation of 81.98bn instead of the required 112.2bn. Failure to provide this funding would consequently tantamount into a stagnation of rural connection initiatives to meet the targets for rural electrification i.e. increase in transmission network of 1306km of Medium voltage and 1113km of low voltage networks, increase in number of connections and connection of all sub-counties, which would curtail evacuation efforts for the excess hydroelectricity currently being generated.The committee recommends that counterpart funding for these projects be provided. The UGX 30.2 billion for the Uganda Rural Electrification Access Project be prioritized. THEORIO MINI HYDRO POWER PROJECTUganda Energy Credit Capitalisation Company (UECCC) is implementing the ORIO Mini Hydropower Project (the Project) which entails the development of nine (9) mini hydro power sites with capacity ranging between 0.2 MW to 1.5 MW (combined capacity of 6.7 MW); a 288km distribution network and a targeted 71,081 connections in the project area as a single project. The project sites are located in the Districts of Kasese, Bushenyi, Mitooma, Hoima, Kabarole, Bunyagabo and Bundibugyo.The Committee further observed that the project is funded with a grant from the ORIO Infrastructure Fund (ORIO) of the Government of Netherlands amounting to EUR 13.1 Million (UGX 49.9 Billion) and Co-financing from the Government of Uganda (GOU) amounting to EUR 28.9 Million (UGX 110.1 Billion). The Committee was further informed that the Development Phase of the Project (feasibility studies) was 100% financed with a grant of EUR 0.89 Millionfrom the ORIO Infrastructure Fund and completed in October 2016. Thereafter approval was obtained from ORIO to proceed to the Implementation / Construction stage and a Grant Agreement of amount EUR 12.2 million for the Implementation Phase was signed between the Government of Netherlands and GOU on 29th June 2017. The Committee also noted that only UGX 1.0 Billion has been provided for the ORIO project against the requirement of UGX 46.02 Billion. This amount grossly falls short of the GOU co-financing requirement. The Committee recommends that government should provide budget allocation of UGX 45.02 Billion as counterpart funding for FY 2018/2019Underfunding of SCAP 100The Committee was informed that the Service Coverage Acceleration Project (SCAP 100) which is a project financed by NWSC together with the Government, aimed at providing safe water to 100% of the population targeting all villages under NWSC jurisdiction (at least 12,000 villages) started in July 2017. The project will be implemented over a period of three years (2017-2020) at a cost of Ushs 213Bn out of which Government committed to contribute Ushs 90Bn (Shs 30Bn per annum) and NWSC Contributes 123Bn (an average of Ushs 41Bn per annum). In the FY 2017/18 Government allocated Ushs 22.5Bn leaving a funding gap of Ushs 7.5Bn. In the coming FY 2018/19 again Ushs 22.5Bn is proposed leaving a funding gap of Ushs 7.5Bn. The total funding gap is Ushs 15Bn.The Committee recommends that Government allocates additional Ushs 15Bn to cover the shortfall in the financing requirement for SCAP 100PUBLIC SERVICE AND LOCAL GOVERNMENTMINISTRY OF PUBLIC SERVICEMisuse of public vehiclesThe Committee noted that there is continued abuse of government vehicles by some public officers. Government vehicles continue to be used after the stipulated time and during weekends by non-entitled officers. Furthermore, it is observed that several government vehicles have been intentionally abandoned in the MDAs parking yards and garages for a long time over minor repair requirements. The Committee Recommends that;The Ministry of Public Service should present to Parliament a report on the status of all Government vehicles.The Ministry of Public Service should work with Police to ensure that officials who misuse public vehicles are apprehended and disciplined in accordance with Public Service Standing ernment vehicles no longer in use, should be boarded off in time and disposal should be by public auction.The Ministry of Public Service should expedite the process of finalizing the Fleet Management Policy.The government should initiate and establish a vehicle hire purchase scheme for public servants. This measure will contribute to saving the tax payers from inflated vehicle maintenance costs, fuel costs and other forms of wastageLand Purchase and office construction: The Committee notes that the PSC operates from the Farmer’s House, sharing space with three other Commissions and one Ministry. The space to accommodate a computer lab which is intended to accommodate computers, is limited. The Public Service Commission has looked for land for the last couple of years without success and yet the cost of land has continued to appreciate. The Commission has planned for Shs. 8.892bn to purchase land and construct relatively big office block that will also accommodate a number of computers to be used during interviews. However, this item is unfunded priority.The Committee strongly recommends that the Government should urgently secure land, engage contractors, preferably under Public Private Partnership (PPP) arrangement and construct a large office block that will accommodate a computer lab. This will further reduce on the cost of hiring a computer lab at Makerere University.The pay reformsThe Committee learnt that Cabinet approved a 5% pay enhancement for selected group which include Medical workers, Scientists, Judiciary/Prosecutors, Police and Prison Officers in lower ranks, UPDF in lower ranks, Primary Teachers in lower ranks and Local Government Political Leaders. Therefore, there is no salary enhancement across board and which is discriminatory.RecommendationsThe government should establish a Salary Review Commission to compressively review and recommend the remuneration of all categories of staff in the public service.All categories of civil servants should have their salaries enhanced during financial 2018/19 to avoid “piece meal” approach of increasing salaries which is the major cause of industrial strikes in the recent past.MINISTRY OF LOCAL GOVERNMENTOperationalization of Administrative UnitsThe Committee learnt that operationalisation of 13 districts, 200 Town Councils and Sub Counties have been put on halt due lack of required resources. These were already approved by Parliament and gazzeted by government.The government should provide adequate resources to operationalise these administrative units in FY 2018/19LEGAL AND PARLIAMENTARY AFFAIRSMoJCAThe committee observed that during the FY 2016/17 the Attorney General represented Government and won 23 out 54 cases saving Government Ushs.198.2 billion, while 30 cases worth Ushs. 23.12 billion were lost. This implied the government net saving was Ushs 175.1 billion. The high amount of cases lost arose from the nature of cases especially from various MDAs resulting from breach of contracts; government departments failing to give evidence and failing to appear in court.Punitive actions should be taken against public officials who do not cooperate with the Office of the Attorney General in defending government in Courts of law.Court AwardsThe committee was concerned with the escalating levels of court awards. The contingent liability of Government against uncompleted civil matters (ongoing cases) is estimated at Ushs.6.62 Trillion. The Attorney General has seen the liability of court awards grow from Ushs.249 billion in FY 2012/13 to Ushs.676.8 billion as at June 2016. However, Government has budgeted Ushs 9.35 billion in FY 2018/19, the same level since as in the FY 2016/17.The committee recommends that court awards should be decentralized so that the concerned government department becomes responsible for the payment of court awards.The outstanding bill of Ushs 676.8 billion should be settled in FY 2018/19 under the Ministry of Justice and Constitutional Affairs to pave way for the settlement of claims from FY 2016/17 on wards under respective government institution budgets. Interest rate chargeThe arbitrary interest rate charge on court awards ranging from 10% to 25% has partly led to the increase in the court award bill. In order to curb the rising interest charges on court awards, the committee recommends a policy to cap the interest rates on awards be developed to guide judicial officers’ pensationsGovernment has provided Ushs 23.6 billion as compensation budget for FY 2018/19. However, these compensations include those related to human rights abuses by state agencies. In addition the criterion for settlement of these compensations is not clearly defined. The committee recommends that compensations resulting from human rights abuses should be transferred to UHRC during the FY 2018/19. Ushs 5 billion has been earmarked for this purpose. A policy and an enabling law should be enacted to guide the criteria in compensation of persons who are victims of injustices.Implementing the new Ministry StructureThe Committee observed that the Ministry was restructured increasing staffing from 300 to 442 in FY 2017/18. Implementing the new structure requires additional Ushs. 2 billion in the wage bill.The committee recommends that the Ministry should stay recruitment of additional government lawyers until the harmonization of salaries is concluded by Government in FY 2018/19. Effective representation of Government in CourtsThe number of cases filed against the Attorney General (AG) has increased over time partly due to increased citizen awareness. Currently there over 6,000 civil cases in which the AG is party. With the non-wage budget provision of 1.64 billion, the average allocation is Ushs 0.273 million per case per year, which is inadequate. The committee recommends that that the Non-wage budget of the AG be enhanced to increase the per capita case cost to Ushs 0.5 million. This will require an additional Ushs 1.358 billion to the non-wage budget to strengthen the civil case management system and provision of a witness fund.In addition, there are currently 25 cases against the AG in the East African Court of Justice. A total of Ushs 1.31 billion is required to effectively enable the AG represent government. The committee recommends that Ushs 1.31 billion be provided to enable the AG represent government in the East African Court of Justice Administration of Estates/ property of the deceased The office of the administrator general has registered growth in the demand for its services across the country due to increased awareness resulting from regular sensitizations being conducted. In order to strengthen its information management system to provide online services, the Administrator General’s Office requires additional Ushs 1.4 billion. The committee recommends that Ushs 1.4 billion be provided to Administrator General’s Office to further enhance and de-concentrate their services in all the 6 regional Offices.Regulation of the legal professionThe Law council was restructured but the new structure has not yet been implemented. As a result it is constrained in disposing disciplinary matters; inspect law firms, universities and legal aid service providers. The committee recommends an additional Ushs 1.6 billion to the Law Council to operationalize the new structure and enhance service delivery. JUDICIARYPay rise in the JudiciaryThe committee observed that the wage bill has been maintained at Ushs 3.72 billion despite the industrial action that occurred during the FY 2017/18. The Committee is aware that government is in the process of harmonizing and enhancing salaries across the public service to make them competitive in the region, in a phased manner. The committee recommends that judicial officers be considered among the first category of beneficiaries of pay reforms during the FY 2018/19.Judiciary Administration BillThe committee also noted that there is no law to operationalize the mandate of the Judiciary. The committee recommends that the Administration of Judiciary Bill be enacted expeditiously to operationalize it independence, improve standards and deal with corruption in the sector. Implementation new staff structureJudiciary has been restructured to meet increased demand for services. The plan seeks to increase High Court judges from 51 to 82 so as to match the