14 June 2019

East Africa: Budget - EAC Govts Count On Infrastructure for Growth

East African governments will again be a burden to their citizens with the responsibility of funding their budget priorities for the next financial year 2019/2020.

The regional governments, mainly Uganda, Kenya, Tanzania and Rwanda, who presented their budget speeches simultaneously yesterday, have several priorities in common where they want to spend money in the next financial year.

Just like the previous five financial years, the member states have increased their resource envelopes again with major allocations going to majorly the same sectors they allocated a lion's share last year.

Heavy infrastructural investment, industrialisation to create jobs, energy and security are some of the priorities that the regional governments will focus on in the 2019/2020 financial year.

Improved infrastructure is expected to ease business, while boosting the energy sector will support local industries grow economies.

East African economies generally experienced robust growth in 2018, growing at an estimated 5.7 per cent. Growth was less than 5.9 per cent in 2017, but was the highest among African regions.

Finance Minister Matia Kasaija earlier said: "The economies in the region are projected to remain strong, with economic growth projected at 5.9 per cent in 2019 and 6.1 per cent in 2020."

Resource envelopes

In Uganda, the resource envelope for the financial year 2019/2020 has been increased to Shs40.5 trillion, up from Shs32.7 trillion in the 2018/2019 financial year, indicating an 19.6 per cent increase.

The Ugandan 2019/2020 Budget themed: "Industrialisation for Job Creation and Shared Prosperity", is the fifth and final implementation year of the second National Development Plan (NDP II).

Like previous National Budgets, the Budget for Financial Year 2019/2020 will be implemented in line with the five focus areas of NDPII: Agriculture; Tourism; Minerals, Oil and Gas; Infrastructure Development; and Human Capital Development.

Similarly, Kenya the region's biggest economic power in the new financial year 2019/2020 will spend Ksh3.02 trillion (about Shs111 trillion), up from Ksh3.01 trillion - almost thrice Uganda's budget.

The Kenya Revenue Authority is expected to raise Ksh1.9 trillion (about Shs70 trillion) towards the budget. Kenyans are, however, concerned over where the deficit will be directed to.

Rwanda's public spending has increased to Rwf2.8 trillion for the financial year 2019/2020, up from Rwf2.5 trillion in the 2018/2019 financial year.

The government will, over the next three years, spend Rwf23 billion to recapitalise the Bank of Rwanda to increase the lender's ability to fund the country's ambitious development agenda, invest in transport (boost Rwanda Air), agriculture and roads.

While Tanzania, the region's second largest economy's Finance minister Philip Mpango presented a TZS33.1 trillion (about Shs62 trillion), up from Th28.2 trillion for the 2018/2019 financial year.

Mr Mpango's budget is expected to build an industrial economy and improve the welfare of the citizens.

"The government will also work to improve the business environment, promote investment, and simplify taxes," Mr Mpango said.

TZS20.9 trillion ($9.08 billion) will be allocated to recurrent expenditures, while development expenditure should reach TZS12.2 trillion ($5.3 billion).

TZS23 trillion ($10 billion) will be obtained from internal revenue sources, TZS5 trillion ($2.1 billion) will come from loans from local financial institutions, foreign loans will provide TZS2.3 trillion ($1 billion), while TZS2.8 trillion ($1.2 billion) will come from development partners, Mr Mpango explained.

E. Africa budgets

Uganda. Shs40.5 trillion from Shs32.7 trillion in 2018/2019.

Kenya. KShs3.02 trillion from KShs3.01 trillion.

Tanzania. $14.3b from $14b.

Rwanda. $3 billion from $2.7 billion.

South Sudan. They did not present their budget.

Burundi's financial calendar starts in January and South Sudan, the newest member of the community, has not yet synchronised its budget reading with the rest of the member countries.

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