Business & Management
Mak-RIF Plugs Tax Education Gaps in Uganda’s Informal Sector
According to statistics from the Uganda Revenue Authority (URA) Annual Data Book 2018/19, at 12.44%, Uganda’s average tax to GDP ratio over the last five years is one of the lowest in the region, and far below the sub-Saharan Africa average of 16%. Simply put, the total tax collected by URA has on average over the past five years accounted for only 12.44% of the size of Uganda’s economy. Comparatively, Kenya, Tanzania, Rwanda and Burundi recorded average tax to GDP ratios of 16.10%, 12.83%, 15.80% and 13.55% respectively over the same period.
This should not come as a surprise, given that 2016 statistics from the Uganda Bureau of Statistics (UBOS) indicated that approximately 98% of Uganda’s population of working age (14-64) were engaged in the informal sector. The title of a 2017 article published by the Economic Policy Research Centre (EPRC) based on the same statistics put it aptly, “Informality Growing Faster than Formality”.
Expanding the tax base by tapping into semi-formal economic activities is going to be one of the major focus areas in the Third National Development Plan (NDPIII) 2020/21-2024/25. It is against this background that researchers in the College of Business and Management Sciences (CoBAMS) led by the Principal, Dr. Eria Hisali conducted a study that sought to understand which gaps exist in tax education and how these gaps can be packaged into improving compliance and subsequently broadening the tax base in Uganda.
Funded by the Government of Uganda through the Makerere University Research and Innovations Fund (Mak-RIF) the research undertaken in 2020 targeted over 500 respondents with particular focus on the informal sector. In addition to the Principal Investigator (PI) Dr. Eria Hisali, the research team consisted of Dr. Ismail Kintu, Dr. Fred Bateganya, Ms. Marion Atukunda, Ms. Winfred Nalwoga, Mr. Nicholas Musoke, Mr. Patrick Lumala and Dr. Kagarura Willy.
Speaking at the research dissemination workshop held on 10th February 2021 in the School of Business Conference Room, Dr. Hisali shared that “The research advocates for a comprehensive review of Uganda Revenue Authority’s tax education programme with focus on linking tax collection to better service delivery,”
The research team’s interaction with members of the informal sector revealed that tax education being provided is not well suited to the informal sector. “For instance, tax exhibitions, messages on websites and brochures do not provide the best approach to reach out to the informal sector. The informal sector needs more engagement with emphasis on field visits and face-to-face interaction,” explained Dr. Hisali.
The Principal Investigator however pointed to some quick wins that could be adopted as URA evaluates and updates its tax education programme. He noted that approximately UGX 6 Trillion had been allocated to livelihood programmes by the Government of Uganda between the 2018/19 and current financial years. “How can tax education be included as part of the package that these Government livelihood programmes contain? I think we could see some quick wins because as recipients benefit from livelihood programmes, they could be asked to register as tax payers.”
Findings shared by the research team further revealed a limited coverage of tax education. Whereas 53% had been told or heard about the importance of paying taxes, only 40% had received education on how to register for taxes while only 38% had heard about filing tax returns. Furthermore, only 32% had received tax education on fines and penalties, 29% on the benefits of paying taxes and only 16% on audits and assessments.
Nevertheless, some of the registered respondents who admitted to not paying taxes cited low tax morale as well as poor service delivery and unfairness as reasons for their noncompliance. Researchers further took note of the limited personal touch with potential taxpayers in the informal sector, disconnect between the current taxpayer education modality and unique features of the informal sector, as well as the cost implications and overly technical language in existing modalities as some of the reasons for nonpayment of taxes.
The Study concluded that:
- Majority of the respondents had limited or no knowledge about the Tax Identification Number (TIN), a critical requirement for tax payment. More than half of respondents did not know how to acquire a TIN.
- Actors in the informal sector cannot differentiate between taxes paid to URA and those paid to local governments and other bodies that bring together operators.
- Most respondents did not know how to formalize their business/enterprise, another important factor for tax registration.
- There exists some form of registration of informal businesses/enterprises upon which formalization can build.
- The URA tax education campaigns messaging and targeting has left out some potential tax payers. Messaging and targeting of tax education is key to realizing intended results of growing the tax base and ultimately the tax revenues.
The Research Dissemination attracted participants from URA, Kampala City Traders Association (KACITA), Academia, Private Sector, Civil Society, the Media, Mak-RIF Grants Management Committee (GMC) as well as staff and students from Makerere University.