increase in High Court Circuits from 13 to 20; the increase in magisterial areas from 38 to 82 will require an increase in Chief magistrates from 47 to 100 and magistrates Grade one from 215 to 532. Implementing the new structure will require additional 18.37 billion for the wage bill. The committee recommends that the implementation of the new structure be undertaken in a phased manner starting FY 2019/20, after implementing the pay reforms in FY 2018/19.Construction and renovation of CourtsThe committee observed that judiciary rents over 70% of its premises including the Supreme Court and Court of Appeal. This puts the expenditure on rent to Ushs 8 billion annually. Also to note is the reduction in the non-wage recurrent budget by Ushs 0.16 billion. Further the construction of courts from the development budget of Ushs 4.1 billion is insufficient to cater for both renovations and construction of new ones. The committee recommends that additional Ushs 1.5 billion be provided to kick start the construction program of Courts. Support to innovation in case managementParliament approved additional Ushs 2.5 billion to automate Court during the FY 2017/18. This has yielded results where Courts have registered an increase in disposal rate at all levels during the FY 2017/18. Other initiatives employed by the judiciary include: Plea bargaining for criminal matters, and Small Claims procedures which targets the majority of people’s cases with a value of less than 10 million in civil matters. However, such initiatives require continuous sensitization, training of all stakeholders.To complement the planned roll out of the performance enhancement mechanism where judicial officers will dispose more cases in an efficient and effective manner, government should provide additional Ushs 1 billion. Parliament’s ResolutionParliament resolved to increase the number of Judges from 51 to 82 so as to fully operationalize the 20 High Court Circuits. However, the committee noted that government froze the recruitment and limited it to only replacements of retired Judicial Officers. As a result case backlog has persisted in the Judiciary, amidst use of alternative methods like Plea bargaining and mediation. The committee recommends that government considers phasing the recruitment of judges as a matter of priority in the medium term. Inspectorate of Government Construction of IG Head Office BuildingThe committee observed that the construction of the Head Quarters is now a project under the IG. This implies that feasibility studies had to be undertaken to for the project leading to delays in implementation during the FY 2017/18. In FY 2018/19 Ushs 12.5 billion has been allocated to the project to construct the IG Headquarters. However, this provision in inadequate to the first phase at a cost of Ushs 33.095 billion.The committee recommends that the current provision be maintained but protected from budget cuts for the IG to implement the project without interruptions. Operational FundsThe Committee further observed that the IG faces a funding gap of Ushs 2.66 billion in the FY 2018/19, to effectively facilitate investigations, prosecutions, verification of declarations and conduct public awareness programmes. Government should provide the required Ushs 2.66 billion to enable the IG fulfil her mandate. Staff TrainingThe Committee noted that ccorruption in Uganda is becoming more sophisticated with more cases of organized and syndicated corruption being recorded. As a result, the IG needs to continuously build capacity of its staff to promptly respond to the changing trends. In the FY 2018/19 the IG has prioritized training, to equip the new staff with requisite skills for investigations, prosecutions, conducting policy and system studies and specialized skills to tackle the emerging trends of corruption. This has a funding gap of Ushs 0. 646 ernment should provide Ushs 0.646 billion for training staff to promptly respond to the changing trends in corruption cases.National Integrity SurveyThe committee further noted thatthe Inspectorate of Government introduced the National Integrity Survey (NIS) to generate empirical information to enable stakeholders monitor progress in combating and reducing corruption. However, due to lack of resources, the Survey for 2013 was not conducted. The IG has prioritized this activity in FY 2017/ernment should provide Ushs 0.521 Billion during the FY 2018/19 budget to facilitate the IG to undertake the National Integrity Survey.Leadership CodeImplementation of the Leadership Code Act, as Amended: The implementation of this Act started in FY 2017/18 and Ushs 3.307 billion was required to setup the Tribunal. However, up to now, this has not yet been implemented. The Committee recommends that government provided Ushs 3.307 billion to the directorate of Ethics and Integrity to implement the Act. PARLIAMENTARY COMMISSION Parliamentary Oversight roleParliament heavily relies on its recurrent budget to fulfill its oversight role. During the FY 2017/18 MPs and Staff travel allowances were increased and a number of oversight activities were not undertaken. However, during the FY 2018/19 the non-wage recurrent budget is projected to reduce from Ushs 371.89 billion to Ushs 329.89 billion. The additional requirement of Ushs 42 billion is required to reinstate the current provision of non- wage budget for FY 2017/18 to enable Parliament fulfill its oversight roles during FY 2018/mittee recommends that an additional Ushs 42 billion be provided to Parliamentary Committees to undertake Parliamentary oversight and legislative roles efficiently and effectively. In addition, Shs 9.2 is required to cover outstanding arrears of emoluments for Members of the 9th Parliament.Support to Technical Departments of ParliamentThe committee observed that technical departments of Parliament receive the least budgets despite their mandate of providing technical support to committees and Parliament as a whole. These departments require additional funds for capacity building to serve the increasing members of Parliament; funds to undertake studies to enable parliament make informed decisions and benchmark to obtain best practices. These departments include the Legal, Research, ICT and Budget Office Department. The committee recommends an additional Ushs 3.7 billion (Ushs 0.8 billion- ICT; Ushs 0.7 billion- Legal Department; Ushs 1.2 billion Research Services Department; and Ushs 1.0 billion- Parliamentary Budget Office Department) to the four departments to enhance their capacity to efficiently and effectively fulfill their respective mandates. ELECTORAL COMMISSION (EC)Administrative Unit Councils and Women Councils electionsThe commission planned to conduct elections for Administrative Unit Councils and Women Councils and Committees during the FY 2017/18. However, this was not undertaken due to Court that halted the process owing to petitions in the High Court. Once resolved, an additional Ushs 6.5 billion will be required to conclude the elections. The committee recommends that a provision of Ushs 6.5 billion be provided to conduct the Administrative Unit Councils and women Councils elections in FY 2018/19 budget.Re-location of EC headquartersThe Standard Gauge Railway, Jinja Express. Highway and Kampala Flyover Projects will take up the biggest part of the EC headquarters Office land. During the FY 2018/19 no provision has been made to relocate to other premises to pave way for the implementation of the projects.The committee recommends that Ushs 10 billion be provided to relocate EC headquarters to new premises during the FY 2018/19, as part of compensation costs of the projects.Transfers to Political PartiesThe committee observed that Section 14A of the Political Parties and Organizations Act, 2005, provides that Government shall contribute funds or other public resources towards the activities of political parties or organizations represented in parliament. Accordingly, during the FY 2017/18, Ushs 10 billion was provided. However no provision has been made for FY 2018/19 budget. The committee recommends that Ushs 10 billion be provided by government in line with the Political Parties and Organizations Act, 2005 for the FY 2018/19 budget.UGANDA LAW REFORM COMMISSION Printing of revised Principal Laws of UgandaThe committee observed that the printing of the 7th Revised Principal Laws of Uganda has a funding shortfall of Ushs 6 billion. The Committee recommends that Ushs 6 billion be provided to ULRC for indexing and publishing 2500 copies (15 volumes) of the 7th edition of law books.UGANDA HUMAN RIGHTS COMMISSION (UHRC)Civic Education and Human Rights AwarenessThe Committee observes that there is need to enhance efforts of sensitization, protection and promotion of human rights right up to the grass root level. Given the rising population UHRC will require an additional 3.5 billion to undertake this exercise, including training of security agencies, who are the largest human rights offenders. The committee recommends an additional Ushs 1.5 billion to the non-wage recurrent to undertake countrywide sensitization campaigns on protection and promotion of human rights. The balance should be provided over the medium termConstruction of the UHRC HeadquartersThe development budget of UHRC is projected to be Ushs 0.41 billion despite the need to construct the Commission’s headquarters. The Commission has land on Buganda Road that it is not utilizing and continues to rent premises (at Ushs 1.4 billion) that cannot accommodate all their needs.The committee recommends that Ushs 0.25 billion be provided in FY 2018/19 to undertake feasibility studies and obtain detailed engineering designs and required approvals.LAW DEVELOPMENT CENTRE (LDC)Construction of an Academic BlockThe Committee observed that the increase in number of students to over 2000 annually has not been matched with the increase in the physical facilities, especially firm rooms to increase interactions with lecturers. As a result LDCs intends to construct a multi storied building to comprise of; 20 firm rooms, Resource Centre, Computer room, Bookshop and Administrative offices. Ushs 2.52 billion is required to implemented the first phase of the project The Committee recommends that Government provides an additional Ushs 2.52 billion to the development budget of LDC to implement the first phase of constructing an Academic Block in FY 2018/19.Regional CentreThe physical and education facilities at LDC are inadequate in view of the increasing demand for legal education in Uganda. In order to decongest LDC and manage the ever increasing demand for legal training, LDC has planned to decentralize to all regions to increase access to all. In FY 2018/19 LDC plans to pilot one regional Centre, which will require Ushs 2.9 billion for wages and non- wage recurrent expenses.The Committee recommends Ushs 1 billion be provided to LDC recurrent budget for FY 2018/19 to decentralize its services in one region of the Country. The balance should be provided over the medium term.UGANDA REGISTRATION SERVICES BUREAU (URSB)Development Budget for URSBThe Committee observed that URSB has no development budget for acquisition of requisite infrastructure for effective delivery of services. This is in spite of the approval of the institutional support project with a code of 1431. The committee recommends that Ushs 2.313 billion be provided for the institutional support project that has already been approved by government for the FY 2018/19. This will enable the entity purchase capital equipment to enhance service deliveryDecentralization of URSB servicesThe Bureau plans to expand its services across the country through setting up 8 regional offices. This will require Ushs 8 billion.The Committee recommends that Ushs 1. 