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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.

Article by Public Relations Office

Business & Management

Business owners trained on social media usage in business operations by Makerere University Researchers

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Dr. Kasimu Sendawula (L) shakes hands with one of the officials after the research dissemination workshop at St. Joseph’s Inn Virika-Fort Portal on 29th September 2022.

On Thursday 29th September 2022, happened a research dissemination workshop at St. Joseph’s Inn Virika-Fort Portal that presented a policy debrief on social media technology as a feasible strategy in catalyzing Sustainable growth of small businesses in Uganda. A case study of Mbale and Fort portal by Makerere University’s Business Management expert and Lecturer Dr. Kasimu Sendawula.

The research project themed “Strengthening the Social Media Competencies of Business Owner Managers for Sustainable Growth of Small Businesses in Uganda” objected at equipping business owner-managers with social media competencies that are relevant in boosting productivity, marketing and promoting business operations for sustainable growth.

The project team first conducted a needs assessment before training where it was revealed that 195 (92%) of the business owner-managers in Fort Portal and Mbale had never obtained training on social media usage. The research team engaged the project participants in a hands-on social media training and eventually social media platforms were integrated into the functionality of their businesses.

Uganda being the most entrepreneurial country in the world, it is unfortunate that 64% of businesses started do not live to see their first birthday and those that do, 30% collapse before their 3rd anniversary, this all has been made worse by the covid 19 pandemic.

This research further revealed that 85% of the participants demonstrated readiness to use social media in the operations of their business and 77% of Business owner-managers have smartphones. On the other hand, 87% of participants were concerned that social media platforms may make it easy for Governments to spy on their businesses hence Privacy and Security threats.

Dr. Kasimu Sendawula the project Principal Investigator reported that after engaging the Business owner-managers in a hands on training; they appreciated social media and opened up social media platforms, channels, and pages that were suitable for their businesses and that the project team used the training materials to develop social media digital training modules that can be adopted by institutions of higher learning to equip nascent entrepreneurs with social media competencies relevant for sustainable business growth.

Dr. Mercy Amayo the Representative of the Grants Management Committee (GMC), Makerere University Research and Innovations Fund applauded the project team for the job well done and also congratulated them upon winning such a prestigious grant.

Mr. Ssekyondwa Augustine a Business Process Analyst and National Information Technology Authority Uganda Directorate of E-Government Services added his voice to appreciate and congratulate the research team on doing such an impactful study. He encouraged the trained business owners to exercise their marketing goals in respect to computer ethics and patent rights of businesses to avoid falling culprits of plagiarism and offensive communication.

The research recommends that government of Uganda amends the current social media guide by integrating issues concerning social media usage by the business community as it will guide business owner-managers on the requirements and guidelines for social media usage, potential risks, security, transparency and the legal considerations of using social media in business operations, for small businesses will trust social media platforms and fully utilize them with a goal of fostering sustainable business growth in Uganda.

Further recommendations highlight that government integrates social media technology training in the skilling Uganda program to enable nascent entrepreneurs to acquire competencies needed to successfully integrate social media technology into the functionality of their startups for sustainable growth.

The Ministry of Education and Sports should encourage academic institutions to adopt the social media training modules developed from this project to equip learners with practical soft and technical social media skills to enable future entrepreneurs to acquire competencies relevant in launching social media platforms, selling and marketing online.

This study was spearheaded by Dr. Sendawula Kasimu, Professor. Peter Turyakira, Professor Grace Kibanja, Dr. Saadat Kimuli Nakyejwe, Ms. Najjinda Shamirah, Mr. Ashiraf Mutagubya, Mr. Muhsin Mutagubya and Ms. Betty Tuhaise: funded by the Government of Uganda through Makerere University Research and Innovations Fund (Mak-RiF).

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MBA Shortlist for Graduate Admission Test (GAT) 2022/2023

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An aerial photo of L-R: The Main Library, Central Teaching Facility 2 (CTF2), School of Economics and School of Business (CoBAMS), Makerere University, Kampala Uganda.

The Academic Registrar, Makerere University, invites all shortlisted candidates who applied for the Master of Business Administration (MBA) programme offered at Makerere University Main Campus; College of Business and Management Sciences (CoBAMS) for academic year 2022/2023 for a Graduate Admission Test (GAT).

The test is scheduled to take place on Saturday 27th August, 2022 starting 9:00 AM at CoBAMS.

Further information can be accessed by following the link:

Shortlist for Graduate Admission Test (GAT) 2022/2023

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Hon. Baryomunsi Launches Book with Pledge to continue Supporting Research

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Hon. Chris Baryomunsi signs a dummy of the Book "Academics, Research and Leadership in Institutions of Higher Learning: Experiences from Makerere University" signifying its launch on 29th July 2022.

The Minister for ICT and National Guidance, the Hon. Chris Baryomunsi today July 29, 2022, launched a book authored by 20 researchers of Makerere University.

The book titled “Academics, Research and Leadership in Institutions of Higher Learning: Experiences from Makerere University” details the research and training experiences of some academic units in Makerere University. The programs analyzed in the book include training of statisticians, population scientists, quantitative economists among others. The book documents past, present and emerging issues in training and research in the above fields. The book, according to Prof. Ben Kiregyera who gave the keynote address, makes the case for strengthening the infrastructure for training and research including technical and administrative leadership. The book also looks at the acquisition of new knowledge, strategic skills and competences in different disciplines to meet the 21st century development and data challenges.

Hon. Chris Baryomunsi challenged researchers to engage in new research areas such as robotics, nano-technology, big data, Internet of Things and integrate them in our day to day lives.
Hon. Chris Baryomunsi challenged researchers to engage in new research areas such as robotics, nano-technology, big data, Internet of Things and integrate them in our day to day lives.

