INTEGRATING COMPETITIVENESS PRIORITIES INTO THE BUDGET by Angela Katama Private Sector Expert CICS S

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INTEGRATING COMPETITIVENESS PRIORITIES INTO THE
BUDGET by Angela Katama- Private Sector
Expert ( CICS Secretariat )
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OUTLINE OF PRESENTATION

• I Introduction Rationale and Principles
• II Focus of Analysis and Consultations
• III The Budget Preparation Process FY
  2007/8
• - Treatment of key CICS Priorities.
• - Policy and Institutional issues.
• IV Emerging Issues for Budget Cycle 2008/9
• V Suggestions for Improving integration of
  competitiveness priorities.

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I Introduction, Rationale and Principles

• Competitiveness - A set of institutions
  policies and factors that drive productivity.
• Therefore need to assess adequacy of funds for
  key institutions influence resource allocation
  policies.
• Principle Value chain approach to determine
  priorities for key sectors particularly exports.
• Processes Budget Advisory Group with broad
  representation, consultation with SWGs, analyses
  of budgeting documents and expenditure reviews
  and formulation of CICS Steering Committee
• recommendations

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II Focus of Analysis and ConsultationsBasis of
Assessment

• Assessed the allocation of resources to
  determine
• Whether they reflect appropriate
  prioritization and sequencing of actions.
• Whether the provisions made are adequate.
• To a limited extent considered sustainability
  coordination issues. (i.e how do we enhance
  Public/Public relationships)
• .

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Focus of Analysis and Consultations-
Competitiveness Features Covered

• Factors affecting competitiveness of Ugandas
  high-potential productive sectors.
• Issues relating to the domestic Investment
  Climate (Business Environment).
• Institutions, Trade Relations and Policies
  affecting Ugandas international
  Competitiveness.

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FY 2007/08 Budget Projections UShs Billions -
MTEF Percentage Allocation.
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I The Budget Preparation Process FY 2007/6
Agricultural Sector Priorities

• Agriculture Sector Concerns were
• Rehabilitate productive capacity and diversify
  raw material sources ( focus on fish and
  coffee).
• Facilitate implementation of competitiveness
  plans developed by existing clusters.
• Fisheries - Inspection Costs, Fisheries Sector
  Bill, resources for Uganda Fisheries Authority.
• Legal and regulatory framework- Sanitary and
  Phyto-sanitary bill, fisheries Sector Bill.

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Assessment of Agriculture Sector Budget
Priorities

• The activities of relevance to CICS relate
  to
• Agric Research accounting for 16.8 of sector
  budget
• Capacity Building for the Production of Seeds,
  Planting Materials- accounting for 12.8 of
  sect oral allocation
• Strong focus on poverty eradication, limited
  attention to the export sectors which will make
  a strong contribution to economic growth
• Limited attention for Coffee sub-sector
  rehabilitation chain (i.e. research replanting
  and marketing).

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Assessment of Agriculture Sector Budget
Priorities

• Capacity Building for the Production of Seeds,
  Planting Materials- absence of well structured
  PPPs.
• Compartmentalized approach ( MAAIF,vis a vis
  NAADs and NARS etc
• Agricultural Sector expenditure has been
  following a declining trend.

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Policy and Institutional Issues Agriculture
Sector

• Funding of Regulatory Framework in the
  Fisheries sector not yet clarified.
• Broader issue of Agricultural Sector
  promotional and regulatory authorities and
  their contribution to competitiveness.
  Guidelines for efficiency measures are required.
• Need to link priority agricultural sector
  initiatives and market potential
• Institutional linkages within the sector and
  with other ministries e.g. Trade Tourism and
  Industry are weak.

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The Budget Preparation Process FY 2007/8
Industrial and Services Priorities

• The provision of serviced industrial land and
  other facilities has been highlighted as a
  priority is funded under PSCP2.
• The tourism bill is before parliament and
  budgetary provision should be provided for the
  institutional arrangements within it.

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The Budget Preparation Process FY 2007/8
Energy Sector

• Concerns were
• Priority energy sector investments (Karuma and
  Bujagali)
• Mitigating the impact of power deficit
  including regular reviews of compensatory
  measures (e.g. Diesel waiver).
• Explore possibility of greater competition with
  respect to distributional and generation.

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Assessment of Energy Sector Budget

• Investment in new dams proceeding as planned.
• Funding for Thermal plant lease has been
  secured (US 175ml)
• The provision has been made for establishment of
  an Energy fund- desirable that legislation been
  passed promptly.
• Kenya Oil Pipeline-need to Clarify if Ugandas
  equity share in the investment (US 6.738) this
  was not addressed.

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The Budget Preparation Process FY 2007/8 -
-Transport and Works

• Reliability/accessibility to and cost of key
  utilities and infrastructural service.
• Establishment of a Road Fund.
• Give top priority and secure funding for Trunk
  Roads Jinja/Bugiri Malaba Road and maintain
  in good condition.
• Develop Policy framework for Public/Private
  Partnerships in Infrastructural development.