5 billion in FY 2018/19 to enable the Bureau open 2 regional offices DIRECTORATE OF PUBLIC PROSECUTIONS (DPP)Witness preparationIt is important for the ODPP to conduct pre-trial witness interviews to prepare witnesses testify in Court and save government from losing resources in form of compensations. The Committee also noted that the resources to facilitate witnesses are provided under the MoJCA yet the ODPP is responsible for prosecution and facilitating witnesses. This will require an additional Ushs 4.320 billion. The committee recommends Ushs 2 billion is provided to the ODPP to facilitate witness preparation to reduce loss of cases in the Courts of Law. In addition witness facilitation funds should be transferred to the ODPP to manage the facilitation of witnesses.Implementation of Prosecutions Led Investigations ApproachThis approach is limited to cases like corruption, Land, Sexual Offenses to be concluded within an average of 87 working days. Ushs 0.848 billion has been provided in FY 2018/19 out of the required Ushs 5.5 billion.The committee recommends that Ushs 4.652 billion be provided to the ODPP to facilitate successful prosecutions of corruption, Land and Sexual offences cases’ Backlog ReductionThe Committee observed that while police has over time received additional funds to investigate cases and the Judiciary has increased its capacity to deal with case backlog, the ODPP has no funds to prosecute these cases creating a mismatch in interventions to improve the justice system in the country. In order for the OPDD to effectively participate in case backlog reduction, Ushs 2.3 billion is required for per diem of officers handling sessions, transport and research on cases under Court sessions.The Committee recommends Ushs 1.5 billion be provided to ODPP during the FY 2018/19 to contribute towards the reduction of case backlog by 20%. JUDICIAL SERVICE COMMISSION (JSC)Regional OfficesJSC development budget has been maintained at Ushs 0.24 billion since FY 2016/17. This is in spite of the need to set up regional offices to enhance access to administration of justice. A funding gap of Ushs 20.9 billion is required to setup regional offices over the medium termThe committee recommends that JSC establishes a project under the development budget to kick start the process of setting up regional offices. Therefore, Ushs 0.5 billion be provided in FY 2018/19 to undertake feasibility studies for the above category of infrastructure. ICT AND NATIONAL GUIDANCEFunding to UBCThe Committee observed that in FY 2017/18, Shs 20bn was appropriated to revamp Uganda Broadcasting Corporation (UBC) as a National Broadcaster. However as of third quarter FY 2017/18, Ministry of Finance had only released approximately 6.4 billion despite the Ministry’s request to Ministry of Finance to frontload the revamp funds to enable hastening on its slow development rate. The Committee recommends that; UBC provides detailed information to Parliament on the following;A costed work plan for the utilization of the Shs. 10/=bn Status report on the utilization of the funds so far received arising from the 18bn before additional funds can be providedPPP Grant on Digital TelevisionThe Committee observed that UBC had budgeted for a grant of 70 million Ugx within its budget which is only hinged on the probability of a Public Private Partnership with a foreign company. The PPP if approved will reduce on the costs being paid by Ugandans to access digital television hence improved service delivery.The Committee notes that approval of the grant would equate to selling off the only National broadcaster in the country as it would be managed by a foreign company and recommends that the idea of a partnership is immediately disregarded and the Ministry identifies other sources of funding.Uganda Institute of Information & Communication Technology (UICT)The Uganda Institute of Information and Communications Technology (UICT) is a public tertiary institution that was established by a statutory instrument 2005 No 79. The Uganda Communications Commission Act 2013 enjoins Uganda Communications Commission (UCC) to operate and manage UICT.The Committee notes that for a long time the Institute has aspired to transform into a Center of Excellence (CoE) in ICT skills-based training, research and innovation, but it has not been able to achieve the objective due to technicalities in the legal framework. The Committee recommends that Government expedites the process of reviewing the current laws that govern UICT to facilitate for autonomy of the institution. Revenue Generation from the NBI The Committee observed that there was a reduction in NITA-U NTR Budget from UGX 25.4 in FY 2017/18 to UGX 16.032 in FY 2018/19 despite completion of phase 3 of the NBI as it was en envisaged that the completion of this phase would lead to high revenue generation for re-investment into the ICT infrastructure. The reduction in NTR is mainly attributed to reductions in the projection for IT certification which will not kick off in FY 2018/19. This will be implemented once the requisite regulations and laws to enable this are in place such as the IT professionals bill and reduced projections for implementing the IT advisory framework. The Committee recommends That the requisite laws are fast tracked and that NITA-U steps up its efforts to generate more revenue for reinvestment in the sector.ICT is one of the sectors generating the highest revenue to government thus; the issue of unfunded priorities within the sector should not keep recurring.The Committee observed a slow rate at which NITA-U was connecting districts to the NBI. As of FY 2017/18 only 39 districts had been covered. The Committee appreciates the drop in internet cost from USD 1200 in 2013 to USD 190 mbps in 2017; however the costs can still be further reduced to meet the needs of the citizenry. With the loan from the World Bank for development infrastructure under RCIP, it is hoped that NITA will connect all the remaining districts to the NBI which will be done with a mix in technologies i.e Satelite and optical fiber considering that optical fibers may not be accessed in areas too remote from the highways which will accordingly lower the costs more. The Committee recommends that;All the remaining MDA sites/ districts are connected to the NBI in 2018/2019 in order to improve service delivery.The installed optic fiber cables be utilized to improve digital migration across the country. UGANDA COMMUNICATION COMMISSIONOperational licensesThe committees noted with concern those there media companies that are operating with licenses from the regulator, UCC for unknown reasons. The committee noted that this denies government potential revenues out of the license fees. Also members were equally concerned that some these media organization unlicensed are transacting business with government. The committee therefore recommends that UCC should publish licenses of all media houses so that government institutions can only deal with duly licensed companies. This will also boost government revenues.FINANCE, PLANNING AND ECONOMIC DEVELOPMENTVOTE 008: Ministry Of Finance, Planning and Economic DevelopmentCapitalization of government financial institutions The government is going to capitalize Uganda Development Bank with UGX 57bn to finance various investment initiatives in Uganda. Government has also in the past capitalized Microfinance Support Center, Housing Finance bank and Post Bank which also receive UGX 7bn this financial year. However, the piecemeal capitalization has not realized the much needed capital to spur the growth of the economy. For Uganda Development Bank to realize an impact on financing investment especially industries, government needs to inject UGX 200bn as recommended by the Private Sector Foundation. The Committee recommends that government add an extra UGX 142bn to the proposed UGX 57bn to enable Uganda Development Bank finance development objectives aimed at poverty reduction and creation of the much needed employment. Wage shortfallThe Committee observed that Uganda Investment Authority has a wage shortfall of UGX 1.522bn on their subvention. Wage is a statutory payment that cannot be foregone. The Committee recommends that government provides Uganda Investment Authority with UGX 1.522bn to cover the shortfall on wage. One stop center The Committee observed that Uganda Investment Authority established a one stop center to improve on the process of facilitating investors in the country. The center is supposed to have 15 core agencies rendering the various services required in order to facilitate investment. Seven agencies have already started operating and these are Uganda Investment Authority, Uganda Registration Services Bureau, National Environmental Management Authority, Directorate of Citizenship and Immigration Control, Uganda National Bureau of Standards and Kampala Capital City Authority. To fully operationalise the center, UIA needs an extra UGX 1.22bn which has not been provided for in the MTEF. The Committee recommends that government provides UGX 1.22bn to enable Uganda Investment Authority fully operationalize the one stop center and facilitate investors in the country. Economic Growth Economic growth momentum has slowed over the last five years registering average of 4.5 percent. In FY 2016/17, the economy grew by 3.9%, below the annual target of 5% and the previous year of 4.7%. The poor growth was due to slowdown in agriculture due to prolonged draught and increased pest attacks; slowdown in industry due to weaker performance of the mining sub-sector and slowdown in services due to contraction in trade, and financial and insurance services. The Committee recommends that government improves the agricultural sector by providing funds for irrigation, water for production and pest and disease control initiatives; harnesses growth dividends from the completed infrastructure projects like Karuma and Isimba which are to be completed in FY 2018/19 and also improves on public investment management. The Committee recommends that Government achieves 100% IFMIS coverage to all Government Entities by 2019/20. Poverty trends Uganda National Household Survey results show that poor people have increased from 19.7% in 2012/13 to 21.4% in 2016/17. This translates to an increase of 1.4 million in the number of poor people. One of the reasons given by government was heavy draught that affected agricultural production hence increasing food prices. The Committee recommends that government provides irrigation systems for farmers to produce food throughout the year, provide funds for water for production, increases access to credit for industrial investments hence creating opportunities for employment. Monitoring should also be increased and strategic poverty interventions like operation wealth creation and NAADS to reverse the trend. Resource Envelope Tax revenue is projected to increase from UShs14. 68trillion in FY2017/18 to UShs 15.13trillion in FY2018/19 (or by UShs 0.45trillion).This will represent a 0.3% increment in the tax to GDP ratio; which is below the fiscal policy objective/target of 0.5% increase in the tax-to-GDP ratio per annum. The revenue target for FY 2018/19 is based real GDP growth of 5.5%, annual headline and annual core inflation rates of 5.0% in 2018/19, Exchange rate, Policy Measures and Administrative measuresThe Committee recommends that government put in place a strategy for domestic revenue mobilization which can enhance revenue performance over the medium term. ACCESS TO FINANCIAL SERVICES About 68 per cent of Ugandans do not have access to credit facilities from banks while those that do, acquire them at high interest rates. A declining loan recovery rate by Microfinance Support Center and high annual lending rates of about 36%-40% by SACCOs. The Loan Recovery Rate by MSC in the FY2016/17 was 57.5% declining from the 72% in FY 2015/16. The Committee recommends that government implements the Financial Inclusion Strategy that provides for access to affordable credit, capitalizes government owned banks to trigger competition in the financial sector and bring down interest rates and conduct due diligence, appraisal and supervision of borrowers before loan disbursements to improve the loan recovery rate. External Resource Performance and disbursementAs at end of the Financial Year 2016/17, 69% of the approved external support (including both project and budget support) had been disbursed. The Committee recommends that MDAs make proper project designs which can be executed on time, build capacity before the projects commence and government should also guarantee counterpart funding before the loan agreements are signed. Development of Entebbe Free Zone Uganda Free Zones Authority was allocated