32 , Monday,April 9, 2018 INFRASTRUCTURE NEW VISION, Monday, April 9, 2018 33 WILL EAST AFRICA FILL ITS INFRASTRUCTURE GAP? Works on Musita-Lumino Busia-Majanji road resume

By Henry Sekanjako

The Government has signed a new contract with China Railway Our market can 18th Group Bureau Limited for “ the construction of the Musita- comfortably Lumino-Busia-Majanji road. provide capital for In June last year, the National Roads Authority relatively small (UNRA) terminated the contract that had been given to China projects in the Railway Group 18 Company region of $50- Limited for the same road over incompetency and performance $200m (about below the contractual standards. However, appearing before sh180b-sh720b). the parliamentary committee on physical infrastructure last week, Monica Azuba Ntege, the works minister of works told the MPs that a new contract had Monica Azuba Ntege been signed. She said the earlier sh206.7b road construction 22-month extension granted project cost had been revised to through a consent judgment. sh208.9b, and a new contract George Kumama Nsamba, signed. the chairperson of the physical “The Completed road will infrastructure committee, comprise 300mm thick stabilised commended the Government sub-base, 200mm thick CRS base for resuming works on the road and a double surface dressing with which he said would boost trade. lined drainage channels in urban “This road is an important road, areas. The road carriageway and especially in facilitating trade, shoulder width is 10m in rural since it is near the border and Construction worker at Karuma. The dam is expected to be complete soon areas,” Azuba said. Lake Victoria. I am happy that The 1,445km pipeline from Hoima to Tanga port is expected to commence later this year and will take 36 months The Busia-Majanji-Lumino– the Government has embarked to adopt systems that will bring close Nankoma-Musita is part of the on its construction once again,” New Vision. collaborations in different communities. national roads network and covers Kumama told “The ability of any Government to close domestic debt in the Government’s According to a research conducted by a distance of 104.8km from Busia the infrastructure gap is determined financing mix,” Moody’s said. URA, an analysis of the compliance of 71 “The local council system should be Compensation strengthened. There is potential in the border town to Musita. The entire by its ability to raise tax. That is why top Government officials over the period The committee, however, asked real estate. This should help URA identify road is unpaved. infrastructure in countries such as South of 2011/12 to 2013/14 revealed that the Government to expedite which houses belong to who in an area,” Azuba said in the scope of Africa which earns $100b (about sh360 URA SPEAKS OUT although all of high net worth individuals payment of the project affected Nalunga said. works, the road will be upgraded trillion) are able to build infrastructure Last week, officials from the tax body have stakes in commercial enterprises, persons to avoid any further Efforts to contact officials from the to a class II Bitumen standard faster,” Keith Kalyegira, the chief said it is estimates that on average the majority were not paying PIT. delays. National Planning Authority (NPA) were of approximately 104km of the executive officer at Capital Markets persons’ income taxes (PIT) contributes “It is politically sensitive (to consider However, Azuba said, 126 futile. existing gravel road. Authority said. only 2% of GDP in sub-Saharan Africa, taxing high net worth individuals). This project affected persons, for only However, information from NPA The completed road will have Uganda’s tax base remains small and which is low when compared to the 10% will be done depending on the data we Musita-Lumino road section, had website says given that the country has 7.0m carriageway width flanked the revenue authority is grappling with collected in the high income countries. have, but the register will keep changing,” been paid. The remaining 5,718 considerable infrastructure deficiency, by 2.0m or 1.5m double surface- measures on how to widen it in light of As a result, Uganda Revenue Authority Siraje Kanyesigye, the assistant are yet to be paid. The minister the revenue generated from oil and dressed shoulders. decreasing donor funds and pressures to (URA) plans to tax the high net worth commissioner large taxpayers, said. said the compensation of the gas resources during the first years In the earlier contract which fully finance the national budget. individuals more as compared to low Jane Nalunga, the country director project affected persons was will largely be used to close these was cancelled, the construction Musa Lwanga, a research economist income earners as a new tax measure at Southern and Eastern African valued amounted at sh20.5b. infrastructural gaps. works which started in September at the Uganda Bankers Association, aimed at raising the country’s resource Trade Information and Negotiation The road which passes through According to NPA the increase in 2014, was supposed to have been said external development financing the envelop. Institute (SEATINI), said URA needs Mayuge, Bugiri, and tax revenue will be achieved through; completed in September 2017, landscape is changing which implies that Busia was flagged off by President diversification of tax sources, introduction covering a period of 36 months. cheaper and patient concessional funds Yoweri Museveni in February of new taxes in an effort to widen the tax In the new contract, the that can be invested in infrastructure are 2015 during a ceremony at base, especially in areas that are currently completion date has been revised no longer readily available. to October 18, 2019 with a Mwesiga, Mayuge District. “If middle income status comes from not taxed at all. This will also call for a increased production and productivity major institutional and tax policy. across all sectors, increased incomes that As a result, the revenue to GDP ratio is translate into increased revenue to the to increase from the current 13% to over Government, then borrowing on non- 25% by 2040. concessional terms should not be a big Currently, many commercial banks are deal,” Lwanga said. investing into government projects by He said: “If the source of growth that providing credit to government through gets us to the middle-class status does treasury bills and bonds. not translate into increased production Musa Lwanga, a research economist and productivity across all sectors and at Uganda Bankers Association, said an Government revenue continues to efficient banking system can mobilise stagnate, then financing future budgets private savings that can be invested in will be difficult.” infrastructure. Uganda’s public debt reached $10.7b The Uganda’s Securities Exchange is (about sh36.9 trillion), representing finding it difficult to convince firms to Construction workers at a site. Funds for infrastructur nearly 38% of Gross Domestic Product go public. The scrutiny that comes with (GDP) according to the Central Bank. Sh37 trillion listing has kept many to remain private Last month, Moody’s, an international entities. compliance requirements of being public As at end of year 2016, there were credit rating agency, said Uganda’s The amount of money that The markets offer a variety of financial and subjecting themselves to public 16 companies listed on the USE, eight debt burden has risen faster than the bank of Uganda says Uganda’s instruments that enable economic agents scrutiny,” Kalyegira said. being local, while the remaining being Government’s revenue, resulting in a public debt has reached. to pool, price and exchange risk. “Our market can comfortably provide cross-listed from the Nairobi Securities debt to revenue ratio of around 250% by This represents 38% of the According to Kalyegira the Government capital for relatively small projects in the Exchange. end-2017, up from 218% in 2013. country’s GDP. has already been tapping into the domestic region of $50-$200m (about sh180b- The last sale of shares to the public “Debt affordability has also capital markets through the issuance of sh720b). However, as you know, happened in 2012 with Umeme. No new deteriorated, reflecting a gradual shift treasury bonds, but participation of more infrastructure projects are typically large company has listed since then. in the composition of the debt burden Internet connectivity in Uganda is still poor. The network of connected firms remains a challenge. hence the need to tap into international The small number of interested firms at towards non-concessional borrowing. internet infrastructure is yet to cover the entire country “The private companies have to make capital markets as well as raise part of the stock market has constrained efforts Construction work on the 104km road between Busia-Majanji- This mainly reflects the rising share of the hard choice of remaining small and the financing from development financial of the markets to be able to finance some Musita has resumed. UNRA had cancelled the contract private or growing big, fulfilling the institutions.” infrastructural projects.