LocationsAs Uganda Launches the Public Investment Financing Strategy
Government, UNDP and Partners Discuss Options for Financing Development
March 24, 2023
Officials from Government, United Nations, World Bank, European Union, the private sector and other partners during the launch of the Public Investment Financing Strategy.
The Ministry of Finance, Planning and Economic Development (MoFPED), in partnership with the United Nations Development Programme (UNDP) and the World Bank have launched the Public Investment Financing Strategy (PIFS). The launch was presided over by Hon. Matia Kasaija, the Minister of Finance, Planning and Economic Development, on Tuesday, March 21, 2023.
The PIFS, which comes at a time when development is being de-funded, explores additional financing from domestic, external, emerging and innovative financing options to meet the increasing development aspirations embedded in the National Development Plans and the Sustainable Development Goals. It also provides a framework for collaboration with the private sector in the implementation and financing of public investments.
Hon. Matia Kasaija, the Minister of Finance, Planning and Economic Development (Centre), the UN Resident Coordinator Ms. Susan Ngongi Namondo (Left) and UNDP Deputy Resident Representative Ms. Sheila Ngatia during the launch of the Public Investment Financing Strategy.
The PIFS is part of the broader Integrated National Financing Framework (INFF) for financing national sustainable development priorities and the SDGs at the country level. The INFF has four building blocks – Assessment and Diagnostics (commonly known as Development Finance Assessment (DFA); Financing Strategy; Monitoring and Review; and Governance and Coordination.
With financial and technical support from UNDP, Government conducted a DFA in 2019, which identified and built consensus around solutions to address development-financing challenges, and specifically recommended for the development of INFF. The design of PIFS followed a 2015 meeting of world leaders in Addis Ababa which agreed to the formulation of INFFs at a country level to provide a mechanism for financing sustainable development, strengthen planning processes and overcome challenges to financing SDGs.
The INFF will also help Uganda align its development plans, policies and financing with the NDPIII and the SDGs; strengthen the management of public resources to harmonise plans, budgets and financing and reinforce monitoring and oversight systems to track implementation of the SDGs.
Following completion of the DFA in 2020, Government, with financial and technical support from the Word Bank and the United Nations through the UN Joint SDG Fund project under the overall coordination of the Resident Coordinator and technical leadership of UNDP working together with UN Capital Development Fund (UNCDF) and UN Women, embarked on developing the PIFS.
Racing towards the 2030 deadline for achieving SDGs
Speaking during the launch, Hon. Kasaija noted that Government has for the past 20 years mobilized resources from a narrow base of financing options comprising domestic tax revenues, concessional loans and borrowing from the domestic market in form of Treasury bills and bonds. The report warns that these options, are incapable of meeting the growing development aspirations and have led to, “increased borrowing at non-concessional terms, raising the risk of unaffordability because of the high interest rates.”
The launch of the PIFS comes at a time when the world is racing towards the 2030 deadline for achieving SDGs, but also when the global economy is grappling with the aftereffects of COVID-19, the war in Ukraine, rising geopolitical tensions and a worsening climate change crisis.
Hon. Kasaija also decried Uganda’s widening annual financing gap currently standing at Shs 33 trillion shillings out of the projected Shs 49 trillion annual budget.
A panel discussion on financing NDP III and the SDGs during the PIFS launch
New financing options
Citing the COVID-19 resource mobilization efforts that saw many organizations and individuals make financial contributions towards the country’s COVID-19 response, the minister noted that the PIFS offers new financing options and affords all people an opportunity to contribute to the country’s development agenda.
“I, therefore, urge every Ugandan, development partner, private sector player, ministry, department and agency to peruse the strategy to find your strategic fit so that you can tap into the opportunities that the Strategy provides,” he said.
More financing options
The strategy notes a remarkable increase in the number of financing options including pension funds, public-private partnerships, remittances and philanthropy. Others are climate finance, international bonds (including Euro and infrastructure bonds), Islamic finance and crowd funding. For effective implementation, PIFS calls for the establishment of the Project Preparation Fund financed by Government resources; establishment of the Resource Allocation Committee to provide strategic leadership to ensure sustained adherence to the proposed alignment framework; and allocation of institutional responsibilities for each of the financing options.
A balance between tax holidays and exemptions
In her speech, the UN Resident Coordinator Ms. Susan Ngongi Namondo called for a balance between tax holidays and exemptions to create an enabling business climate, “If the tax incentives must be maintained, they must be kept at the lowest levels and restructured to ensure transparency and fairness in their implementation.”
Faced with a changing global funding landscape, the UNDP Deputy Resident Representative Ms. Sheila Ngatia noted that, “In this context, it is even more crucial to develop strategies like PIFS to identify innovative financing solutions, co-investment platforms like public-private partnership, enhance business environments, advance financial deepening, and increase the efficiency of public spending.”
The launch also included a multi-stakeholder panel discussion on integrated financing NDPIII and the SDGs featuring panelists from Government, the private sector, academia and UNDP. During the panel discussion, harnessing the potential of Uganda’s tourism and extractive sector to drive growth was emphasized. Others were addressing the high-level of informality to bring the informal sector into the tax bracket and investing in infrastructure such as roads, railway transport and Uganda Air Cargo to unlock development opportunities.
Panelists also highlighted the need to adapt climate-smart agriculture practices such as irrigation and positioning the country to tap into climate finance as a measure to deal with the effects of climate change.