Business & Management
Study Reveals Taxation Issues in Uganda’s Informal Economy
A recent study by researchers at Makerere University’s College of Business and Management Sciences has identified the lack of a structured taxation framework for informal businesses as a significant cause of tax non-compliance among traders in Uganda. This revelation came from a collaborative research project involving eight university scholars, who examined the underlying factors contributing to the shadow economy and its implications for the national tax system.
The findings were presented by Dr. Ismail Kintu, the study’s Principal Investigator, at a dissemination workshop held in Nansana Municipality Council, Wakiso District, on Thursday. The research, initiated in 2022, aimed to assess traders’ perceptions of fairness within the taxation system and how this relates to voluntary tax compliance.
“Traders said the system is unfair to them,” Dr. Kintu explained during the workshop. “Our research aimed to understand what fairness means in Uganda’s context.” According to the study, fairness in the tax system is crucial for voluntary compliance, suggesting that taxes should be aligned with one’s revenue, and penalties should be applied equitably.
The researchers developed a proposed framework for taxing the informal economy, emphasizing the importance of consulting key stakeholders, such as district commercial officers, tax consultants, and leaders from traders’ associations, before implementing tax policies. The framework recommends engaging these stakeholders in meetings with the Uganda Revenue Authority (URA) and the Ministry of Finance to ensure that new tax policies are inclusive and fair.
The study also suggests the need for flexibility in tax collection, advocating for payment in installments and prior notification to traders before collecting taxes. This approach, the researchers argue, would help build trust and encourage compliance among informal traders.
The researchers’ proposed framework includes annual mapping of policy gaps in the informal economy and developing solutions to address them. This process would involve regular consultations with stakeholders to refine the tax system and maintain fairness.
Local officials who attended the workshop expressed support for the research findings. Mr. Festo Tandeka, Nansana Municipality town clerk, encouraged traders to cultivate a culture of paying taxes but cautioned against excessive taxation. He recommended allowing tax payments in installments to avoid overburdening traders.
Similarly, Mr. Shaffic Ali Nsubuga, Nansana Municipality Deputy Resident District Commissioner, urged tax officers to approach tax collection with compassion, suggesting that prior notices be given to traders before taxes are collected.
The findings of the Makerere University study arrive at a critical time, as Ugandan traders have recently protested against increasing taxes. Mr. Joshua Mawerere, a youth representative from the Kampala City Traders Association, welcomed the study, noting that it brings clarity to issues surrounding tax policies. He urged the government to raise awareness about new tax systems, like the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), which some traders mistakenly perceive as additional taxes.
The study’s comprehensive approach to understanding the informal economy’s taxation challenges may pave the way for a more inclusive and equitable tax system in Uganda, fostering greater compliance and reducing the size of the shadow economy.
The research was funded by the government of Uganda through the Makerere University Research and Innovations Fund (Mak-RIF). Speaking at the stakeholders’ engagement on April 25th, Ms Evelyn Nyacho who represented the chair of the grants committee, congratulated Dr. Kintu and team upon the timely research finding. She said the findings would help URA and the traders coming after a traders’ strike over taxation. She said Mak-RIF was happy to sponsor research that is aimed at solving society issues like taxation. “I was happy to learn that taxes can be pay in installments. I hope traders can embrace this flexibility in paying taxes,” she said. She appreciated government for the research funding to the university. The government commits Shs30 billion annually to research at Makerere University in an effort to spur development of the country.
The research team
Dr Kintu (PI), Prof Eria Hisali (Co. PI), Dr Fred Bateganya, Dr Willy Kagarura, Mr Patrick Lumala, Mr Nicholas Musoke, Ms Marion Atukunda, and Ms Winfred Nalwoga.
The Vice Chancellor of Makerere University, Prof. Barnabas Nawangwe, has officially opened a one-week training for Ministry of Kampala Capital City and Metropolitan Affairs (MoKCC&MA) officials on Integrating and Managing Environmental, Social, Health and Safety (ESHS) Safeguards in Procurement.
The training, conducted by the Public Investment Management (PIM) Centre of Excellence, is funded by the World Bank and brings together officials from KCCA, metropolitan and municipal authorities under the Greater Kampala Metropolitan Area (GKMA) programme, alongside officials from central government ministries and agencies.
Opening the training, Prof. Nawangwe emphasized that safeguarding is a critical pillar of sustainable development and accountable public service delivery.
“If we get things wrong in Kampala, we affect the entire country. Everything done in this city must be well planned, socially responsible, and environmentally sound,” Prof. Nawangwe said.
