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By Patrick Edema
Recently, the Ministry of Finance officials and the National Planning Authority (NPA) team together with the key government stakeholders from the sectors that constitute key drivers of the National Development Plan (NDP) IV appeared before the parliamentary committee on budget for the detailed presentation of the fourth National development plan.
This is in line with Article 125 of the Constitution of the Republic of Uganda that establishes the National Planning Authority with a mandate to produce a comprehensive and integrated National Development Plans as highlighted by the National Planning Authority Act CAP 202, and the National Planning Authority (Development Plans) Regulations (2018).
The Act requires the National Development Plan to be submitted to Parliament for approval. In addition, the Public Finance Management Act (2015) also requires the budget framework paper (BFP) to be consistent with the National Development Plan for approval by the Parliament.
It should be noted that the implementation of the third National Development Plan (NDPIII) will elapse at the end of this Financial Year (FY2024/25) and the country commences with the NDP IV from FY2025/26 to FY2029/30 with the goal of Achieving higher household incomes, full monetization of the economy and employment for sustainable socio-economic transformation. This goal is to be achieved under the theme of ‘Sustainable Industrialization for Inclusive Growth, Employment, and Wealth Creation’.
It is evident that the NDP IV is informed by the NDPIII review assessment that provided lessons, the Uganda Vision 2040, SDGs, Africa Agenda 2063, EAC Vision 2050 and others. However, despite the good plans that government puts in place, the implementation on ground remains insignificant due to different government’s imbalance priorities for each financial year.
For instance, the Uganda Vision 2040 envisions a minerals sector that is a major driver of employment creation and GDP growth. The country is also one of the many countries in the Great Lakes region that have committed to the Paris Agreement and the need to address the mineral intensive clean energy technologies for a transition to a 1.5oC – 2oC by 2050 and a low-carbon future will be very mineral intensive because clean energy technologies need more materials than fossil-fuel-based electricity generation technologies.
According to the 2018 Mining and Mineral Policy for Uganda, the country has good potential for minerals with favorable geological environment of world class economic mineral deposits including copper, nickel, gold, chromite, iron ores, tin, tantalite, tungsten, limestone, marble, graphite, gemstones and other Rare Earth Elements.
These resources have attracted increased Foreign Direct Investment (FDI) in the sub-sector from US$5 million in 2003 to over US$ 800 million in 2017. Similarly, the non-tax revenue from license fees, annual mineral rent, and royalties have significantly increased from approximately Shs1.8 billion in 2003 to Shs11.3 billion in FY 2022/2023.
In addition, the macro-economic data provided by the Uganda Bureau of Statistics (UBOS), also indicates that the mining and quarrying sector accounted for UGX 2,626.60 billion in the FY2020-21, which represents 1.8% of the national GDP on current basic prices, including 1.35% from formal sector activity and 0.4% related to informal sector activities. The contribution of the mining and quarrying sector to GDP has increased compared to the prior year’s contribution (1.6%).
However, the mineral sub-sector has continued to face challenges of low funding, institutional capacity to manage the mineral resources, value addition to minerals, complex nature of artisanal and small scale mining, conflicts and environmental degradation.
It is time for the government to rethink her investment strategy and resources allocation of the mineral sub-sector because of its potential to improve the GDP and job creation especially for the youths across the country.
Additionally, the minerals have become more essential components in today’s rapidly growing clean energy technologies from solar panels, wind turbines and electricity networks to electric vehicles. The demand for these minerals will grow quickly as clean energy transitions gather pace.
With the Uganda’s Energy Transition Plan (ETP), a strategic roadmap for achieving net zero emissions by 2065, the reality remains that a significant increase in production and international trade of critical minerals is likely to be required to meet the projected demand for the transition to net zero.
Therefore, this also raises a series of questions on how much of the finite mineral reserves can and should we realistically extract to meet future energy demands? Secondly, how can the requisite extraction be operationalized without worsening existing issues such as transparency and accountability, environmental integrity, health, safety, and social equity?
Notably, the growing global demand for these resources also presents a development opportunity for Uganda if we can add value to the extracted minerals, effectively utilize the proceeds and diversify within the value chain and other sectors. Moreover, as a continent, we are yet to fully seize the opportunities presented by our mineral resources, most of the value-added activities of green value chains are still captured elsewhere.
And currently, African countries only possess 1% of the global installed photovoltaic capacity and are estimated to generate only about 40% of the revenue they could potentially collect from critical minerals.
It is also evident that no African or Latin American country is a major player in manufacturing or trading cathodes or battery materials for electric vehicles. This is yet again evoking the paradox of commodities, the fact that Africa is a great source of wealth, but oftentimes come with a trap of development, a cycle of vulnerability and a source of inequality for the world’s most vulnerable economies.
Patrick Edema Is An Environmental Engineer
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