funds to buy land in FY 2017/18 which they bought in Entebbe. However, no allocation has been made in the FY 2018/19n for land clearance, feasibility studies, master plan, road networks and other facilities to make the free zone operational. The activities require UGX 5,988,312,000 for Entebbe Free Zone to operate. The Committee recommends that government provides UGX 5,988,312,000 to enable Uganda Free Zones Authority provide the necessary facilities in the free zones and attract investment to increase exports. Support to development and establishment of private free zones Uganda Free Zones Authority is mandated to provide support to licensed zones, to the intent that the development plans come to reality through monitoring, supervision and business development support. The activities include monitoring visits, site inspections for prospective zones and revision of the free zones law to a wider SEZ. In order to carry out this activity, UFZA requires UGX 800m which has not been provided for in the MTEF.The Committee recommends that government provides UGX 800m to enable UFZA support development and establishment of private free zones. Support to administration Uganda Free Zones Authority requires an increase of the non-wage budget to support the operations of the Authority. The agency is still being established and requires financing to pay for office space, staff gratuity, capacity building, purchase of computers, furniture, maintenance of vehicles, fuel and lubricants, office equipment and other administrative costs. The non-wage budget has a shortfall of UGX 1,711,688,000. The Committee recommends that government provides UGX 1,711,688,000 to enable UFZA fulfill its mandate. Operationalization of the Gaming and Lotteries Board The Lotteries and Gaming Regulatory Board started operations in 2016 with the enactment of the Lotteries and Gamming Act 2016. The Board currently has one 1 staff the executive director. The board in one year of operation has contributed shs. 35,000,000,000 to the consolidated fund. This has been done on self-declaration of companies without monitoring and compliance. The Board needs to recruit staff, procure furniture, rent office space, purchase computers, buy vehicles, fuel and lubricant and other office equipment. The Committee was informed that if government provides them with UGX 8bn, the can contribute UGX 57bn to the treasury in FY 2018/19. The Committee recommends that government provides shs. 8,000,000,000 to enable the Board recruit staff and equip the office to perform their regulatory functions. VOTE 108: NATIONAL PLANNING AUTHORITYNDP I End Evaluation and NDP II Medium term reviewThe Committee observed that in line with CNDPF, end of plan evaluation is required 2 years after its implementation has ended; while the Mid-term Review should be undertaken 2.5 years into the implementation of the current plan. The End Evaluation of the NDP I and NDPII MTR have not been provided for in the FY 2017/18 and FY 2018/19 Budgets due to inadequate allocations of funds to NPA. Both the NDPI end evaluation and NDPII MTR are necessary for the formulation of the 10 year NDP and NDP III which must be ready by September 2019 if it is to inform the budget of 2020/2021. In the BFP for FY 2018/19 these activities are reflected as unfunded requiring UGX 7.63bn, which can come down to UGX 3.9bn if the NDPI end evaluation is integrated within the NDP II MTR process. Additionally, NPA requires funding to kick start the process of preparation of NDP III and the 10 – year Plan. Sixty percent (60%), UGX 4.69bn of the funding is required in FY 18/19 while 40% UGX 3.128bn is required in FY 2019/20. The Committee recommends that government provides UGX 3.9bn to enable NPA conduct the NDP I end evaluation and NDPII midterm review which is a cost saving option. Government should also provide UGX 4.69bn to NPA start the preparation of the 10 year plan and NDP IIIWage and associated shortfall for critical positions The committee observed that the shortfall arises out of the need to fill critical positions at Executive Authority and Secretariat levels. Among the positions are the two anticipated presidential appointments of the Deputy Chairperson and 2 executive authority members, the Director Research and Development performance and a number of technical positions. There are positions like Senior Planner Chemical Industry that are being field arising out of a directive by H.E the President communicated to NPA with special reference to the 15th Cabinet meeting held on 26th April, 2017. Under the ongoing recruitment to fill 20 positions, NPA is to improve on its staffing levels from 51% as at 15th January 2018 to 64% during FY 2018. This has created a shortfall of UGX 313,528,628/=The Committee recommends that government provides shs. 313,528,628/= to enable NPA cover the wage shortfall which is a statutory payment. VOTE 131: OFFICE OF THE AUDITOR GENERALImplementation of Corporate Services Restructuring The Committee observed that a review of the Corporate Services Structure was conducted in 2013 by an external consultant and this review highlighted concerns relating to reporting lines, business processes, overlaps and lack of clarity in the Corporate services structure. To this effect, a new Corporate Services structure was developed and deliberated upon by the Parliamentary Sub-Committee on Finance, Planning and Economic Development and the Committee subsequently approved the new structure of the OAG Corporate Division. Funds were provided under the non-wage budget line to conduct the recruitment process to fill the vacant positions. However, the OAG cannot issue appointment letters without a provision for wage, NSSF contributions and gratuity expenses. This requires UGX 2.78bn for wage which has not been provided for. The Committee recommends that additional UShs 2.78 billion to enable OAG implement the restructuring of the Corporate Services restructuring. This consists of wage, NSSF Contributions and gratuity expenses.Clearing of Audit Backlog and Expansion of Audit Coverage The Committee observed Section 13 of the National Audit Act 2008 requires the Auditor General to audit and report on all public accounts of Uganda and of all public offices, however due to inadequate funding the office has suffered an accumulation of audit backlog combined with new emerging audit areas. In Fy 2018/19, the office will require additional funding of UGX 6.101bn to clear audit backlog and to embark on the expanded audit coverage. The audit of lower local governments and schools requires UGX 2.31bn while the office was requested to undertake a professional, real-time audit of Karuma and Isimba hydropower projects, owing to the fact that large sums of money have ben committed to these projects. To conduct a comprehensive audit of these projects, the office requires UGX 2.42bn which will cover a period of 3 years. The Committee recommends that government provides UGX 6.101bn to enable OAG to clear audit backlogs and to embark on the expanded audit coverage, which include: Audit of Karuma and Isimba Hydro-electric power projects lower local governments and schools. UGANDA REVENUE AUTHORITYLow Tax to GDP RatioThe tax revenue to GDP ratio is currently at 13.5% of GDP, which is very low compared to the convergence criteria as per the East African Community Monetary Union Protocol threshold of 25%. Tax to GDP ratio is expected to grow from the projected target of 15.97% in FY 2017/18 to 16.98% in FY 201/19. The ever growing size of the informal sector (which constitutes over 43% of GDP) has resulted into the stagnant tax to GDP ratio despite the projected increase in the ratio.The Committee recommends that the following measures are undertaken to address the ever diminishing tax base:Implement Tax register expansion project geared towards growing the tax base; this is a collaboration effort with between URA, URSB, KCCA and Local government to jointly manage the tax payer Identification and registration activities. Implement tax education programs widening tax education coverage and targeting specific sectors and categories of persons. Follow up on presumptive regime enforcement and strengthen research in sectors such as transport and logistics Valuation of goodsThe current trend in taxing imports is majorly based on knowledge of the cost of the products before they are imported into the country. In order to ascertain this, countries send customs attachés to embassies in the major import countries. This helps to provide correct product costs and avoid forget pricelist that come with shipment documents that affect the taxes collected by Uganda Revenue Authority. The poor valuation of products have in turn affected the growth of local manufacturers driving them out of business as imported products are cheaper than goods manufactured from here. URA intends to attach its officials in embassies at major import destinations like China, UAE and India for the start. However, this activity requires UGX 684,627,200 million. The Committee recommends that government provides UGX 684,627,200/= to URA to enable the agency post customs attaches to missions in the above stated countries in order to increase revenue collection. VOTE 153: PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS AUTHORITYLow Procurement Audit Coverage: The Committee observed that PPDA can only audit about 35% of the entities it’s mandated to audit as a result of budgetary constraints to the Authority. The Authority currently audits 120 audits of the 333 (148 LG, 157 CG and 28 Missions) covering all the 15 high spending Entities and selected entities based on risk assessment using in house staff. This activity has a shortfall of UGX 2.3bn. The Committee recommends that government provides UGX 2.3bn to enable PPDA conduct procurement audits in all the high risk institutions and also conduct a procurement integrity survey. Construction of the PPDA HomePPDA is constructing a permanent home jointly with Uganda Road Fund which will house the two government institutions. For the project to succeed, both agencies must meet their contributions failure of which the building will stall. PPDA has a shortfall of UGX 4.61bn on the contribution for this financial year. The Committee recommends that government provides UGX 4.61bn to enable PPDA make the required payment so that the construction continues. This will save government the money currently spent on rent. VOTE 143: UGANDA BUREAU OF STATISTICSAgriculture Census & Business Inquiry StatisticsThe Committee observed that Uganda Bureau of statistics has not conducted the agriculture census and Uganda Business Inquiry which provide key statistics on the structure of business in the country, the areas for investment as well as the distribution of particular crops and their production across the country. The agriculture census requires UGX 16.82bn while the Uganda Business Inquiry. The Committee recommends that government provides UGX 16.82bn for the Agriculture Census and UGX 2.15bn for the Uganda Business Inquiry. Allocation for baseline surveysUBOS is mandated to collects develops and disseminates official statistics for planning and assessing economic development across government. With the Program based Budgeting, requires that MDA start keeping track of outcomes to measure results of interventions of governmentThe committee has observed most MDA do not have baseline statistics to determine their sector targets to assess progress. Therefore UBOS should be adequately funded to able to carry out comprehensive baseline across all MDAs.The committee recommends funds to kick start the process should be provided.VOTE 130: TREASURY OPERATIONSContingency fund The committee noted that according to Section 25 of the PFM Act 2015 (as amended), there is established a Contingencies Fund which shall, every financial year, be replenished with an amount equivalent to three and a half percent of the appropriated annual budget of Government of the previous financial year (excluding supplementary appropriation).This would translate to an allocation of UShs1,015.2 bn (i.e 3.5% of UShs 29,006.3bn) in the FY2018/19. However, in theFY2018/19 the projected allocation is UShs 77.07bn only. Failure to provide for funds in the Contingency fund has led to