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Mak-RIF Plugs Tax Education Gaps in Uganda’s Informal Sector

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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.

Dr. Eria Hisali, Principal of College of Business and Management Studies (CoBAMS) as well as Principal Investigator (PI) of the project.

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.

Mr. Everest Kayondo, Chairperson – Kampala City Traders Association (KACITA)contributing to the discussion.

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.
Mr. Nicholas Musoke represented the Assistant Commissioner Research Planning and Development.

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 represented the Chairperson of MakRIF Grant Management Committee

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.

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Business & Management

Prof. Hisali, Prof. Yawe handover office to Prof. Bbaale, Prof. Wokadala

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In a vibrant ceremony brimming with nostalgia and optimism, College of Business and Management Sciences-Makerere University (CoBAMS) celebrated the transition of leadership from the accomplished hands of Prof. Eria Hisali and Prof. Bruno L. Yawe to the promising stewardship of Prof. Edward Bbaale and Prof. James Wokadala on Friday 31st May 2024.

The event, attended by esteemed members of the university community, including representatives from the Vice Chancellor’s office and members of the Central Management Team, was a testament to the collaborative spirit and dedication that have come to define CoBAMS. The outgoing Principal, Prof. Eria Hisali, and Deputy Principal, Prof. Bruno Yawe, were lauded for their eight years of service, during which they significantly advanced the college’s academic and infrastructural capabilities.

A Legacy of Excellence

Prof. Hisali’s farewell address highlighted the numerous achievements under his leadership. He proudly noted the establishment of strategic partnerships and collaborations that have greatly benefited the college. “Our MoU with Stellenbosch University provided full PhD scholarships for four Academic Staff Members, while our partnership with Wageningen University in the Netherlands supported PhD training for two Staff Members. Additionally, the Republic of Korea’s embassy in Uganda granted three PhD scholarships,” he remarked.

Assoc Prof. Bruno Yawe (Left) handing over to incoming Deputy Principal Dr. James Wokadala.

These collaborations extended to notable institutions such as ACCA, Prudential Uganda, Addis Ababa University, The University of Rwanda, Universidade Eduardo Mondlane, and the University of Dar es Salaam, reflecting CoBAMS’ commitment to internationalization and academic excellence. Prof. Hisali also mentioned the development of a Quality Assurance Framework and significant infrastructural proposals, including a new block pending government funding.

The outgoing Principal shared impressive statistics: a fivefold increase in publications from 30 in 2017 to 150 in 2023, expansion of wireless internet coverage to over 90% of the college, and a significant rise in PhD holders among the academic staff to 60%.

Prof. Yawe appreciated all the academic, administrative and support staff that supported his leadership throughout the 8 years of service.

Looking Ahead

Prof. Edward Bbaale, the incoming Principal, expressed his vision to elevate CoBAMS as a global leader in innovative teaching, research, and policy engagement. With over two decades at CoBAMS, including eight years as Dean of the School of Economics, he emphasized his commitment to continuing the progress made by his predecessors. He pledged to prioritize graduate training, faculty research, and the commercialization of innovations, alongside strategic financial initiatives such as the College Endowment Fund.

Prof. Eria Hisali receiving a token of appreciation from memebers of the Administrative Staff at MakCoBAMS.

Prof. James Wokadala, the new Deputy Principal, acknowledged the substantial achievements of the outgoing leaders and outlined his plans to build on their legacy. He aims to foster a supportive and engaging environment by establishing a gym for staff and creating a Savings and Credit Cooperative Organization (SACCO).

Heartfelt Farewells and New Beginnings

The ceremony featured heartfelt speeches from various stakeholders, celebrating the contributions of Prof. Hisali and Prof. Yawe. Dr. Susan Namirembe Kavuma, representing the academic staff, praised the outgoing leaders for their unwavering support and urged the new administration to continue fostering a conducive environment for teaching and learning. Ms. Caroline Nanono Jjingo, on behalf of the administrative staff, echoed these sentiments, appreciating the open and inspirational leadership style of Prof. Hisali and Prof. Yawe. “Throughout their tenure, they have resonated the words of Henry Ross Perot, who said that “Lead and inspire people. Don’t try to manage and manipulate people. Inventories can be managed but people must be led.”  She said.

Outgoing Principal Eria Hisali and outgoing Deputy Principal Bruno Yawe cut cake.

The Deputy University Secretary, Mr. Simon Kizito, provided sage advice to the incoming leaders, emphasizing the importance of openness to feedback, leading by example, and maintaining accountability. He reminded them that failure is an inevitable part of leadership and encouraged them to learn from it while prioritizing self-care.

On their part, the support staff appreciated the outgoing leadership for their open door policy and willingness to support all staff especially those experiencing life challenges. Quoting Ecclesiastes 3:1, Mr Joseph Ikarokot said there was a season for everything and staff were privileged to have worked with the duo.

A Promising Future

As the new leadership team embarks on their journey, they carry forward a legacy of excellence and a vision for a brighter future. With their extensive experience and commitment to innovation and collaboration, Prof. Bbaale and Prof. Wokadala are well-positioned to steer CoBAMS toward greater achievements and global recognition.

