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
The Academia & Government Officials Identify Research & Data gaps in the Management of Natural Resources in Uganda
Environmental economists and graduate students from Makerere University held a meeting with government officials to identify research and data gaps to address the persistent environmental and natural resources (ENR) challenges in Uganda.
The two-day researchers’ training organized by EfD Uganda was held at Esella Country Hotel in Kampala, on 14th and 15th March 2024,
Local Government (LG) representatives were brought on board to help understand policy research questions in the local government that researchers can leverage to generate evidence to inform policy implementation and improvement in service delivery and environmental protection in general. The District Natural Resources Officer for Wakiso, Rebecca Ssabaganzi, was the lead facilitator.
The national policymakers, on the other hand, presented policy, capacity, research, and data gaps that researchers can focus on to improve their work. Ronald Kaggwa from the National Planning Authority facilitated the training.
Center Director Edward Bbaale said the purpose of the workshop was to identify what natural resources and environmental issues are being pitched in National Development Plan (NDP) IV and how Uganda is transiting from NDP III to NDP IV to inform their research.
“This is a great opportunity for our researchers to have a deeper discussion with the local government and National Planning Authority on critical issues and that the government is focusing on so we can ensure that our research is policy-relevant,” said Edward Bbaale.
He urged the government to reduce taxes on renewable energy as a key tool to encourage the public to drop the use of biomass which has negative effects on the environment and human health.
“Transitioning from the dirty sources of energy to the cleaner sources of energy is a very expensive venture and it requires infrastructure investments. We would like to hear about green financing and what the government is planning to do to raise the money,” he remarked.
From the Local Government presentation, Ms. Rebecca Ssabaganzi focused on the role of Local Government in protection of natural resources, the structures, challenges and capacity gaps for research. Ssabaganzi stressed the need to raise public awareness on the sustainable use of the environment and conservation as an obligation for everyone, the need for mindset change for the public to adopt alternative energy sources and investing in eco-tourism as well as the regulation of building substances and valuation as a basis for revenue assessments and best development use.
She explained that poor management of water, environment, and natural resources coupled with the worsening effects of climate change have resulted in high exposure to hazards and disasters, with limited capacity for climate change adaptation and mitigation, low disaster risk planning and rampant degradation of the environment and natural resources caused by low enforcement capacity.
From the national planning perspective, Ronald Kaggwa highlighted the persistent ENR management challenges inherited from NDPI, II, III to IV.
These include deteriorating state of ENR, enforcement and compliance challenges, limited use of economic incentives and income poverty among the ENR-dependent populations. Kaggwa also reported that there is low value-addition to ENR, excessive reliance on the market prices to make major decisions and challenges on how to balance the benefits and real costs of natural resource conservation.
Kaggwa proposed some thematic areas for research to inform policy. These include reviewing policy, legal, and institutional frameworks for effective ENR governance and management; reviewing the effectiveness and efficiency of the program approach to ENR governance and the likely impacts of the rationalization of ENR institutions on performance;
Other research areas proposed are coordination, regulation, and monitoring of ENR management at LG and national levels, exploring the feasibility of economic instruments for ENR management, and the public good and trans-boundary nature of ENRs and governance challenges.
Key takeaways from the workshop
From the presentations and group discussions, the meeting agreed on key thematic areas for research including valuation of existing resources, appropriate mix of policies, stocktaking of existing data and the role of decentralization in protecting the environment. Other proposed areas are climate financing and transitioning to a low-carbon economy, cost-benefit analysis for an energy transition and climate change and its effects
The meeting also resolved to strengthen collaborations between Makerere University‘s existing projects, government ministries, departments and agencies, development partners and international agencies, financial institutions, and civil society organizations.
EfD-Mak to prepare research proposals and tailored courses
Uganda’s IGE policy engagement specialist Peter Babyenda said the meeting identified the capacity gaps in Local Governments that the center can fill, by preparing tailored courses to address gaps. The courses would entail training Local Government workers in data collection, evaluation of natural resources, stakeholder engagement, mindset change, and feasibility studies
For the researchers, the meeting informed them of where they are needed and their role at a national level.
“We are preparing our research proposals to have multidisciplinary research projects, which means, we need sociologists, accountants, statisticians for data collection, etc. but also, a partnership between academia and policymakers”, Peter Babyenda said.
The center will build on key issues generated from the meeting.
Jane Anyango is the Communication Officer EfD Uganda
Makerere University in collaboration with three partner companies have recognized and awarded best performing business graduates of the 74th graduation who were conferred with bachelors and Masters in January.
The companies including Prudential Uganda, ACCA, and EPRC presented to graduates with cash prizes, mentorship and training opportunities in the companies.
The recognizing and awarding ceremony was held at the School of Business, Makerere University on March 12 from where 12 graduates from the College of Business and Management Sciences (CoBAMS) received their prizes.
While addressing the graduates and their parents, Prof Barnabas Nawangwe, the University Vice Chancellor, congratulated the awardees upon obtaining good degrees.
“It is very difficult to get a good Makerere degree. If you are being honoured you have got a first class, you must count yourself extremely clever and also blessed by God,” Prof Nawangwe said.
The VC said he has struggled to create a conducive learning environment for the students by restoring discipline among the students to connect them to the world.