Painting a picture on the new ideas and innovations to foster a taxpaying culture through tax education, URA’s Mr. Nicholas Musoke who represented the Assistant Commissioner Research Planning and Development-Ms. Milly Nalukwago, noted that whereas Uganda’s population is approximately 45.7million, the taxpayer register stands at only 1.59million. Approximately 953,000 of those registered are active taxpayers, while 906 URA clients pay 80% of the tax. The informal sector currently contributes less than 1% (0.03%) of tax collected.
To help achieve this, URA plans to roll out the AEN strategy. AEN stands for Awareness, Empower and Nurture. Under Awareness, URA intends to intentionally engage the public on tax laws, roles, rights, obligations and opportunities relating to tax. Under Empower, URA will guide taxpayers on their rights as well as how and when to fulfil their tax obligations, while under Nurture, the Authority will set up and support mechanisms to cultivate and maintain a taxpaying culture.
Dr. John Mutenyo who represented the Chairperson of MakRIF GMC- Prof. William Bazeyo in his address commended the Government of Uganda for prioritizing research at Makerere University. “In phase One of Mak-RIF, the Government committed UGX 30billion and this was one of the research projects that
was funded under that phase. To date, over 500 competitive research grants have been supported.”
Prof. Bazeyo congratulated Dr. Hisali and the entire research team for undertaking a study geared towards strengthening the implementation of NDPIII and supporting the development of Uganda. “Most importantly, I would like to thank Dr. Hisali and the team for having a collaborative study that involved the key stakeholders such as URA. These are the stakeholders that are going to make it easy to buy into and implement the outcomes of this research.”
Commenting on the findings, the other stakeholders at the research dissemination workshop pointed out the need to embark on trust building programmes with the taxpayer. They equally emphasised the need to consider reducing the load on the tax payer. The taxpayer in Uganda is subject to taxes such as;
Value Added Tax (VAT), Pay As You Earn (PAYE), Customs, Demurrage, Income Tax, Withholding Tax, Excise Duty, Over-The-Top (OTT)/Social Media Tax among others.
Article by Public Relations Office
Business & Management
Public Investment Management Centre of Excellence awards certificates to 30 Officials
The Public Investment Management Centre of Excellence at the College of Business and Management Sciences, has successfully concluded a five-day training workshop for public officers from various government agencies and universities. The training, held in Jinja, was attended by 30 participants who received certificates of completion at a closing ceremony on July 5, 2024. The event was graced by the Principal of the College of Business and Management Sciences, Makerere University, who delivered closing remarks and awarded the certificates.
In his closing address, the Principal expressed deep gratitude and pride, thanking the Ministry of Finance, Planning, and Economic Development (MoFPED) for their generous financial support, which made the training possible. He highlighted the Ministry’s crucial role in identifying and nominating participants from various government bodies, emphasizing the importance of professional development in improving public investment efficiency and effectiveness.
The Principal also extended special thanks to the Permanent Secretaries, Vice Chancellors, and Executive Directors of the participating institutions for recognizing the significance of the training and nominating their staff to attend. He commended the dedication of the faculty members from Makerere University, MoFPED, and the National Planning Authority for their expertise and time, which ensured a fruitful learning experience for the participants.
Addressing the participants, the Principal lauded their commitment and resilience throughout the week-long training. He noted that the program equipped them with essential skills and knowledge in Public Investment Management (PIM), including project preparation, execution, procurement, Public-Private Partnerships (PPP), monitoring and evaluation, and integrating climate change, social, and environmental risk management in project preparation.
He encouraged the participants to view this training as the first step in their journey to becoming experts in PIM, emphasizing the importance of continuing education through advanced modules in Financial and Economic appraisal of projects. The advanced training, conducted in collaboration with Cambridge Resources International (CRI) and Queens University in Canada, offers a tripartite certificate from Makerere University, MoFPED, and Queens University.
In his remarks, the Principal highlighted the broader scope of the Public Investment Management Centre of Excellence, which extends beyond training to include research, outreach activities, and advisory services to the government. He announced the Centre’s ongoing efforts to revise the Development Committee guidelines for MoFPED and assess the performance of projects selected since the first National Development Plan (NDP I). Additionally, he proposed organizing a one-day Public Investment Management Conference in October 2024 to evaluate the current state of public investments in Uganda and develop future strategies.
The Principal concluded by congratulating the participants on their achievement and expressing confidence in their ability to effect positive change in the management of public investments in Uganda. He acknowledged the invaluable support of the faculty, mentors, and coaches, as well as the excellent work of the PIM CoE Secretariat, headed by Dr. Willy Kagarura.
As the training workshop came to a close, the participants left with a sense of accomplishment and a renewed commitment to enhancing public investment management practices in Uganda, contributing to the country’s economic development and prosperity.
