Dr Fred Muhumuza is not the kind of economist who retreats into abstraction.
When he talks about government spending, he talks about buses, fuel allowances per vehicle, the Minister of Health’s car parked next to the Minister of Energy’s car on a public holiday in Arua, both drivers on allowance, both burning public money into the red dust.
He was speaking at the NTV Uganda – Absa post-budget dialogue on Friday, a day after the Finance Minister read the National Budget, surrounded by business leaders who wanted to know, simply, what it meant for them.
His answer, characteristically, was that the question itself needs reframing. ‘You can benefit from this budget by either waiting for the delivery to come,’ he said, ‘or by being part of the delivery process.’
Uganda’s ten-fold growth strategy is the Agro-Industrialisation, Tourism Development, Mineral-Based Industrialisation (including oil and gas), and Science, Technology and Innovation (ATMS), which is a long-term blueprint aiming to expand the country’s Gross Domestic Product (GDP) from about $50 billion to $500 billion by 2040.
This ‘tenfold growth’ model focuses on four priority sectors: Agro-industrialisation, Tourism development, Mineral-based industrialisation, and Science, Technology and Innovation.
For a country still trying to build out its productive base, these are not surprising choices.
But Dr Muhumuza, who is also the director of the Economic Forum at the Makerere University Business School, was more interested in what the budget signals than what it says. This coming financial year, it signals reform.
These words appear repeatedly in the Finance Minister’s speech: procurement reform, salary reform, and the cancellation of certain public ceremonies.
And the number that Dr Muhumuza kept returning to is 10. As in, 10 percent GDP growth, double digits, which Uganda has not seen since the early 1990s, the last great era of structural reform.
‘Reforms stimulate growth,’ he said. ‘The last time we were in double digits was the period of reforms. Somewhere we left the reforms or brought in different ones. One of the major ones that got left behind was procurement.’
The proposed changes to government procurement are, he acknowledged, going to be ‘loved and hated equally.’
‘There are people who eat from the current system, who depend on its drag, its opacity, its capacity to delay and inflate,’ he said.
But there are also people, he argued, waiting on the other side: businesses owed government arrears, pensioners whose payments are caught in a bureaucratic tangle, civil servants whose real salaries have been quietly substituted with a labyrinth of allowances.
‘You’ve been waiting. It’s your pension. You delivered the business. Who knows? Savings from this reform of procurement may eventually resolve the pending arrears,’ he noted.
Fuel prices rising
The conversation turned to fuel. The government has added a levy of Shs200 per litre on petrol and diesel for the 2026/2027 financial year starting July 1, raising total duties to Shs1,750 and Shs1,430, respectively. This measure is expected to generate Shs450 billion. With the pump price already rising to Shs6,700, it looks set to settle somewhere around Shs7,000 per litre.
For businesses, this is a recalculation of every delivery, every commute, every operational line.
Dr Muhumuza was indifferent and impatient with the way the debate tends to close in on itself, pointing out that Parliament, which budgeted for its own inland travel allowances at the old fuel price, will almost certainly come back asking for a supplementary budget to cover the difference.
‘You’ll not be surprised to see Parliament asking for a supplement. In the spirit of reforms, Mr Parliament, you already have Shs1.2 trillion. Can you go and reform some of the ways you are doing things and absorb this necessary cost?’
Consistency
It is, he said, a question of consistency. If the legislature is demanding efficiency from the executive, the executive should demand the same in return. The buses-and-cars example is not incidental.
It is his central argument about what reform actually looks like when it isn’t just a word in a speech.
‘One bus. Put them on a bus because if each one drives their own car, you trigger a fuel allowance per vehicle. A driver’s allowance per vehicle,’ he said.
He imagined the aggregated schedule: officials going to Karamoja, to Arua, to Gulu, their trips consolidated, their costs pooled. ‘I would have had one driver for all of them.’
The savings from such reforms, Dr Muhumuza argued, have a destination. He has thought carefully about where they should go, and his answer is salaries.
The current system, in which civil servants supplement modest base pay with a proliferating array of travel allowances, per diems, and ceremonial payments, is both opaque and unstable.
‘An allowance you are waiting on, whether you’ll get it or not,’ he said. ‘But if it is your salary, you can plan better.’
His benchmark was specific. Uganda has set a national objective of living above a dollar a day per person. If a civil servant is the breadwinner for five dependents, he argued, their household needs at least six dollars (Shs22,495) a day, roughly $180 (Shs674,873) to $200 (Shs749,859) a month.
The minimum salary, on those grounds, should be around Shs2 million.
‘Where am I going to find the money? From the reforms, because now I’m taxing Shs2 million, not Shs700,000. So part of the money comes back,’ he said.
He was describing a virtuous cycle of higher wages, higher tax intake, higher household expenditure, and economic growth that has so far remained theoretical.
‘Economies grow out of household expenditure. The more I empower households to spend, the better I’m speaking to double digits,’ he said.
There is one point at which Dr Muhumuza’s measured tone gave way to something closer to frustration, and it is on the subject of environmental taxes and the people they fall on. The budget includes several taxes that are partly justified on environmental grounds, including a levy on second-hand clothing. This affects the mivumba market, which millions of Ugandans rely on for affordable clothing.
But something is troubling about the logic.
‘You are punishing the poor to cater for the environment. Which poor person literally survives on the environment?’
He was thinking about the charcoal burner, the swamp-dweller, the person who irrigates their onions from the wetland at the edge of their land. ‘They have no option.’
His concern was not that environmental protection is wrong, but that the burden keeps landing in the same place, on people with the least capacity to absorb it, and the money raised rarely finds its way back to environmental restoration.
‘It’s going to end up paying salaries,’ he said. ‘You’re going to have a procurement committee.’
What he wants instead is what he calls a ‘climate-smart way of life’, not a penalty, but an alternative. Something that gives the charcoal-dependent household a different option, rather than simply making their existing one more expensive.
‘Can we begin to make decisions with the common person at the back of our mind?’ he asked. It is, in some way, the question that underlies everything he has said: not just what the budget allocates, but who it imagines when it does so.
‘The Uganda Revenue Authority (URA) used to say: can we build Uganda together?’ he illustrated. ‘These discussions are themselves an opportunity. We hear from the government but we also have an opportunity to talk back,’ Dr Muhumuza said.