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The Budget Preparation Process FY 2007/8
Assessment Works and Transport Budget

• Efforts have been made to budget within the
  sectors allocation and to make realistic
  provisions for time lags related to procurement
  delays.
• Given funding constraints the following key-
  initiatives were not be covered.
• National roads maintenance back- log 3,900
  km
• Inadequate counterpart funding to improve the
  Ministry's absorption capacity
• Combating effects of mini El Nino rains on
  roads

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Addressing the Investment Climate Challenges
Commercial Law Reform, Registries

• Need to place priority speeding up revision of
  key commercial laws, undertake review of
  revision process and implement and report on a
  bill tracking system.
• Resolve issues holding back URSB reforms and
  implement agreed priority reforms.
• Consider a separate budget line for commercial
  law or dedicated budget support to cover
  unfunded priorities.

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The Budget Preparation Process FY 2007/8
-Competitiveness in International Markets

• CICS Priority Concerns
• Implement recommendations of functional
  analysis of MTTI - increase recurrent costs
  provision- over the coming two year period.
• Make provision for passing the Tourism bill and
  its institutional arrangements

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Trade Tourism and Industry Assessment
Outstanding issues

• Provision is made for implementation of F.A.
  recommendationshowever ministrys absorptive
  capacity is an issue.
• Need for a well prioritized action plan for
  implementing Trade Policy and Industrial Policy
• Formal planning linkages with MAAIF are
  important for development of export market
  potential

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IV Outstanding and New issues FY 2008/9
Agricultural sector

• Next FY
• Prioritize resources for, rehabilitation of
  export crops- in particular research and
  re-planting for Coffee and Tea sector
  Research. With
• Pass high priority legislation Fisheries Sector
  Sanitary and Phyto-Sanitary Bills. make
  financial provision for the required
  institutional infrastructure
• Adopt Competitiveness Plans (where they exist)
  to guide res source allocation.
• Medium term
• Develop and implement plan for phased
  introduction of Irrigation infrastructure

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Energy Sector and Outstanding New Issues

• Uganda Equity share in the Kenya Oil pipeline to
  be clarified construction to be expeditied
• Project management issues taxation and
• counterpart funding.
• Expansion of Grid to address increased demand
  particularly Rural Demand
• PPP policy required to encourage private sector
  finance should put in place a for fairer
  sharing of risks

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Outstanding New Issues FY 2008/9 Works,
Transport ICT Sector

• Improvement of absorption capacity for donor
  funding for road projects counterpart funding
  prioritized
• Full establishment of second generation road
  fund for improved maintenance by Act of
  Parliament
• Address Funding gap with respect to upgrading
  of Jinja / Malaba Road -
• .
• Policy framework for the development of PPPs
  in infrastructural investments is urgently
• required.
• Establish policy for local construction industry.
• Examine measures to reduce cost of Jet Fuel
  Transportation from Mombasa - Ebb

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Works, Transport ICT Sector ( cont )

• Railways
• Operarationalize the railway concession
  investment plan.( in contract)
• Improve marine rail wagon capacity from 2 3
  
• Rehabilitation of Kampala Malaba Rail track
• Medium- term priorities
• Begin process of assessing options for co-
  investment with Kenya port and northern
  corridor facilities
• Look into the establishment of a local-based
  Airline .
• Assess investment costs for development and
  strengthening of alternate route to the Sea (
  i.e through Dar-es Salaam
• ICT
• Installation the East African Sub-marine Cable
  System EASSy in order to reduce connectivity
  costs.

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Outstanding and Emerging IssuesCommercial
Justice and Registries

• Need to place priority speeding up revision of
  key commercial laws, undertake review of
  revision process funding of bill tracking system
  and report.
• Resolve issues holding back URSB reforms and
  implement agreed priority reforms this might
  require review of recurrent funds

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Outstanding and Emerging Issues FY 2008/9 -
Tourism Trade, Finance and Industry

• Next FY
• Need to review recurrent costs to match
  facilitation needs of new staff.
• In the medium term consider raising allocation to
  the TTI, sector in response to a well
  prioritized Trade and Industrial Development
  Strategy.
• Finance aggressive implementation of Tourism
  policy an Strategy
• Plan phased introduction of National I.D System
  and Secure Funding for phase

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V Suggestions for Improving Integration of CICS
Priorities into the Budget

• Strengthen the consultative process - start
  process earlier strengthen SWGs analytical
  capacities.
• Lay emphasis on wealth creation rather than
  poverty reduction in making resource allocation
  decisions.
• Review allocations- particular emphasis on
  development expenditure (of key sectoral
  ministries particularly those within the Trade
  Industry and Tourism and Agricultural sector)
• Strengthen co-ordinational linkages between key
  ministries and agencies.
• Consider funding mechanisms which specifically
  ear-mark funds for specific priority activities.
  

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Integration of CICS Priorities into the Budget

• Next steps
• Build consensus around the prioritization of
  the above outstanding and emerging issues
  formal presentation to MoFPED mid October.
• Monitor utlization of approved allocations and
  report on quarterly basis