various supplementary requests that distort the planning and implementation of the budget buy the various MDAs. The Committee recommends that government complies with Section 25 of the PFMA and provide for the necessary funds required to meet emergency situations in the country without cutting budgets of departments. Increasing Stock of Domestic ArrearsThe Committee observed that the stock of domestic arrears of MDAs has continued to rise notwithstanding the policy and legal frameworks that have been initiated in the past to ensure non-accumulation of domestic arrears.The stock of domestic arrears has increased from UShs 1.434 trillion in FY2013/14 to UShs 2.7 trillion in the FY2015/16. This represents an 88.3% increment or UShs 1.266 trillion increments. In FY 2016/17, the arrears are standing at UShs 2.9 trillion. This increment is mainly attributed to Pensions and Gratuity Arrears, Court Award Arrears, and Compensation Arrears. The Committee recommends that among other interventions to ensure non-accumulation of domestic arrears; Section 15 (3), 45 (1b) and 79 (1m) of the Public Finance Management Act, 2015 should be enforced. These Sections ensure that Accounting Officers only commit the budget of a Vote, based on the annual cash flow plan after approval of the annual budget by Parliament; and ensures that Accounting Officers are held responsible for making unauthorized commitments.Public DebtAccording to the Auditor General’s 2016 report, for the first time, the ratio of total nominal interest payments to total government revenue increased to 16% in 2016, exceeding the 15% cap agreed in the Public Debt Management Framework (PDMF), 2013. Domestic Debt Stock/Private Sector Credit (at nominal value) was 98.4%2 in FY2015/16, which is outside of the “less than 75%” criteria recommended by the Public Debt Management Framework. This is due to increased payments on external borrowings arising from shift from more concessional borrowing to non-concessional borrowing to meet increased government intervention in the energy and transport sectors, The 2013 Public Debt Management framework emphasized concessional and semi concessional borrowing but this was inconsistent with the NDP which prioritized infrastructure development which is mainly funded through non-concessional windows.The Committee recommends that Government strengthens the capacity to negotiate for favorable terms for the available commercial financing and scales down on the rate of borrowing so as to comply with the Public Debt Management Framework.DEFENCE AND INTERNAL AFFAIRSWage Enhancement for the Lower CadreThe Committee observed that in view of the erratic economic and inflationary conditions, the wage for the lower cadre in the army needs to be enhanced at-least to the level of primary school teacher. This enhancement requires a total of Shs. 87.994Bn which could be implemented in two phases.The Committee reiterates its earlier recommendation that Government should adjust the Ministry of Defense Budget ceiling to provide a total Shs.87.994Bn in two equal installment of Shs.43.797Bn in FY 2018/19 and 2019/20 respectively for wage enhancement for lower cadres.Supplementary requestsThe Committee further observed that the key items that persistently lead to supplementary requests in the Ministry of Defense budget are Wage, Food, Fuel, Medical and clothing for the military. The medium term expenditure framework has not provided for Shs.160Bn to cater for the essential items mentioned hence future supplementary request are inevitable. This undermines the budget process. The Committee recommends that MTEF ceiling for Ministry of Defense be Uplifted by Shs.160.01bn on the following most critical items that persistently receive supplementary and continued accumulation of arrears: Wage Shs.30.01bn) Food 50bn, Fuel 39bn, Medical 5bn and Clothing 36bn.VOTE 009 MINISTRY OF INTERNAL AFFAIRSUnderfunding of the NGO Board The Committee observed that the enactment of the NGO Act, 2016 envisaged a self-sustaining NGO Board through generation of Non-TaxRevenue. However, NGO Board needs infrastructural support in order to takeoff. Currently, there are 13,000 (Thirteen thousand) NGOs in Uganda and only 200 (Two hundred) are monitored annually. This risks having an NGO sector which is not accountable. In the FY 2018/19 Shs.5Bn is required for acquisition of Electronic Data Management System. This will enhance NGO data validation, monitoring and subsequently increase NTR. The Committee recommends that government should provide Shs.5Bn to the NGO Registration Bureau to enable it implement the NGO Act, 2016.Demobilization, Resettlement and Reintegration of Reporters The Committee observed that a numberof reporters have been demobilized and need resettlement and reintegration into the communities. Shs. 1.35bn is required for this activity short of which a desperate situation could be created that discourages future potential reporters. The Committee therefore recommends that government should endeavor to find Shs. 1.35bn for resettlement and reintegration of reporters to avoid desperate situations of the reporters.Operationalization of Prevention of Trafficking in Persons Act, 2009The Committee further observes that government has not fully provided for activities related to curbing of trafficking in persons which requires an additional Shs. 1.5 bn.The Committee recommends that Shs. 1.5 billion that is required for effective implementation of Prevention of Trafficking in Persons Act be provided VOTE 305: DIRECTORATE OF GOVERNMENT ANALYTICAL LABORATORYInadequate Scientific Equipment: The Committee observed that the available scientific equipment is old and obsolete. The only Questionable Document Examination equipment (VSC5000) in the country broke down after serving 10 years and needs replacement. This has increased case backlog especially for questionable Documents. The Committee further observed that the nature of current crime is sophiscated, which requires replacement of the old equipment to successfully investigate them. Shs.2Bn is required to replace the scientific equipment namely, High Performance Thin Layer Chromatograph (HPTLC), VSC 5000.The Committee further observed that the Directorate has four regional laboratories in Mbarara, Moroto, Mbale and Gulu; all of which are meant to take services closer to the people, however, the laboratories are not equipped and are not functional. Shs.12bn is required to equip these laboratories.The Committee recommends that funding to forensic laboratory beprioritized. Government should provide Shs.14Bn to DGAL to enable it replace obsolete equipment and to equip regional laboratories. This will reduce case backlog and congestion in Uganda prisons facilities. It will generate NTR and also save expenditure on samples taken abroad.Inadequate laboratory chemicals and reagents: The Committee observed that the funds allocated for procurement of consumables is inadequate and this has resulted into accumulated case backlog. There was 1,524 DNA cases and 4,032 non DNA (Toxicology) case backlogs as of 30thDecember 2017. This has sometimes caused Government to lose cases due to lack of evidence from the forensic experts to guide prosecution hence huge compensation costs to the Government. Annually, DGAL receives 2000 DNA cases Shs. 6.11Bn is required to procure laboratory chemicals and reagents. The Committee recommends that Government should provide Shs.6.11Bn to DGAL to procure laboratory chemicals and reagents to process the case backlog to ensure timely court justice.VOTE 120: DIRECTORATE OF CITIZENSHIP AND IMMIGRATION CONTROL (DCIC)Digitization of Directorate of Citizenship and Immigration Control records The Committee observed that the DCIC has automated most processes of issuance of immigration services and facilities hence the need to implement electronic document management system. Currently, there is an estimated 2.5 million physical files that need to be converted in digital format. Shs.2.316Bn is required for the completion of digitization the remaining of 570,000 files however, only Shs.0.840Bn is provided; leaving a shortfall of Shs. 1.47 Bn. The Committee recommends that Government should provide a shortfall of Shs.1.47Bn to digitize the DCIC records. This will reduce human interface, compatibility, efficiency and reduce corruption. Procurement of Passport Data Disaster Recovery EquipmentThe Committee observed that huge volumes of Data at DCIC is not secured and cannot be recovered in case of disaster. There is need to provide hardware and system for a Data center, an off-site disaster recovery system for passport data and to provide for connectivity to Missions Abroad, Headquarters and the Regional offices which is requires Shs.2.19Bn.The Committee recommends that Shs.2.19Bn be provided to the directorate for the procurement of passport data disaster recovery equipment and to provide connectivity to Missions abroad and Headquarter.VOTE 144: UGANDA POLICE FORCE (UPF)Inadequate Accommodation: The Committee observed that the Uganda police force has continued to leave in dilapidated structures. Some of the housed especially in upcountry Barracks are roofed with Asbestos with all its dangers to human life. The proposed 17block Housing project will cost Shs.85Bn out of which Shs.13.3Bn has been provided leaving a shortfall of 67.10Bn The Committee recommends that Government should provide Shs.67.10Bn for the Housing project and construction priority should be given to the police barracks that are still roofed with Asbestos. Accumulated Domestic ArrearsThe Committee observed that UPF has accumulated Domestic Arrears for services and utilities and gratuity worth Shs.85.26Bn. The Committee further observed that despite the current domestic arrears position, no allocation has been made in the proposed FY 2018/19. The Committee recommends that the auditor general should verify Shs.85.2Bn accumulated in arrears before it is considered for payment. VOTE 145 UGANDA PRISON SERVICES (UPS)Domestic arrears resulting from supply of food itemsThe Committee observed that the Prisons service closed FY2016/17 with outstanding commitments on food items of Shs.30.548bn. Shs.4.85bn was allocated in FY2017/18 to cater for Arrears of Prisoners food leaving a shortfall of Shs.25.689bn. It is projects to close FY2017/18, with outstanding commitments on food of shs.24.262bn. The total outstanding commitments will be shs.49.951bn. The Committee therefore recommends that the Auditor General should verify the accumulated arrears on food supplies upon which government should provide Shs.25.689Bn to cater for the UPS areas on food supply to avoid litigation and associated costs.Food shortageThe Committee observed that Prisoner population is the major cost driver of the prisons budget.Prisoner population is expected to increase by 19.7% (10,932) from 55,562 prisoners in July 2017 to 66,494 prisoners in June 2018 which increase constraint on the food and accommodation. Commercial Maize Grain for self-sustenance in terms of prisoners feeding, requires shs.30.820bn out of which shs.10bn has been provided leaving a shortfall of shs.20.82bnThe Committee therefore recommends that government should provide Shs.20.24Bn for food. VOTE 309: NATIONAL IDENTIFICATION AND REGISTRATION AUTHORITY (NIRA)Implementation of Unapproved and Exaggerated Organizational StructureObservation: The Committee observed that NIRA organizational structure is exaggerated and work is not commensurate to the number of filled positions and planned recruitment; yet it is not approved by the Board and Ministry of Public service. NIRA Wage bill requirement of Shs.25Bn and 865positions is based on unapproved structure which may prove to be unsustainable both in the medium and long term. The Committee further established that NIRA has so far registered 28.5million people out of the target Uganda population of 37.7million. Only 9.2people are pending registration yet the institution has just recruited 607 to be deployed at the district level. The current structure provides for 5 staff at the district which risks the institution to redundancy of human resource since the work of NIRA reduces with increased number of people registered.The Committee recommendedthat the Ministry of Public Service; in conjunction