Scholars from Makerere University, in partnership with researchers from Europe, have launched the Remaking of the Family in East Africa (FamiLEA) project, focusing on 2000 households in the Kampala Metropolitan Area. This 3-year research initiative, which began on July 1st, includes households in Kampala, Wakiso, and Mukono Districts and will continue until mid-2027.
The FamiLEA project examines families and the factors influencing changes in family structures. This research responds to the rapid and significant changes in family dynamics across Africa, including innovative kinship practices.
Dr. Stephen Wandera, the Principal Investigator (PI) from Makerere University, stated that enumerators will conduct door-to-door data collection using structured questionnaires. “Our enumerators are students from Makerere University’s Population Studies program, both undergraduate and postgraduate. We expect them to gain valuable field experience and provide validated results,” Dr. Wandera explained during the training.
The study focuses on household changes such as marriage, divorce, intermediate relationships, and networks to understand the reasons behind family changes in East Africa. Following data analysis, dissemination meetings will be held with stakeholders, including government ministries, departments, and agencies.
Earlier this year, a stakeholders’ meeting in Kampala included representatives from the Ministry of Gender, Labour, and Social Development and the Uganda Bureau of Statistics. Researchers will submit reports to policymakers and prepare policy briefs to support informed policy-making and programming.
Yonatan N. Gez, Co-Principal Investigator from ISCTE University Institute of Lisbon, Portugal, highlighted that the FamiLEA project is being conducted in both Kenya and Uganda, funded by the Swiss National Science Foundation. This interdisciplinary project involves scholars from demography, anthropology, political science, geography, and history, collaborating with universities from Switzerland, France, Kenya, Canada, and Portugal, with Makerere University as the key collaborator.
Gez noted, “We will conduct extensive surveys using both qualitative and quantitative methods in Nairobi and Kampala. Given the project’s focus on family structures and their transformation, religious and cultural leaders will play a key role in the study.”
The survey will include parents and guardians from 2000 randomly selected households, targeting individuals aged 18 to 64. The questionnaires will cover topics such as intermediate networks, emotional connections, and the impact of these factors on family changes.
Prof. Edward Bbaale, Principal of the College of Business and Management Sciences (CoBAMS), officiated the training. He emphasized the alignment of this research with Makerere University’s strategic direction of being a research-led institution. “This research is within our university’s strategic direction, and I congratulate all the principal investigators for securing the grant,” Prof. Bbaale said.
Prof. Bbaale also highlighted the importance of international collaboration in research, encouraging scholars to pursue similar research projects. He advised enumerators to exercise patience, intelligence, and care in the field to ensure high-quality research findings.
On behalf of the university, he thanked the African Population and Health Research Centre for their collaboration with Makerere University. “Engage with line ministries and the private sector to ensure the implementation of the research project’s recommendations,” Prof. Bbaale urged researchers.
Business & Management
Public Investment Management Centre of Excellence at Makerere University Trains Over 30 Public Officers
The Public Investment Management Centre of Excellence at Makerere University has launched a five-day intensive training program for over 30 public officers from various government agencies. This significant event is being held in Jinja, aimed at enhancing the skills and knowledge of public officers in effective investment management.
The training program was officially opened on July 1, 2024 by the Principal of the College of Business and Management Sciences, Makerere University, under which the Centre of Excellence operates. In his opening remarks, the Principal emphasized the importance of building capacity within public institutions to ensure efficient and effective management of public investments.
“We are committed to equipping our public officers with the necessary skills and knowledge to manage public investments efficiently. This training is a testament to our dedication to excellence in public service,” stated the Principal.
The opening ceremony was also attended by Ms. Getrude Basiima from the Ministry of Finance, Planning and Economic Development, the funding agency for this training program. Ms. Basiima highlighted the Ministry’s commitment to supporting capacity-building initiatives that contribute to the country’s economic development.
“The Ministry of Finance, Planning and Economic Development is proud to support this initiative. We believe that investing in the professional development of our public officers is crucial for the sustainable growth of our nation’s economy,” Ms. Basiima remarked.
Proper Public Investment Management (PIM) is critical for ensuring that government resources are used effectively to achieve development goals. It involves rigorous planning, allocation, and monitoring of public funds to maximize socio-economic benefits and minimize wastage. Effective PIM leads to improved infrastructure, better public services, and enhanced economic growth, ultimately contributing to the overall well-being of citizens.
Throughout the five-day training, participants will engage in a series of interactive sessions and practical exercises designed to enhance their competencies in public investment management. The training covers various topics, project proposal writing including project planning, financial analysis, risk management, and performance evaluation.
This initiative by the Public Investment Management Centre of Excellence at Makerere University underscores the institution’s role as a leader in fostering professional development and enhancing the capacity of public sector professionals in Uganda.
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