The ceremony concluded with a celebratory cake-cutting, gifts from the administrative staff, and a reaffirmation of the college’s enduring spirit of unity and progress. The new era at CoBAMS promises continued growth and success, building on the solid foundation laid by Prof. Hisali and Prof. Yawe.

Some of the staff memebers who were present at the handover ceremony.

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CoBAMS Annual Report 2023

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Professor Eria Hisali, Principal College of Business and Management Sciences (CoBAMS). Makerere University, Kampala Uganda.

The overall objective of our operations and strategy is to position the College as a relevant and sustainable institution of international standing with high caliber staff, an active presence in public policy research and formulation, and contribution to the community. This report highlights the main activities that have taken place over the year 2023 in fulfillment of the College’s objective.

Strategic initiatives

The College continued to pursue plans to expand and remodel its infrastructure facilities. The Feasibility Study for the proposed infrastructure expansion and remodeling project got approval of the Development Committee of the Government of Uganda in March 2023. A budget code for the project was assigned to the project shortly afterwards. Engagements are underway to secure funding for the project starting the 2024/2025 financial year.

The College also continued to strengthen its Endowment Fund. Fifty million shillings was added to the Fund over the course of the year and an exercise to reconcile the amount of money held on the Main Endowment Fund of the University was embarked on. We still await an opportunity for the formal launch of the Fund to pave the way for a more structured capital campaign.

Teaching and learning

The College took steps to strengthen its quality assurance framework. The College established a Quality Assurance Committee to oversee the quality of its operations across the Board. It also embarked in automation of workflow processes in the administrative and support functions. The College also continued to support student led discussion groups and engaged Graduate Fellows at each of its Departments.

Three thousand new students took up programs at the College in the course of the year while the College presented one thousand six hundred sixty eight candidates for graduation.

The CoBAMS Library continued to subscribe to The Economist & Harvard Business Review magazines – both the print & electronic versions. The Library also acquired 366 Titles and 395 copies of textbooks purchased and delivered from the Book Bank; and 26 titles & 41 copies of textbooks purchased by the College.

Brand visibility

The quality of programmes and staff are ranked highly. Students on the Master of Arts Degree in Economics emerged the best performing of the seven premier universities on the continent at the Joint Facility for Electives (JFE). This program is run on a collaborative arrangement where students take core courses at their universities for one academic year after which the elective courses are taught jointly. Staff from the College served as visiting lecturers and external examiners at other institutions. Staff from the college produced over 200 new publications and facilitated at various panel discussions and policy dialogues.

Collaborations, partnerships and grants

The College concluded a Memorandum of understanding with the Human Resource Management Association of Uganda (HRMAU), which aims to train prospective HR practitioners on professional conduct to bridge the gap between theory and practice.

The School of Economics collaborated with the University of Oxford to host the 2023 workshop on Economic Development in Africa. The four-day workshop brought together scholars across Africa, Europe, and North America. Thirty one frontier papers on Economic Development in Africa were presented cutting across, Trade, Health, Natural Resources and Environment, Political Economy, Poverty, Productivity, Fiscal & Monetary Policy, and Agriculture among others. Staff and graduate students had parallel training sessions on Survey Design and Data Collection for Gender Analysis (Lead by Cheryl Doss, Tufts University), Introduction to Structural Transformation and Growth (Lead by Douglas Gollin, University of Oxford and Tufts University, and Joe Kaboski, University of Notre Dame), and Randomised Control Trials (Lead by Clare Hofmeyr, J-PAL Africa). Faculty from the University of Tufts and the University of Notre Dame are exploring the possibility of teaming up with faculty at MakSOE to support Macroeconomics at the PhD level. This could extend to supervising PhD research within the space of structural transformation. The funding is likely to be from Structural Transformation and Economic Growth (STEG) of which the two persons I met are the principals behind STEG. The CSAE committed to partnering with MakSOE to offer demand-driven policy advice to GoU and to continue mentoring young faculty and graduate students who are keen to climb the research radar.

The College also collaborated with the United Nations Development Program (UNDP) Uganda to undertake consultations for 2023 Human Development Report.

The College also got additional exemptions from ACCA Global for the Bachelor of Commerce students. Going forward, students graduating with the Bachelor of Commerce Accounting Option will get nine of the 13 courses required for full ACCA qualification.

The College hosted a breakfast meeting with a section of government agencies to deliberate on areas of mutual interest. This has resulted in MoUs with the Uganda Manufacturer’s Association, the Uganda Revenue Authority and the Kampala Capital City Authority. These initiatives will create platforms through which the parties will among other things:

  • pursue joint research, publishing research findings, write background policy papers, and promote outreach to the relevant state and non-state actors;
  • collaborate on knowledge transfer & staff exchange programs to impart more practical skills on both parties;
  • organize and participate in joint activities such as seminars, workshops and conferences aimed at imparting practical skills, knowledge transfer and re-tooling; and,
  • collaborate on the review and development of the CoBAMS curriculum to reflect more practical/workplace content for students.