with Ministry of Finance, Planning and Economic Development should review the organizational structure of NIRA to make it more economical, efficient and cost-effective and no further recruitment should be conducted until the structure review is concluded. No additional funds should be provided.Lack of Strategic Investment Plan:The Committee observed that NIRA does not have a strategic investment plan to guide long-term institutional strategic investments and budgeting. The Committee recommends that NIRA should expedite the development of a strategic investment plan which should be aligned to the Sector investment Plan (SIP) and National Development Plan II (NDPII) before its budget can approved for this year as recommended by the Budget CommitteeTRADE, TOURISM AND INDUSTRYRevival of the National CarrierThe Committee observed that for effective promotion and marketing of tourism and cutting costs of air transport to Uganda as a tourist destination the government needs to revive the national carrier. For instance an air ticket from Nairobi to Entebbe is the most expensive at $600 in the region, this coupled with the expensive single visa fees of $100 and the bad tourism roads in the country disadvantages Uganda.The Committee reiterated its recommendation that government revives Uganda Airlines as the National Carrier and the efforts of National Planning Authority and Ministry of Works and Transport on the same should be fast tracked.Revitalization of the Cooperative MovementThe Committee acknowledged the importance of Cooperatives and their revival being imperative as one of the key components in the National Development plan for the realization of the plans objectives. However the committee finds the funding for the program inadequate. The Committee reiterated its earlier recommendation that Government prioritizes and provides UGX 20bn for the revival of the cooperatives.The process to revive the Cooperative Bank should also be fast tracked.Capitalization of UDCThe Committee noted that Uganda Development Corporation was supposed to be capitalized with UGX.500bn as the UDC Act 2016 stipulates. However, the ministry had requested for Ugx.10bn in the financial year 2017/2018 but only received 1bn. The Committee recommends that the process of capitalizing Uganda Development Corporation with UGX 500bn be prioritized in the next financial year by providing them with at least UGX 50 Billion as was indicated in the last financial year 2017/2018 to enable it undertake its operations. Recruitment of technical staffThe Committee observed there is an influx of substandard goods in the country which poses great risks of affecting the health and safety of the citizens of Uganda and their investments and support the decentralization of its services.The Committee from its observation therefore recommends that UNBS is funded with UGX.6bn to enable it recruit at least more 100 staff to enable it clean the market place and enable it strengthen enforcement of quality standards in the market place.Development of MuseumsThe Committee observed that under the ministry of tourism wildlife and antiquities there is need to develop and upgrade museum exhibitions for cultural and heritage conservation. The Committee recommends that UGX.3billion is availed for the above development since Tourism is one the key primary growth sectors that will leapfrog Uganda to the Middle Income StatusDevelopment of the Source of the NileThe Committee observed that the construction and development of the source of the Nile was core in for product development and revenue generation. Therefore the Committee recommends that UGX 6 billion is availed for completion development and implementation of the master plan for the source of the Nile. Tourism Marketing and Promotion The Committee observed that tourism is core for the growth of Uganda’s economy and is already contributing to UGX 6 trillion to GDP and earning the country over USD 1.4biliion foreign exchange. Thus a background for harnessing, developing tourism both locally and internationally. The Committee also observed that the sector is underexploited and yet it has a potential to contribute more greatly to Uganda’s achievement of a middle income status by 2020,therefore of a number of constrains ranging from underfunding, inadequate tourism support infrastructure ,inadequate marketing, low levels of product development among others.The Committee recommends that at least modest UGX. 20 billion is availed to the Uganda Tourism Board to enable it market Uganda comprehensively domestically, regionally and internationally. Clearance of debts owed to cooperative UnionsThe committee noted with concern that over years Parliament has recommended for provision of funds to clear war debts to cooperative societies. Most cooperative are losing property due to the debts. Government has only provided Ush. 2.1 bn out of the requested funding of Ushs 45 bn. The committee recommends that Government should provide Ushs. 43 billion to clear the debts owed to cooperative unions so that they can save their assets.EAST AFRICAN COMMUNITY AFFAIRS (MEACA)Ministry of East African Community Affairs (MEACA)Low Public Awareness of the EAC Integration mattersThe Committee observes that was still low public awareness and sensitization of the EAC integration to the Ugandans, especially at the border points. Lack of awareness was putting Ugandans at a disadvantage in the EAC integration process. Because of absence of a Communication Strategy coupled with limited resources, MEACA was constrained to reach the population for sensitization. MDAs, Local Governments, Political leaders, cross-border associations and local people, have received very little sensitization, hence they lack the necessary drive to apply EAC integration activities. The Committee recommends that the Ministry of Finance should facilitate MEACA to be able to enhance public sensitization and awareness of the EAC integration, for the benefit of all Ugandans. The Communication Strategy which is still at the Cabinet level should be fast tracked by the MEACA.HEALTH SECTORIndustrial ActionThe blame game in resolving the industrial action by the health workers will affect efficiency and effectiveness of service delivery in the health sector, therefore, to prevent ugly scenarios, Funds should be availed in the budget for FY 2018/19 to fulfil the following critical undertakings health sector; Governments’ commitment to resolve the issues that led to the industrial action by medical workers as provided for in the agreement reached by Government to the effect that Medical workers’ duty facilitation allowances, budgeting for allowances to Intern-doctors’ and senior medical officers’ allowances would be considered in the budget for FY 2018/19. Payment to the senior medical officers at a rate of UGX 1m per month, it would require UGX 6.708 billion annually. However, only UGX 4.2bn was approved for FY 2017/18, leaving a funding gap of UGX 2.508 billion. Clearly, the above budgetary outlook does not take into account these critical undertakings. Inadequate Supply of Blood in the CountryThe Committee noted that theannual requirement for blood collection is 260,000 units; however, the country is experiencing an acute shortage of blood supply. The shortage is attributed to inadequate funding for blood collection activities. The Committee accordingly recommends that the Uganda Blood Transfusion Services (UBTS) be allocated an additional UGX 5 bn to enable the blood collection to at least increase from 140,000units to 210,000 units. Ambulance ServicesThe Committee noted that there is a general public outcry on the ambulance services. An ambulance is a vehicle for transportation, from or between places of treatment, and in some instances will also provide out of hospital medical care to the patient. Emergency medical services (EMS), also known as ambulance servicesor paramedic services are a type of emergency service dedicated to providing out-of-hospital acute medical care, transport to definitive care, and other medical transport to patients with illnesses and injuriesIn view of the above, the Committee is recommending for provision of UGX 5.0bn for the Ambulances and UGX 5.0bn for the establishment of Emergency Centres at all Regional referral Hospitals.BUTABIKA REFERRAL HOSPITALThe Committee noted that Butabika Referral Hospital and Referral Hospitals do not have a CT, orCAT scans and a Magnetic Resonance ImagingMachine (MRI). A CT Scan is a special X-ray machine that tests and produces cross-sectional images of the body using X-rays and a computer. CT scans are also referred to as computerized axial tomography. It provides detailed images of internal organs are obtained by this type of sophisticated X-ray device. CT stands for computed tomography. The CT scan can reveal anatomic details of internal organs that cannot be seen in conventional X-rays. The CT scan is also known as the CAT (computerized axial tomography) scan. While the Magnetic resonance imaging is a medical imaging technique used in radiology to form pictures of the anatomy and the physiological processes of the body in both health and disease.The Committee therefore recommends that a sum of UGX 70bn for the purchase of CT Scan machines and UGX MRI machines be allocated to all Regional Referral Hospitals. National Health InsuranceThe Committee was informed that the process of enactment and implementation of National Health Insurance Scheme (NHIS) is on-going. The Committee recommends provision of UGX 3bn for building institutional frameworks as the Ministry of Health prepares for the enactment and implementation of National Health Insurance Scheme (NHIS).PROPOSED BUDGET FOR THE NEW REFERRAL HOSPITALS Given the inadequate funding, in the budget and the numerous funding pressures, from the newly expanded Kawempe, Kirrudu and Entebbe Referral Hospitals, and noting that, these hospitals will act as alternate referral hospitals for the Kampala metropolitan area. The Committee recommends that the Ministry of Finance, Planning and Economic Development provides UGX 22bn in the budget for FY 2018/19, in addition to granting a Vote Status to above health facilities in FY 2018/19, because of the critical services expected to be provided at the these facilities. (For the break down refer to Annex 5: Proposed enhanced budget support to the New Referral Hospitals) Improvement , Upgrading of Mebende Referral Hospital The Committee noted that Mubende Health Facility, which started as a dispensary, has been in existence since 1912. It has served as a district Hospital and Regional Hospital, currently serving approximately; 2 million people, and a catchment area comprising of; Mubende, Mityana, Kiboga and Kyankwanzi districts. However, the Hospital is reported to continuously experience the following among others;Stock outs of medicines and supplies due to many referrals from the above areas,71% of the Blood transfusion referrals are always referred to Mulago Hospital 92% maternal deaths due to lack of bloodIrregular power supplyCongestion on Maternity, Emergency and Surgical Wards;Insecurity due to lack of fence, etc The Committee therefore recommends for a complete overhaul & upgrading of Mubende Hospital and consequently a budget enhancement of UGX 4.909 bn to do the following;Provision of a blood bank to alleviate blood shortage Medicines and other health supplies UGX 0.400bnRecurrent budget UGX 0.400bn Development budget UGX 1.5bn for roofing the Pead/ Surg WardArrears : UGX 2.609bn to pay off debts Improving the Health Management Information System (HMIS)The committee noted the need for Improving the Health Management Information System (HMIS by availing the HMIS tools to facilities (printing and distribution of the HMIS tools on quarterly basis); revision of the HMIS for inclusion of National ID Number in the patient registration; improving data quality through mentorship and data quality audits; and stabilizing the eHMIS connectivity to enable timely reporting. The Ministry of Health should work with the National Information Technology Authority (NITA-U) for IT platform integration, disseminate and implement the five-year e-Health strategy The committee also recommends increasing of the funding to NMS for the persistent short falls in