Hon. Chris Baryomunsi, also a former lecturer in the department of population studies said the government would continue to support research and innovation because they drive development of the economy. “What we need to do better is engage policy makers in our research processes,” Dr. Baryomunsi advised. “Your research needs to inform government but you also have a role of simplifying statistics to the public”. He challenged researchers to engage in new research areas such as robotics, nano-technology, big data, Internet of Things and integrate them in our day to day lives.

Prof. Henry Alinaitwe, the Deputy Vice Chancellor in charge of Finance and Administration, who represented the Vice Chancellor, applauded the authors of the book, saying they are greatly contributing to the research agenda of the university. He said the book will go a long way in informing decision making in the university, as the university moves into becoming a research led university.

Prof. Henry Alinaitwe delivers the remarks on behalf of the Vice Chancellor, Prof. Barnabas Nawangwe.
Prof. Henry Alinaitwe delivers the remarks on behalf of the Vice Chancellor, Prof. Barnabas Nawangwe.

The Principal of the College of Business and Management Science, Prof. Eria Hisali, who was represented by the Deputy Principal Prof. Bruno Yawe, congratulated the authors and editorsfor a job well done. “This is yet another reminder that a lot can be achieved when we are determined and when we choose to work closely together,” the Principal said.

The Principal told the authors, most of whom were drawn from CoBAMS that the college will be launching a special purpose vehicle for policy engagements called the Policy Labs. This will bring together policy makers, implementers, private sector actors, development partners and the academia to engage on topical policy issues. It will enable researchers to share the recommendations with a wider audience of policy makers and implementers.

Prof. Buyinza Mukadasi (2nd L), Prof. Eria Hisali (R) and other officials at the Book Launch.
Prof. Buyinza Mukadasi (2nd L), Prof. Eria Hisali (R) and other officials at the Book Launch.

The Director of Research and Graduate Training, Prof. Buyinza Mukadasi also congratulated the authors and reemphasized the university’s commitment to supporting research geared at finding home grown solutions to society challenges.

The coordinators of the book project, Prof. Abel Nzabona, shared with the audience the 5-year journey of writing the book.

The journey started in June 2018 when Prof. Ronald Wesonga (in the company of Dr. Fred Maniragaba) mentioned that he had a book idea and wanted Prof. Nzabona to coordinate the writing process. Prof Ronald Wesonga’s idea of the book was an academic document that was researched, evidence-based, informative, marketable and interesting to read. The team then set out on a journey or writing, vetting, peer-reviewing and manuscript writing, identifying editors and publishers. 

Part of the audience at the Book Launch.
Part of the audience at the Book Launch.

“We started off with just 4 chapters but never gave up. We intensified the popularization of the book idea and eventually reached the 15-chapter mark,” Prof. Nzabona said. The team was delighted to have been joined by colleagues from the College of Education and External Studies namely Dr David Onen and Prof. Fred Bakkabulindi.

The vision bearer and funder of the publication, Prof. Ronald Wesonga, in his remarks highlighted the objectives of the book which included:

  1. To Share evidence-based, data-driven experiences pertaining academics and research leadership at Makerere University.
  2. To Infer how leadership shapes academics and research outputs at universities
  3. To Provide viable recommendations based on findings from different studies
  4. To Contribute to the Mak@100 celebrations

The book Prof. Wesonga shared addresses the following research questions:

  1. What is the effect of leadership on excellence in academics? Addressed in seven chapters: {4,5,6,7,9,10,12}
  2. What is the effect of leadership on research outputs? Addressed in six chapters: {2,3,8,11,13,14}
One of the Book Authors, Dr. Anthony Tibaingana.
One of the Book Authors, Dr. Anthony Tibaingana.

The book employed the following methodology:

  1. Teamwork and networking
  2. Primary and secondary data sources
  3. Literature Search
  4. Mixed Methods
  5. Descriptive and Inferential Approaches
  6. Quality Standardization and Flow (Abstract, KW, Introduction, Methods, Results, Discussion, Conclusion & Recommendations)

According to Prof. Wesonga, the book’s unique attributes include:

  1. First ever in the history of Mak to demonstrate impeccable teamwork and network with 20 contributing authors
  2. Pioneering book in Mak history that focuses on leadership audit
  3. Proven data-driven scientific approach
  4. Baseline for various monographs, yet to come soon
  5. First book to be internationally demanded before its launch
Hon. Chris Baryomunsi (5th R) poses with officials and some of the authors at the Book Launch on 29th July 2022, Yusuf Lule Central Teaching Facility Auditorium, Makerere University.
Hon. Chris Baryomunsi (5th R) poses with officials and some of the authors at the Book Launch on 29th July 2022, Yusuf Lule Central Teaching Facility Auditorium, Makerere University.

THE AUTHORS

  1. Anthony Tibaingana
  2. Abraham Y. Owino
  3. Mwanga Yeko
  4. Fred Maniragaba
  5. Ronald Wesonga
  6. John Mushomi Atwebembeire
  7. Abel Nzabona
  8. John Paul Tugume
  9. Christian Kakuba
  10. Charles Lwanga
  11. Ishmael Kalule-Sabiti
  12. James Ntozi
  13. Edward Musoke
  14. Richard Tuyiragize
  15. Fabian Nabugoomu
  16. John Bosco Asiimwe
  17. Yeko Mwanga
  18. Paulino Ariho
  19. Fred Edward K. Bakkabulindi
  20. David Onen

EDITORS:

  1. Fredrick Ruguma Tumwine
  2. Fred E. K. Bakkabulindi
  3. James Ntozi

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