On 10th June 2021, the budget speech for financial 2021/22 was delivered by Honorable Amos Lugolobi, Member of Parliament Ntenjeru North, according to the Public Finance Management Act 2015. The UGX 44.7 trillion country budget is effective on 1st July 2021 and is premised on the theme, “Industrialization for inclusive growth, employment and wealth creation”. The budget, geared towards agricultural industrialization, private sector business growth, and developing productive work skills, presents several opportunities to boost Small and Medium Enterprises (SMEs) recovery from pandemic effects.

Here are some critical takeaways that business owners need to know:

  • Access to affordable medium-to-long term capital for SMEs:Uganda Development Bank (UDB) will be further capitalized with UGX 103 billion in the financial year 2021/22, in addition to the UGX 555 billion disbursed in 2020/21 for lending to SMEs affected by the COVID-19 pandemic. The Agricultural Credit Facility (ACF) at the Bank of Uganda and the Emyooga programme through the Micro Finance Support Centre (MSC) will provide targeted funding for agriculture, women, and youth group business projects.
  • Boosting access to markets for the private sector: The government is extending COVID-19 relief measures and supporting entrepreneurial development through increasing regional and continental market access. It will develop market infrastructure to enable the private sector to take advantage of the export market opportunities, including the African Continental Free Trade Area(AfCFTA).
  • Credit relief for businesses through loan restructuring to improve liquidity:The restructuring of private sector bank loans has been further extended from 1st April 2021 for six months, allowing restructuring loans for up to three times. Any borrower can apply for the restructuring at any time before 30th September 2021.
  • Infrastructure development to ensure quality standards for agricultural exports:Eight (8) major border posts will be constructed and equipped to inspect, test, fumigate, and package services for exports. They will be located at Mutukula, Katuna, Mpondwe, Malaba, Busia, Suam, Elegu, Lwakhakha and the Entebbe and Kabale International Airports. The intervention will address quality standards for commodity exports such as maize and poultry, and dairy products.
  • Oil and gas sector commercialization and development:  The sector presents an opportunity for foreign direct investment inflows, creating direct and indirect jobs, facilitating local enterprise growth, including forwarding and backward linkages to agriculture, tourism, and petrochemical industries. The development phase will create significant benefits to our economy and SMEs, especially those who will provide services and goods to the industry.

The budget speech also demonstrated the government’s commitment to promoting the digitization of the economy to improve productivity and competitiveness. The scrapping off of the internet data excise duty over the top (OTT) is good news for internet users; however, the government has introduced a 12% excise duty on airtime, value-added services and internet data. It means higher communication and internet costs for SMEs integrating information and communication technology (ICT) in their work. Therefore, business owners need to plan how to manage the new charges and embrace the opportunities within the budget.

For more information about the funding contact:

Uganda Development Bank

+256312355500

info@udbl.co.ug

https://www.udbl.co.ug/

Agricultural Credit Facility

+256414258441/9

ACF@bou.or.ug

https://www.bou.or.ug/bou/bouwebsite/ACF/

Reference:

Detailed budget speech on 10.06.2021 available here.