Essential Medicines and health supplies from Shs. 41 billion in FY 2017/18 to UGX 81bn in FY 2018/19. EDUCATION AND SPORTSUGX 4.9 Bn required for buying land on which Kalinabiri P/S sits. Here, the authority has already paid a deposit of UGX 1.5 bn. However, failure to clear the balance of UGX 3.4 bn puts the future of the over 1000 UPE pupils in this schools in jeopardy as the school is at a risk of eviction.UGX 1.8 Bn required to pay lease fees and ground rent for 5 Government Aided Primary Schools (Kitebi Primary School, Namungoona Kigobe P/S, Katwe P/S, KCCA Busega P/S and Mirembe P/S) under the Buganda Land Board (BLB) which has issued conditional leases. Without the payments, BLB could lease out the same land to other private entities thereby causing evictionsBusoga UniversityThe Committee has also learnt that Government through the Ministry of Education and Sports is planning to take over the closed Busoga University and the privately owned Mountains of the Moon University. However, there is no budgetary provision both in the current budget and in the medium term for this the ministry to manage the universities. Besides, the newly created universities are marred with immense financial challenges with limited infrastructure and very few staff.The Committee recommends that the proposed take-over of these universities be delayed until the existing government universities are stabilized properly.UNEBUNEB, needs additional UGX 18.699bn to cater for shortfall in government funded candidates for FY2018/19.SCIENCE, TECHNOLOGY AND INNOVATIONTHE MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATIONThe Presidential directive to give UIRI UGX20bn for commercialization of UIRI proven innovations and another UGX18bn for packaging plant should be allocated to it. Research and Innovations-UGX 5bn re-allocated by Parliament during the FY 2017-18 appropriation process should be reinstated to support further development of existing innovations and to enable new beneficiaries to be brought on board. An additional UGX10bn should be found and added to the Innovation to support the Solar Irrigation Pump Project in collaboration with the College of Engineering, Design, Art and Technology (CEDAT) Makerere University.The Ministry should be provided with a development budget to enable it to implement development activities. Shs 24bn is required to develop an innovation and technology transfer center for technology incubation in Namanve where the Ministry already owns land.PHYSICAL INFRASTRUCTUREWORKS AND TRANSPORTLow absorption of external development supportIn the FY 2016/17, the Uganda National Roads Authority (UNRA) was allotted UGX 1.286 Trillion as external financing for its development budget. Of this, UGX. 634.453bn (50%) was released of which UGX 277.488bn was spent (44%). This dismal absorption was attributed to;The non-responsiveness of the disbursements which are premised on the project appraisal documents of the respective projects, to the actual needs of UNRA which are in tandem with the actual implementation progress of the projects. The MTEF allotment of funds to various externally financed projects which are at odds with UNRA’s actual needs. Of the approved UGX 1.268 Trillion for external development financing, UGX. 734bn was allocated to projects that are still under procurement representing 58% of the allocation leaving only UGX. 533bn (42%) for projects under actual execution. Of the UGX. 533bnto projects under execution, UGX 70bn was allocated to the Albertine Region Sustainable Development Project (ARSDP) which is funded by the World bank yet the bank had frozen financing of projects due to non-compliance with social and environmental safeguards. The prolonged procurement process requiring approval from the development partners at each stage of the procurementDelays in acquisition of landThe Committee notes that the reasons for the advanced above are largely internal to the Government and requires an urgent re-alignment of planning and strategy. As it stands, there is hemorrhage of public resources to servicing external loans with UGX 2.7Trillion of the budget going to interest payments on some of these loans.The Committee recommends that negotiation of terms of external financing agreements should ensure less bureaucratic yet accountable procedures. UNRA should ensure that project appraisal documents are premised on more accurate forecasts. MTEF allocations and disbursements by the MoFPED should be a product of careful yet timely consultations with UNRA. Poor performance of external development support to KCCA The Committee notes the dismal absorption of the externally financed development budget component for roads under KCCA during the FY 2016/17. This was attributed to implementation challenges under the Kampala Institutional Infrastructure Development Project Phase 2 (KIIDP 2), which inter-alia culminated into the suspension of works along Makerere Hill Road majorly due to delays in the implementation of the Resettlement Action Plan (RAP). The Committee was informed of other delays in securing right of way for the handed over batch 1 sub projects especially Bakuli-Nakulabye-Kisubi and delayed relocation of utilities along the handed over project sites (Kiira road, Mambule and Makerere Hill Road) among others. The Committee received assurances that these setbacks have since been mitigated and the projects are on course. The Committee recommends that in the future, multi sectoral planning should be adopted and sites should be handed over to contractors after securing right of way. Performance of NDP II core projectsThe Committee notes the 3% increase in the Sectoral share of the national budget in the FY 2018/19 and a progressive increase to 25.4% in 2022/23. This trend, the Committee was informed was driven by the projects that are integral to the attainment of NDP II core projects namely; Bukasa inland Port, Expansion and rehabilitation of Entebbe International Airport, Kabaale Airport and the Standard Gauge Railway. Specifically, on the SGR, the Committee notes the absence of any budgetary allocation in 2018/19 and 2019/20. This, the Committee was informed is because the financing agreement for the SGR is yet to be signed and therefore no financial figures can be attached for the aforementioned 2 financial years. Funding for the SGR is only reflected for 2020/2021-2022/23.The Committee notes that currently SGR suffers a budgetary shortfall of UGX 428bn on land acquisition with the cost of compensation in the Jinja-Kampala area the most expensive.The Committee was informed that Government is currently in the advanced stages of securing a US$ 1,951,300,159 loan from the EXIM Bank of China having addressed the main issue raised by the prospective financier- finalization of the loan repayment plan and harmonization of construction timelines for the Naivasha-Kisumu-Malaba and Malaba-Kampala with Kenya. The Committee was further informed that a technical team from the financier was in Uganda at the end of 2017 and their report is imminent. In the meantime, pre-construction works for the Eastern route are in advanced stages and construction is expected to commence in June 2018. Funding to road safetyRoad Transport in Uganda happens to be the most dominant mode providing affordable transport services, demonstrated by over 95% of the country’s goods and passenger traffic it carries. For its importance to the economy the Government of Uganda together with the Donor community have invested heavily in this sub-sector over the last 25 years. Over the same period, there has been a steady growth in vehicle and human population. The level of motorization is further expected to increase as a function of the projected increase in per capita income. As a consequence of this growth the road safety situation in the country has instead deteriorated over the same period. The reported number of persons killed by road crashes rose by almost four times from 778 in 1990 to 3,503 in 2016.These road crashes are a huge burden to the economy, and its direct and indirect annual cost is estimated to be 2.7 % of the GDP. This is a very substantial loss which could have been productively invested in the economy.The Committee notes the urgent need to invest more resources in road safety management, safer roads and mobility, safer vehicles, safer road users and post-crash care. To this end, the Committee recommends that in the FY 2018/19, UGX. 10bn be specifically allocated to road safety interventions under the MOWT. The high unit cost of road construction in Uganda.In response to a previous recommendation by the Committee regarding the need to review the high unit cost of road construction in Uganda with a view of reducing it, the Executive Director UNRA informed the Committee that UNRA had set up a cost estimation unit to review and improve its cost estimation. Additionally, UNRA was reportedly in advanced stages of conducting a Unit Cost Study. The Committee urged UNRA to conclude the unit cost study within 3 months.Inadequate allocations to road maintenanceIn response to the Committee’s previous recommendation that a comprehensive road maintenance plan be instituted by the Road Fund to off-set the backlog of maintenance of up to 51,735 km estimated at 1.04bn; the Uganda Road Fund presented a detailed road maintenance plan to the Committee. This plan covers national roads (7,800km), KCCA roads (743km), Municipal Council Roads (2,070km), Town Council Roads (3,570km), District Roads (8,400km) and Community Access Roads (29,152km). Road maintenance and rehabilitation needs to have the road network in the country motorable all through the year. The total requirement for road maintenance is estimated at UGX. 118.8bn and 831.57 for the MOWT and URF respectively. Segregation of road maintenance funds allocationThe Committee notes that in the past, the Road Fund had been treating all districts homogenously in the allocation of road maintenance funds without considering districts that were benefitting from special infrastructural interventions for roads such as CAIP, RTI and ARSDP. As such some districts benefitted from multiple interventions at the expense of others. The Road Fund undertook to coordinate with related road projects in a bid to leverage allocations to districts without special interventions. The Committee recommends that Uganda Road Fund revert to the Committee with a status report on this undertaking during the consideration of Ministerial Policy StatementsLong term funding and mandate of the ULCThe Committee notes that as it exists currently, the ULC requires a greater clarification of its legal status and mandate, for which the Committee awaits a Land Commission Bill to operationalize Article 283 (1) of the Constitution of the Republic of Uganda, 1995. Some of the sticky issues that require clarification include;the position of ULC as a Statutory Commission;Streamlining acquisition, management and disposal of Government land;Establishing a dispute resolution mechanism on Government land and property thereon;Defining key terms necessary for the Commission’s smooth operation;Strengthening implementation of the Land Fund;Providing for administrative issues on staffing, funding and related issues;Making Commission Members full- time; and providing for any other matters connected there-with.With a clearer mandate, the ULC will have its operations, mandate and funding status grossly streamlined. This will significantly enhance its efficiency and effectiveness. The Committee therefore recommends that the Minister of Lands, Housing and Urban Development fast tracks the tabling of the Uganda Land Commission Bill for First Reading in Parliament.In the meantime, the Committee recommends the addition of UGX 500bn towards compensation for absentee landlords in the FY 2018/19Lapses in Physical and land-use planningThe Committee notes that while the Government of Uganda has devoted effort and resources to ensuring planned and orderly development through amongst others, enactment of relevant legislation to guide physical planning, ensuring that local governments have approved Physical Development Plans (PDPs) to guide planning, and offering technical assistance to the local governments in matters of physical planning; there are still various