Every year when the Ministry of Finance reads the National Budget, experts come together after the reading to dissect and extract the nitty gritty within the budget.
Likewise, the 2024/25 Ugandan National Budget read by Finance Minister, Hon. Matia Kasaija on June 13, has shown projections of a 6 percent growth in the economy, valued at USD$53.3 billion (approx. UGX202 trillion), in comparison to the last financial year 2023/2024.
In his budget speech, Hon. Kasaija indicated that the year’s growth strategy is anchored on four key growth drivers —one of which is Science, Technology, and Innovation (STI). However, this was expected as every financial year reading, the tech sector is considered among the key sectors the government will fund the most since it is a key driver in today’s economy.
“Government has earmarked Science, Technology, and Innovation (STI) as a key catalyst for the qualitative leap to achieve tenfold growth of our economy,” said Kasaija while reading the budget at the Kololo Independence Grounds.
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Relatedly, the government has also allocated UGX3.3 billion towards the rapid human capital development of the Uganda Aerospace Programme by training engineers in Japan, China, and Egypt. In addition, plans to refurbish the headquarters of the same Aerospace Programme, the Mpoma Satellite Earth Station to enhance weather prediction and monitoring of landslides and the environment.
The UGX3.3 billion fund will also support the completion and establishment of a satellite development laboratory and a modern Geospatial Centre to obtain data from a broad spectrum of satellites from partner nations.
The government has also provided UGX162 billion for the completion and operationalization of Kabalega International Airport in Hoima, and plans are underway to acquire at least two (2) mid-range aircraft and 2 cargo aircraft to facilitate exports in the medium term.
In the core ICT sector, UGX246 billion has been allocated to continue developing the ICT and digital transformation through various interventions. These include the further expansion of internet connectivity and digital infrastructure across the country; for which a total of 4,354 Km of optic fiber cable have already been laid across the country connecting 1,523 key government service delivery units to the National Backbone Infrastructure (the NBI/EGI Project).
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The UGX246 billion will also be used to continue the rollout of digital services across the MDAs to improve the efficiency of service delivery, transparency, and accountability —with government services provided online now at 40 percent, up from 20 percent registered in 2017.
The other initiatives include leveraging Business Process Outsourcing (BPO) and ICT to create employment opportunities for young people, digital skilling to increase adoption of digital services, and cyber security, data protection & privacy.
Uganda is implementing numerous tax measures to raise revenue and fund the budget. Instead of the technology-related tax measures in the new 2024/25 financial year, below is a breakdown:
1. 0.5% Excise Duty on withdrawals from non-mobile money platforms introduced, save for withdrawals done at agent banking or banking halls.
2. VAT exemption on the supply of electric motorcycles, vehicles manufactured or fabricated in Uganda, and their respective charging stations and batteries.
3. Income tax holiday for individuals who manufacture and fabricate electric motor vehicles, electric motorcycles, electric batteries, and electric vehicle charging equipment.
4. 10% withholding tax on commission paid to bank agents and fintech agents (payment service providers).
5. Strengthening of the Electronic Fiscal Receipting and Invoicing System (EFRIS) and Digital Tax Stamps (DTS) to improve tax compliance and reduce tax evasion.
Speaking at the 2024/25 budget breakdown breakfast meeting organized by Ernst & Young, Mr. Robert Mbaziira, a Senior Tax Manager with Ernst & Young, expressed his concern on the still minimal allocation of funds towards the ICT sector.
“The Government has to be more deliberate and focussed when funding the ICT sector,” he stated. “For instance, if the government seeks to be more efficient, they have to go digital. So, if this is not advocated for nationwide, the problem will still be visible.” He adds that digitalization will make transparency much easier especially for government institutions, applauding Uganda Revenue Authority’s quick adoption of the digital era.
“URA is now going digital. However, if the private sector is not supported in the journey, there will be a disconnect which will be very hard to resolve,” he added.
Prosper Ahabwe, an Associate Director on Tax at Ernst & Young, added his voice in appreciation of the government’s efforts to invest in a ‘knowledge economy’ which is an indicator of bigger input of the budget into the ICT sector. “The agenda to digitize the government will showcase the benefits to the stakeholders to gain more interest in this,” he stated.
This year’s National Budget reading was themed “Full Monetization of Uganda’s Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Services, Digital Transformation, and Market Access”.
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