Drawing from his professional background as an architect, the Vice Chancellor underscored the importance of environmental, social, and safety safeguards, noting that failure to address these issues at planning and procurement stages can lead to loss of life, stalled projects, and massive financial waste. He cited international examples where projects were halted or countries faced global pressure due to neglect of environmental and social considerations.
Prof. Nawangwe commended the World Bank for its continued partnership with Makerere University, particularly in supporting the establishment and growth of the PIM Centre of Excellence, which he described as one of the University’s flagship initiatives with visible national impact.
“I see the work of the PIM Centre in government processes, in reports, and even in Development Committee meetings. That is real impact,” he noted, adding that strengthening in-country capacity through Makerere reduces reliance on costly external consultants.
He reaffirmed Makerere University’s commitment to supporting government through research, training, and policy-relevant knowledge, stressing that continuous professional development is essential in a rapidly changing world.
The Under Secretary, Ministry of Kampala Capital City and Metropolitan Affairs, Ms. Monica Edemachu Ejua, welcomed the training, describing it as timely and necessary given the challenges faced during project implementation, particularly in road construction.
Ms. Ejua, revealed that the training was informed by real and painful experiences, including fatal accidents on construction sites, some of which could have been avoided with stronger environmental and social safeguards.
“Environmental, social, and health and safety issues must never be downplayed. These considerations must begin at procurement planning, not at implementation,” she said.
She highlighted that procurement officers, engineers, planners, accountants, and administrators must all understand safeguards, noting that infrastructure development is inherently multidisciplinary.
“Development must be a blessing to communities—not a burden,” she added.
Ms. Ejua praised Makerere University for hosting the training and the World Bank for supporting government efforts to build institutional capacity, adding that learning does not end at graduation.
World Bank: Strong Country Systems Are Key to Development Impact
Presenting on behalf of the World Bank, Ms. Christine Kasedde, a Senior Environmental Specialist, explained that the training is part of a broader effort to strengthen country systems for managing environmental and social risks in development projects.
She noted that while the World Bank has committed over USD 4 billion to projects in Uganda, weak safeguards and capacity constraints have affected implementation and disbursement.
“Environmental and social safeguards are legally binding commitments. When they are not addressed properly, issues escalate to the highest levels of government,” Ms. Kasedde explained.
She outlined how the collaboration with Makerere University has led to the development of several short professional courses across CoBAMS, the College of Agricultural and Environmental Sciences (CAES), and the College of Humanities and Social Sciences (CHUSS). These courses address gaps in social risk management, environmental sustainability, health and safety, climate risk, and procurement.
Ms. Kasedde also revealed that the partnership has culminated in the establishment of an Environmental and Social Sustainability Centre at Makerere University, which will serve as a hub for training, research, advisory services, and independent assessments.
Procurement as a Tool for Sustainable Development
Representing the Public Procurement and Disposal of Public Assets Authority (PPDA), Ms. Mercy Kyoshabire, Director for Procurement and Disposal Capacity Building, emphasized that public procurement accounts for over 60 percent of government expenditure and must therefore be leveraged as a tool for sustainable development.
She reminded participants that environmental, health, and social safeguards have been embedded in standard bidding documents since 2019, urging procurement professionals to integrate sustainability throughout the procurement cycle.
“Sustainability is about the three Ps—People, Profit, and Planet. Procurement decisions made today should not compromise future generations,” she said.
Ms. Kyoshabire reaffirmed PPDA’s commitment to collaboration and capacity building, particularly with centres of excellence such as Makerere University.
A Model of Interdisciplinary Collaboration
The training also drew strong support from the Principal of CAES, represented by Dr. Patrick Byakagaba and, Principal CHUSS, Prof. Helen Nkabala, who emphasized Makerere University’s shift away from siloed approaches toward interdisciplinary collaboration in addressing national development challenges.
Prof. Edward Bbaale, Principal Investigator of the PIM Centre of Excellence, noted that the training responds to critical gaps identified at the pre-investment and procurement stages of public projects, particularly as Uganda pursues an ambitious growth agenda amid climate and social risks. Dr. John Sseruyange, the manager of PIM Centre of Excellence said, the week-long training is expected to strengthen the capacity of KCCA and GKMA implementing entities to integrate and manage environmental, social, health, and safety safeguards across the procurement and project implementation cycle, ultimately improving service delivery and protecting communities.
Business & Management
Building Skills for Better Public Investments: PIM Centre Trains Public Sector Economists
Away from the bustle of the city, in the calm setting of Mbarara, over 30 public service economists have gathered with a shared purpose: to strengthen the skills that shape how public resources are invested and how national development priorities are realised.