significant lapses namely; The failure of local authorities to translate approved PDPs into smaller, implementable and achievable plansSystemic inefficiencies at local levels leading to the failure of especially municipalities to evaluate development applications within the prescribed 30 days. This has resulted in cases of developers undertaking developments without approval. The development control activities undertaken by the municipalities are too inadequate and ineffective to deter illegal developments. A number of developments are not inspected from start to finish, while a number of illegal developments go undetected.Lapses in coordination between the Physical Planning Committees, the District Land Boards and the Uganda Land Commission to ensure that land administration decisions are informed by physical planning. Slow pace of implementation of the National Urban PolicyThe failure of the Ministry of Lands, Housing and Urban Development to develop National and Regional plans to guide systematic physical development of the whole countryThe Committee notes that while the National Urban Policy provides the framework for organized urban development, in the FY 2018/19 it is one of the underfunded areas to the tune of UGX 2bn. The failure to prioritize organized urban development has severe consequences on welfare, health and safety which are indivisible with Sustainable Development Goal (SDG) 11 which seeks to make cities and human settlements inclusive, safe, resilient and sustainable. It is therefore incumbent on the Legislature to allocate the requisite resources for the implementation of the National Urban Policy. As the responsibility centre for urban development, there is need for the MoLHUD should strengthen the capacity of local and urban authorities in the realization of the inherent targets of the PDPs. In addition, appropriate measures should be undertaken to ensure that Area Land Committees function effectivelyThe Land Information System (LIS)The Committee additionally notes that while the initiation of the Land Information System (LIS) project and Ministry Zonal Offices (MZOs) sought to ameliorate challenges in land management in the country in a bid to increase security of land tenure, reduce land disputes, mitigate fraudulent processes and enhance security of land use for production purposes; project implementation is being dogged by inadequate resources with a reported shortfall of UGX. 6.7bn. in the FY 2018/19. While the national resource purse may be static, land is a crucial factor of production whose management should be prioritized. Any instability in land management distorts not just production but societal stability as well. The Committee recommends that an additional UGX 6.7bn be provided for the implementation of LIS and operationalization of MZOs in the FY 2018/19.SOCIAL DEVELOPMENT SECTOR Outcome indicators The Committee observed that the current outcome indicators being used by the Ministry of Gender are not based on any studies but are based on the previous performance which is guided by the amount of resources received and given that the sector budget performance has been around 60 percent and indeed the performance of the budget for the FY 2017/18 as at the end of the Second Quarter is 31.92 percent, the sector has always used this as a basis for scaling down on its targets.The Committee was informed that the baseline survey for outcome indicators will be conducted by Uganda Bureau of Statistics, the Office of the Prime Minister; Ministry of Finance Planning and Economic Development and Uganda Bureau of Statistics and National Planning Authority have embarked on the revision of Sector Indicators to feed into the National Standard Indicator (NSI) Framework. This work commenced in December, 2017 and is still ongoing and shall address the alignment of outcome indicators to the Sector to match the expected financial growth in the Sector in the medium term. The Committee recommends that government carries out these studies to align all government Ministries, Departments and Agencies outcome indicators to provide accurate and realistic estimates of growth and planning.Social Assistance Grant for Empowerment (SAGE): The Committee observed that in the FY 2018/19 the Social Assistance Grant for Empowerment (SAGE) requires UGX.40.34bn as counterpart funding. However, since the sector budget this year remained almost the same as the FY 2017/18 at UGX 175bn, it implies that the SAGE budget remains at UGX.17.59bn and therefore, creating a budget deficit of UGX.22.74bn.towards the counterpart funding.Hon. Members, it should also be noted that in the FY 2017/18, Social Assistance Grant for Empowerment of the older Persons had a deficit of UGX.11.65bn which Parliament pronounced made a recommend on and this funds have not provided in the financial year and in the FY 2016/17 another UGX.3.7bn was not provided to the project as counterpart funding.The Minister of Gender, Labour and Social Development informed the committee the Minister of Finance, Planning and Economic Development has requested to cover the deficit with a supplementary. (See attached letter requesting for supplementary funding) The committee recommends for the release of UGX.39.09bn as counterpart funding for the FY 2018/19 and FY 2017/18 and arrears for the FY 2016/17 the program.Funding for Uganda Women Entrepreneurship Program (UWEP) UWEP is a social intervention program that was established to help poor and disadvantaged women access funding, improve their livelihoods thus enhancing their participation of women in the economic development of the country. Given the overwhelming demand of this project, ugx121bn is required to fund this project. H.E made a pledge to provide ugx1bn to every district, translating into ugx121 bn to cover the current 121 districts in the country. The Committee is however concerned there no fund allocated to this project in the FY 2018/2019 despite the President’s pledge to fund the program. The Committee therefore recommends that ugx121bn be allocated to fulfil the presidential pledge. National Roll Out of SAGE The Committee observed that, the national roll out of SAGE is a national need that needs to be advanced after the pilot phase of the program in 40 Districts. The Committee in the FY 2017/18 recommended that, rollout of the programme should target the oldest persons in the country while those who are already benefitting with age cap of 65 years oldest should continue receiving the grant and this is in line with the constitutional obligation not to disadvantage the beneficiaries.The Minister, of Gender informed the Committee that her ministry has prepared a national rollout plan targeting the older persons of 80 years and above. She further informed the committee that this position was presented to Cabinet for approval before presenting and is awaiting for certificate of financial implications for it to Parliament and once approved it will facilitate the national roll out plan. This option for national rollout requires UGX.47.07bn and will cover additional 204,771 beneficiaries.The Committee recommends that cabinet considers this option and allocates UGX.47.07bn which is feasible and brings on board 204,771 beneficiaries.Youth Livelihood Program- Program Financing: The Youth Livelihood Program was introduced to provide employment opportunities and improve the livelihoods of the youth. The implementation of YLP commenced in the second half of the FY 2013-14, following the official launch by His Excellency the President on the 24th January 2014. The main focus in the implementation of the YLP in the pilot 27 Districts and the full implementation covering the remaining Districts and Municipalities began in the FY 2014/15.The Committee observes that the program financing of the Youth Livelihood Program has not performed as expected over last five years since its inception. The programme had an initial budget allocation of UGX.265bn for the first five years 2013-14 to FY 2017-18. Since its inception the program has received only UGX.132.423bn that represents 49.95 percent. The Committee recommends that adequate funding for the programme should be availed for it to realise its potentialPromotion of Green Jobs and Fair Labour Market ProgramThe Ministry of Gender, Labour and Social Development is implementing the Green Jobs Programme that is aimed at the creation of green and decent jobs, enhancement of labour productivity, and reduction of poverty. The Programme was approved by Cabinet chaired by H.E The President on 7th December 2016H.E The President directed the Ministry to fast-track the piloting of Songhai Model at Kampiringisa within two years. Accordingly, the Ministry requested UNDP to support the development of the Songhai Model Pilot Site. Implementation of the Songhai Model Pilot Project has already commenced at Kampiringisa. The initial activities that include among others civil works; housing units as well as fencing the site will cost about 10bn. Both Government and UNDP are to contributing 5bn each. However, Government has not honored her obligation.The committee recommends that government releases UGX.5bn to enable the ministry continue the pilot project as directed by H.E the President, and ultimately create jobs for the unemployed youthFunding for Gender and Equity ImplementationEOCmandated to carry out an assessment of gender and equity compliance of all MDAs and recommend to Ministry of Finance Planning and Economic Development for issuance of gender and equity certificate. In the FY 2016/17, the Committee recommended that UGX. 10 billion be appropriated to EOC ensure compliance and affirmative action of state and non-state actors, however to date only UGX.2 billion has been advanced, thus affecting the functionality of the commission.The Committee therefore recommends that ugs10bn be allocated to the Equal Opportunities Commission to enable it execute its mandate.Inadequate staffing for the commission: The Committee was informed that the Ministry of Public Service (MOPS) has approved a new staffing structure for the Equal Opportunities Commission. The approved structure is at 5 Members of the Commission, 75 staff. Currently there is a gap of 30 staff; bringing a wage bill shortfall of UGX.1.7 billion. The Committee notes that delayed fulfilment recruitment of staff will delay a roll out plan of ensuring compliance to equal opportunities and affirmative action in both state and non-state institutions and consequently make limited contribution to sustainable inclusive growth and development. Further, low staffing levels affect the performance of the Commission in fulfilling of its mandate.The Committee recommends that UGX.1.7bn be allocated to the Equal Opportunities Commission to effectively carry out its mandate.Inadequate funding for tribunals:The Committee notes that given Commission on a regular basis traverses various parts of the country to administer justice with reference to the complaints lodged from the various parts of the country. The Committee was informed that many times, the Commission has delayed addressing some of the complaints due to lack of tribunalfunds. This fund is inevitable for the effective and efficient operation of the tribunal as provided under Section 28 of the EOC Act, 2007.The Committee recommends that UGX. 2bn be allocated to the EOC to procure vehicles for ease of transport.Funding for establishment of regional officesThe Committee notes that in order to extend services to the other regions, the Commission needs to set up regional offices in Bushenyi for the Western, Mbale for Eastern, Gulu for Northern and Masaka for central region and this requires UGX. 6bn. The Committee was informed that in the last financial year alone, the Commission registered 320 complaints of which 50% (161) were from the central region. Few complaints were registered from other regions not because of limited cases of discrimination and marginalization but rather due to the accessibility challenge. Establishment of regional offices will lead to the tripling of cases handled across the country.The Committee recommended that UGX.6bn be appropriated to the commission to facilitate establishment of regional offices. ................
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