Plans by government to spend on multi-billion dollar infrastructure projects continue to generate debate over the likely impact on an average Ugandan.
Patrick Mweheire, the Chief Executive Officer of Stanbic Bank Uganda, welcomed the fact that expenditure on power generation and roads network would lead to cheaper electricity and passable roads and propel the country to an export-lead economy.
Mweheire is however concerned that billions of dollars seem to be flowing out of the country with little impact to the country’s manufacturers and private sector. This was in a statement issued on Monday, in response to the 2017/2018 budget estimates presented by Finance Minister Matia Kasaija, two weeks ago.
Government has over the last ten years invested in infrastructure projects like the 51km Kampala – Entebbe expressway, linking the city and Entebbe international airport and the 600MW Karuma power dam, among others. However, most construction projects are dominated by foreign-based companies like China that tend to import most of the materials like steel and cement among others.
Mweheire estimates that less than 10 percent of the USD 2.5 billion spent on two existing Hydro power plants under construction in Uganda has been localized in terms of purchase of locally manufactured cement and steel. He adds that the expenditures on such long term projects are straining the government coffers with no real and immediate trickle-down effect.
Finance Minister, Matia Kasaija in March announced guidelines for a reservation scheme that would have about ten percent of procurement in the roads infrastructure and construction industry going to local firms.
But Mweheire says in light of Uganda’s growth aspirations, 10 percent local content is unacceptable and that the country should aim for a number closer to 30 percent.
Citing the over USD 30 billion that is to be spent on the construction of the oil pipeline to Tanzania’s Tanga Port and other oil and gas infrastructure, Mweheire thinks it would have a huge impact if 30 percent of the money remained in the country.
An excess of USD 15 billion will be invested in developing the infrastructures in the oil and gas sector over the next five years. A huge component of the 2017/208 budget will kick start the construction of oil roads in the Albertine Graben. The Road sectors sector will cost over 4 trillion shillings in 2017/2018 budget.
The World Bank observed, in an assessment of Uganda’s investment strategy in October 2016, that there was no value for money on investments on most public projects over the past decade. It noted that for every shilling invested in the development of Uganda’s infrastructure, less than a shilling (about 70 percent) of economic activity has been generated.
It found Uganda’s projects were characterized by “endemic delays in implementation, cost overruns, and corruption means that sometimes projects come in at twice the original cost”
Moses Kaggwa, the Commissioner for Tax Policy in the Ministry of Finance partly agrees with Mweheire but still defends expenditure on infrastructure.
Meanwhile the International Monetary Fund (IMF) representative in Uganda, Clara Mira has welcomed the fact the government plans to focus on implementation or execution of the projects budgeted for in the 2017/208 budget. She said implementation of the projects will be key to unlocking most of the difficulties observed with the past budgets.