This was in addition to a number of outreach activities that were undertaken by various Centers housed at the College. The Entrepreneurship and Innovations Center for example equipped PDM beneficiaries in Makerere North and Katanga with a range of skills in the areas of bookkeeping, marketing, financial management, etc. The Public Investment Management Center has over the course of the year trained over 120 public officials in various aspects of public investment management ranging from ideation and conceptualization to the more advanced economic and financial analysis of public investment projects. The Environment for Development Center undertook seven outreach activities in different parts of the country and organized three policy dialogues on climate change and the environment. The School of Statistics and Planning also cohosted an international conference on “Aging and Health of Older Persons in Sub-Saharan Africa’ in February 2023.

Researchers at the College won six new institutional research grants, and one staff member developed a new academic concept, which is currently under the process of patenting and copyrighting at the Uganda Registration Services Bureau. The College is also leading the process of the PDM Policy Labs and there are ongoing discussions with the Office of the Prime Minister to convert recommendations of the studies into policy actions.

Human resources capacity development and strengthening

Seventeen Colleagues were promoted to various ranks in the University service in the course of the year 2023. The College provided seven (05) in-house capacity development programs for the support and administrative staff and an orientation of newly appointed staff. Fifteen academic staff members are currently pursing doctorate degrees. Seven staff members acquired PhD qualifications while ten were promoted to various ranks in the University Service. The College also received eight new staff in the course of the year.

Team building sessions were organized for the Schools of Economics and Business, but at which strategic direction of the schools was deliberated. The College leadership organized a retreat to deliberate on the strategic human resources and quality assurance issues as a basis for shaping the future of the College.

Financing

In as much as resources are insufficient and a number of facilities require improvement, all outstanding financial obligations were offset in a timely manner.

Conclusion

I want to thank all my colleagues at the College, and the Management and Council, and indeed all our stakeholders. These milestones have been only possible because of all of you. We look forward to maintaining an environment where we can continue to aim higher and do more together.

Eria Hisali (PhD)
PRINCIPAL

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Makerere signs MoU with Leading Universities in East Africa

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In a historic move aimed at revolutionizing postgraduate education and research across East Africa, Makerere University has signed a Memorandum of Understanding with five prominent universities. The agreement, formalized on May 24, 2024 brings together the University of Addis Ababa (AAU), the University of Rwanda (UR), Makerere University (Mak), Universidade Eduardo Mondlane (UEM), the University of Dar es Salaam (UDSM) and Jönköping University, Sweden.

The newly established collaboration seeks to address critical institutional constraints that have hindered the development of high-quality postgraduate programs. These constraints include a shortage of senior researchers and professors available for supervision, as well as limited funding for research. By pooling resources and expertise, the partnership aims to overcome these challenges and significantly improve the quality of postgraduate education and research output within the member institutions.

While signing the MoU on behalf of Makerere University, The Ag. Vice Chancellor, Prof. Umar
Kakumba emphasized the importance of leveraging collective strengths to enhance academic
excellence and research impact. He also expressed optimism that the collaboration will create
new opportunities for faculty and students to engage in cutting-edge research and contribute to addressing pressing societal challenges.

In Makerere University, the MoU will be implemented by the Departments of Policy and
Development Economics, School of Economics. The signing was witnessed by the Director of International Development Collaboration, at Jönköping University, Lars Hartvigson. He said his institution had been collaborating with the different universities and now sought to make this collaboration a joint venture between the six institutions.

Ag. Vice Chancellor, Prof. Umar Kakumba(3rd L) handing over the signed agreement to Dr. Susan Namirembe Kavuma, Head of Department -Policy and Development Economics. Extreme Left is Prof. Ibrahim Okumu Mike, the Dean of School of Economics.

Goals and Expected Outcomes

The overarching goal of this partnership is to enhance understanding of management and
economic sciences, equipping leaders in public and private sectors with the skills necessary to
drive national and regional growth and development. Specific objectives include:

  • Improving the quality of teaching and supervision in postgraduate programs.
  • Increasing research output among faculty members.
  • Enhancing the utilization of research findings by policymakers in both the public and private sectors.

To achieve these objectives, the partnership has outlined a series of activities, including:

  • Staff exchanges for teaching and supervision roles in postgraduate programs.
  • Student exchanges to participate in training offered by the member universities.
  • Joint research projects and publications.
  • Collaborative research dissemination through conferences and workshops.
  • External examination of PhD and master’s courses by faculty from partner institutions.
  • Capacity-building seminars for staff.
  • Development and delivery of customized short courses.
  • Information exchange on research opportunities and publications.
  • Joint grant proposal writing aligned with the partnership’s objectives.

A Unified Vision for Regional Development
Prof. Eria Hisali, the Principal Of the College of Business and Management Sciences, emphasized the significance of this partnership: “This MoU marks a pivotal moment for higher
education in East Africa. By leveraging our collective strengths, we aim to create a robust
educational framework that not only elevates academic standards but also fosters socio-economic development across the region.”
The partnership is poised to create a dynamic and integrated educational ecosystem, promoting excellence in research and higher education. As the universities embark on this collaborative journey, they set a precedent for regional cooperation and intellectual advancement, ultimately contributing to the broader goals of national and regional development.

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