The two-week executive training on Economic Appraisal and Stakeholder Analysis, organised by the Public Investment Management (PIM) Centre of Excellence at Makerere University, officially commenced this week, bringing together public officers from across government, academia, state agencies, and civil society. At its core, the programme seeks to answer a fundamental question—how can Uganda ensure that every shilling invested in public projects delivers maximum economic and social value?
The training draws expertise from Makerere University, Cambridge Resources International (CRI), the Ministry of Finance, Planning and Economic Development (MoFPED), and the National Planning Authority (NPA), reflecting a strong partnership between academia, policy makers, and development practitioners. Participants represent a wide cross-section of institutions, including the Ministry of Internal Affairs, Uganda Tourism Board, MoFPED, Kiira Municipality, Wakiso Local Government, Kyambogo University, Makerere University, UEDCL, UNCST, UDC, the Uganda Police Force, Parliament of Uganda, and several civil society organisations.
Opening the programme on behalf of the Permanent Secretary and Secretary to the Treasury, Commissioner PAP, Ms. Gertrude Basiima, explained that the choice of venue was intentional. Holding the training away from the city, she noted, allows participants to concentrate fully and engage more deeply with the intensive content. Previous trainings held in similar settings, she added, had yielded positive results.
Ms. Basiima highlighted that the training is part of a long-standing strategic partnership between the Ministry of Finance and the PIM Centre of Excellence at Makerere University, housed in the School of Economics. Established in 2016, the collaboration was informed by diagnostic assessments that revealed persistent gaps in Uganda’s public investment management system—particularly in project identification, appraisal, selection, and implementation.
“These gaps are not merely technical,” she observed. “They determine whether public investments truly transform communities or fall short of their promise.”
The training builds on earlier modules in financial appraisal, equipping participants with advanced competencies in economic appraisal and stakeholder analysis. Through practical case studies and hands-on exercises, participants will explore demand forecasting, economic pricing, and sector-specific appraisal techniques applicable to energy, water, transport, and agriculture. By the end of the programme, participants are expected to competently conduct cost-benefit analyses and assess whether proposed projects merit inclusion in the national budget.
Ms. Basiima emphasised that while many feasibility studies are prepared by consultants, public officers must be able to interrogate, quality-assure, and defend these studies before decision-making bodies such as the Development Committee. The training, she said, is designed to position participants to do exactly that.
For Prof. Edward Bbaale, Director of the PIM Centre of Excellence, the training comes at a critical moment in Uganda’s development journey. With the country implementing ambitious programmes under the National Development Plan IV and the Ten-Fold Growth Strategy, public investment has become a central driver of socio-economic transformation.
Across the country, Uganda is investing heavily in transport infrastructure, energy generation and transmission, irrigation systems to respond to climate change, industrial parks, digital infrastructure, education, and health facilities. Yet, as Prof. Bbaale cautioned, the success of these investments depends less on the volume of funding mobilised and more on the quality of project preparation and appraisal.
“Economic appraisal must be seen not as a box-ticking exercise, but as a strategic tool for national transformation,” he said. “It enables government to prioritise projects with the highest economic and social returns, minimise fiscal risks, and ensure value for money.”
Prof. Bbaale also underscored the strength of the multi-institutional partnership supporting the programme, noting that it blends global best practices with Uganda’s policy realities. At the conclusion of the training, participants will receive a tripartite certificate jointly issued by Makerere University, the Ministry of Finance, and Queen’s University, recognising their enhanced expertise in public investment management.
For the Manager of the PIM Centre of Excellence, Dr. John Sseruyange, the training is as much about mindset as it is about technical skills. He encouraged participants to remain disciplined, engage fully, and build professional networks that will endure long after the two weeks in Mbarara.
“The skills you gain here will not only strengthen you as individuals,” he noted, “but will directly influence the quality of public investment decisions made across Uganda.”
As the sessions unfold over the next two weeks, the training stands as a testament to Makerere University’s enduring contribution to national development—building capacity, shaping policy, and preparing public servants to make decisions that drive sustainable growth, economic resilience, and shared prosperity for all Ugandans.
Beyond training, the PIM Centre of Excellence continues to play a broader national role through research and policy advisory services. The Centre has supported the review of Development Committee guidelines and convened national dialogue through its annual Public Investment Management Conference, including last year’s conference themed “Overcoming Implementation Barriers in Public Investment Management for Fiscal Sustainability.”
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