“We have been trying hard to restore discipline and people didn’t know. So if you go anywhere in the world people know Makerere is a serious university and you will be considered favourably compared to other people.”
Makerere has maintained partnership with companies already thriving in the industry to help students get exposed to the field of their work and also get opportunities through graduate training to gain experience.
Prof Nawangwe has signed several memorandums of understanding over the years with those companies and the relationship have been so helpful especially for self-growth of Makerere products.
“Our partners are in the industry understand it better than we do. When they come and inspire you, they add to what we have done here to encourage you and give you more confidence that you can go out in the world and serve humanity and succeed,” the VC told graduates.
He encouraged students to look out for opportunities across the world.
“We are living in a very competitive world because currently you may find there are around 200,000 students in Uganda with degrees and yet jobs are very scarce.”
He recalled in 1970s, when he was a student at Makerere and they were not more than 2000 people studying at the time and it was a sure deal for all of them to get employed somewhere.
He discouraged graduates against walking on the streets of Kampala looking for jobs and encouraged them to try out international opportunities and self-employment.
“The good thing the population in the rest of the world is going down. It is only in Africa where the population is going up. With the decrease in population, there are many countries where there is a big deficit of skilled workforce.”
Prof Eria Hisali, Principal COBAMS, pledged more support to this year’s academic giants and promised to provide them with all the necessary assistance they may need.
“We have quite a number of initiatives and when we call upon you to participate in some of them, please respond positively. We are still fully available to support you in any way possible,” Prof Hisali said.
The principal lauded the VC for his tireless efforts to partner with different companies through MOUs he signs every now and then.
“For any MOU that comes his way, Prof Nawangwe has been there for us to sign them on behalf of the university,” he said.
Prudential Assurance
The CEO of Prudential Assurance, Mr Tetteh Ayitevie congratulated the graduands saying “your relentless pursuit of knowledge and your unwavering determination have set you apart as the best and brightest in their field.”
Mr. Tetteh revealed that with the support of their Support Scheme, the awardees are not only receiving financial assistance but also mentorship and internship opportunities that will propel them towards success in their future endeavours.
Prudential Uganda rewarded the top five Actuarial Science students with $500 each.
Additionally, through the Prudential Actuarial Support Scheme (PASS), these students will receive scholarships fully covering their professional exam fees.
In total, Prudential Uganda has dedicated one hundred and thirty-five million shillings (UGX 135,000,000) to support the students.
The country Manager of ACCA Uganda, Ms Charlotte Kukunda, said while awarding the best student of Bachelor of Commerce, Mr ………………. And reminded the students of the exception that ACCA granted students of Commerce (Accounting). The students get 9 exceptions at ACCA level.
Ms Fatumah Namubiru from Economic Policy Research Centre (EPRC), congratulated the Sebuliba Jude, upon emerging the best Masters of Economics students and also called on the female students to strive hard to be among the best. Jude received a placement as a research fellow at EPRC and Shs1.5million.
Best students
Jude Sebuliba, the best student in the Masters of Arts in Economics with CGPA of 4.95, said the conducive learning environment created space and time for them to read his books.
“I dedicated much of my time to books, perseverance, God and parents were all part of my journey up to this milestone I have reached today,” Sebuliba said.
His research was about the impact of remittances to inflation in Uganda and his findings revealed that there is a positive impact between inflation and remittances.
“Many people go out but we don’t know the impact of the money they get to our economy.”
The best Master’s student now is eyeing a PhD if any opportunity avails and is currently blessed with a job at the Economic Research Policy Centre of Makerere University where he is employed as a researcher.
Derrick Amanya, Bachelor of Commerce (BCOM) graduate, scored a first class of CGPA 4.54 and attributes excellence to hard work and group discussions.
The research he conducted from Mbarara District was about ‘How sustainability can be adopted in furniture” He looked at ways to make furniture that has metallic components in an effort to reduce deforestation in the country.
“My research found out that if certain components of furniture are used on metallic components, it can reduce on depletion of forests to up to 60 percent,” Amanya’s findings revealed.
The fresh graduate is now enrolled for CPA and he is sitting his first exams in June, thanks to great partners, the ACCCA.
Anneliz Namuddu, B. Sc. Actuarial Science graduate, as well prioritized discussions after believing at University if you are not a part of any discussion group, you cannot understand the concepts.
“I always trusted God in addition to serious attention I gave to books and ensuring that she prepared for her exams in time not waiting for the last minute to panic.
Her research was about factors influencing expenditure among women in rural areas of Uganda. And used secondary data which she converted in to small variables that were convenient for her.
The research findings indicated the expenditure is mostly influenced by the sources of income women are getting and from the kind of family they are in. Is it a single parent home or are they married.
“I thank Prudential for the scholarship they gave me to do the certification that confirms me to be a qualified actuary,” Namuddu said.
The best students B.sc Actuarial Science
- Muhumuza Mark
- Kobugabe Michelle Audrey
- Uwera Ruth Michelle
- Bunjo Steven Hugh
- Namuddu Anneliz
Best students Bachelor of Commerce
- Lwamasaka Prosper
- Nanfuka Sheebah
- Amanya Derrick
- Birungi Mercy Olivia
- Kaganzi Devis
- Namubiru Phionak Rebecca
Best Master of Economics
- Sebuliba Jude
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