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The East African : July 21st 2014
10 The EastAfrican NEWS JULY 19-25,2014 OCTOBER DEADLINE FOR IMPLEMENTATION UNLIKELY TO BE MET Northern Corridor projects put pressure on Uganda’s Treasury In its 2014/15 budget, Kampala failed to set aside cash fo≥ the p≥ojects By DICTA ASIIMWE Special Correspondent U ganda’s Treasury is seeking to readjust its budget plans and also borrow money from China to fund the Northern Corridor infrastructure projects, which President Yoweri Museveni committed to implementing this financial year. The EastAfrican has learnt that in its $5.5 billion 2014/ 15 budget, Uganda, unlike its partners Kenya and Rwanda, did not set aside money for the construction of the standard gauge railway (SGR), electricity transmission lines and the regional commodities exchange that President Museveni signed onto, and which implementing partners are to work in sync. While in Kigali at the be- ginning of July, President Museveni, along with his counterparts Paul Kagame of Rwanda and Kenya’s Uhuru Kenyatta agreed that Uganda would start the construction of the MalabaKampala section of the SGR by October. The Heads of State agreed that if Uganda began later than this date, it would affect the other countries’ capacity to meet the March 2018 completion deadline. Uganda is now talking to the government of China for funding for the Malaba-Kampala section of SGR which is expected to cost Ush4.5 trillion ($1.7 billion). State Minister for Works John Byabagambi told The East-African that he was “working day and night to seal a financing deal” for the SGR with the Chinese government, but admitted that it is likely to be outside the October deadline. “It is difficult to meet the deadline considering that we don’t have financing yet,” he said. Although Jim Mugunga, the Kampala sc≥aps fee on wo≥k pe≥mits By CHRISTABEL LIGAMI Special Correspondent UGANDA HAS joined Rwanda and Kenya in waiving work permit fees for East African Community citizens seeking employment in the country, thereby encouraging the free movement of labour in the bloc. Uganda told the Sectoral Council of Ministers responsible for EAC Affairs and Planning on Wednesday that it had also waived the residence permit fees for EAC citizens on a reciprocal basis. Burundi also indicated that it would waive the work permit fee for EAC citizens, leaving Tanzania as the only partner that is yet to announce such plans. In a previous interview with Matia Kasaija, Ugandan State Minister for Finance, Claver Kabahinji Gatete, Rwanda’s Minister for Finance and Economic Planning, Neside Tas Anvaripour, director of African Development Bank and Henry Rotich, Kenya’s Cabinet Secretary for Finance shortly after signing the Northern Corridor Projects funding in Uganda early this year. Pic: Morgan Mbabazi spokesman for the Ministry of Finance, said Uganda is committed to implementing the SGR project in line with the presidents’ directive, and that Treasury would work towards ensuring this happens, it is not clear how it is possible without borrowing and asking parliament to approve a supplementary budget. But an official in the Minis- try of Finance who requested anonymity said Ugandan bureaucrats only agreed to the October deadline “to please President Museveni, but there was no intention of delivering on this target,” adding that the money for the SGR is likely to be made available in the next financial year. The official argued that it is a long process before Uganda completes negotiations for the loan with the Chinese government as it involves getting approvals from the Parliamentary Committee on National Economy. “At the minimum, the parlia- ment process takes 45 days,” the official said. Equally, while the process of setting up the commodities exchange is expected to start in November, officials at the Ministry of Trade say this was not provided for in the 2014/15 budget. KENYA AND RWANDA Kenya started construction of the Mombasa-Nairobi SGR in November last year and signed the financing contract in May this year. Kenya’s Minister of East African Community Affairs, Commerce and Tourism Phyllis Kandie told The EastAfrican that her country had already budgeted for the projects announced in Uganda, Kenya and Rwanda are also expected to contribute $2 million for a study meant to address the standardisation of regional interconnection of transmission lines. The study, whose funding is also not provided for in the Uganda Electricity Transmission Company Ltd budget, has to be concluded by April 2015. The three countries have to also finance the move by Kenya’s Ministry of Education, Science and Technology to procure a regional skills audit for the SGR at a cost of $420,000. With no budget allocations to cover these projects, borrowing is the only option, yet technocrats in the Ministry of Finance as well as economists are jittery over Uganda’s borrowing spree and its effect on economic growth. “I am hoping the government won’t have to implement these Kigali in July. Rwanda too, said it had set money aside for the projects. “Everything we have put in the communiqué we have money for it, otherwise we would not have included it,” said Claver Gatete, Rwanda’s Minister for Finance and Economic Planning. projects within this financial year because it would mean escalating our fiscal deficit,” said George Bogere, a research fellow in charge of budgeting at the Advocates Coalition for Development and Environment. In the 2013/2014 financial year, Uganda’s fiscal deficit stood at - 9.1 per cent from -5.6, way above the desirable figure which the Ministry of Finance says should be -5 per cent, a fact that could have played a role in the country’s reduced economic growth. Uganda’s economy grew at a rate of 4.7 per cent compared with 5.8 per cent in the previous financial year. The reduction in growth is attributed to low investment by the private sector in a year when the fiscal deficit increased and government borrowed heavily from the domestic market. The EastAfrican, Tanzania’s EAC Affairs Deputy Minister Abdulla Juma said that Article 6 of the EAC Common Market Protocol is clear on work permits, which partner states can harmonise, but countries are free to impose fees as per their laws. “The decision to harmonise the work permits can only be made by the EAC Council of Ministers and that is ongoing. We are a sovereign state and, therefore, not in a rush,” said Dr Abdulla. “It’s not about reciprocating since there is no EAC rule on reciprocation. Some states are overwhelmed with degree holders and are looking for a window to address the matter. Some are after foreign direct investment.” In April last year, the East Afri- can Legislative Assembly passed a Bill proposing that EAC states scrap work permit fees for citizens in order to boost the free movement of people, labour and services. The Bill is yet to be assented to into law by the EAC Heads of State Summit. EAC Secretary General Richard Sezibera said that apart from the waiver on the work permit fees, harmonisation of laws and policies would achieve more. “EAC partner states have been slow to harmonise relevant laws and policies to facilitate the free movement of labour; they also have different classification for work permits,” said Dr Sezibera.
July 14th 2014
July 28th 2014