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Study Reveals Taxation Issues in Uganda’s Informal Economy

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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.

Dr. Kintu the PI of the research project. Lack of a structured taxation framework for informal businesses - a significant cause of tax non-compliance among traders in Uganda. Underlying factors contributing to the shadow economy and its implications for the national tax system, a collaborative research project involving eight university scholars. Dissemination workshop by Principal Investigator Dr. Ismail Kintu and others, 25th April 2024, Nansana Municipality Council, Wakiso District, Uganda. East Africa.
Dr. Kintu the PI of the research project.

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.

Mr Festo Tandeka, the Town Clerk of Nansana Municipality. Lack of a structured taxation framework for informal businesses - a significant cause of tax non-compliance among traders in Uganda. Underlying factors contributing to the shadow economy and its implications for the national tax system, a collaborative research project involving eight university scholars. Dissemination workshop by Principal Investigator Dr. Ismail Kintu and others, 25th April 2024, Nansana Municipality Council, Wakiso District, Uganda. East Africa.
Mr Festo Tandeka, the Town Clerk of Nansana Municipality.

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.

Betty Kyakuwa
Betty Kyakuwa

Business & Management

PIM CoE Magazine Issue 1: Jul-Dec 2024

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Cover page of the Public Investment Management Center of Excellence (PIM CoE) Magazine Issue 1: July - December 2024. College of Business and Management Sciences (CoBAMS), Makerere University, Kampala Uganda, East Africa.

The Public Investment Management Center of Excellence (PIM CoE) was conceived as a result of the 2016 PIM Diagnostic study done by the World Bank and Ministry of Finance Planning and Economic Development with support from Makerere University School of Economics that discovered inefficiencies in PIM in Uganda.

This report highlights the work, achievements and prospects of the Center. The Center plans to start offering Advanced level training through Post Graduate Diploma (PGD) in PIM and Master of Science in Economic and Investment Modelling (MEIM). I am pleased to introduce this report to the public for use by all stakeholders.

I would like to appreciate PIM CoE Secretariat, partners, staff and well-wishers for technical support, daily running of the Center and their role in the realization of these achievements.

Special thanks go to Ministry of Finance, Planning and Economic Development, National Planning Authority, Cambridge Resources International (CRI) and Makerere University for the overwhelming support rendered towards the development of the Center.

Prof. Edward Bbaale
Principal & Principal Investigator, CoBAMS/PIM CoE

Betty Kyakuwa
Betty Kyakuwa

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Somali Officials Complete Executive Training in Infrastructure Asset Management at CoBAMS

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Prof. Edward Bbaale (Seated 2nd Left) with training facilitators and the six Somali Government officials pose for a group photo. Six Somali government officials three-day Executive Training in Infrastructure Asset Management, held at Public Investment Management Centre of Excellence (PIM CoE), College of Business and Management Sciences (CoBAMS), funded by the United Nations Capital Development Fund (UNCDF), 27th-29th January 2025, aimed to enhance regional capacity in infrastructure planning and management, Yusuf Lule Central Teaching, Makerere University, Kampala Uganda, East Africa.

Six Somali government officials have successfully completed a three-day Executive Training in Infrastructure Asset Management, held at Makerere University’s Public Investment Management Centre of Excellence (PIM CoE). The training, funded by the United Nations Capital Development Fund (UNCDF), took place from January 27 to 29, 2025, and aimed to enhance regional capacity in infrastructure planning and management.

The training brought together senior civil servants and policymakers from Somalia, equipping them with practical knowledge and strategies for sustainable infrastructure asset management. It also fostered valuable cross-border collaboration, facilitated by UNCDF Uganda, which played a crucial role in connecting Makerere University with the Government of Somalia.

Left to Right: Prof. Edward Bbaale, PIM CoE Manager-Dr. John Sseruyange and some of the officials follow proceedings. Six Somali government officials three-day Executive Training in Infrastructure Asset Management, held at Public Investment Management Centre of Excellence (PIM CoE), College of Business and Management Sciences (CoBAMS), funded by the United Nations Capital Development Fund (UNCDF), 27th-29th January 2025, aimed to enhance regional capacity in infrastructure planning and management, Yusuf Lule Central Teaching, Makerere University, Kampala Uganda, East Africa.

The program was delivered by experienced faculty from Makerere University’s College of Business and Management Sciences (CoBAMS), alongside experts from the Ministry of Finance, Planning and Economic Development (MoFPED) and the Uganda National Roads Authority (UNRA). A special session was also led by the Makerere University Bursar, offering practical insights into financial management in infrastructure projects.

Speaking at the opening of the training, Mr. Ncube Mkhululi, the Regional Technical Advisor for UNCDF emphasized the importance of infrastructure asset management in driving sustainable economic growth. He highlighted UNCDF’s commitment to supporting capacity-building initiatives in developing economies, noting that effective infrastructure planning and management are critical to national development. He also expressed confidence in Makerere University’s expertise in delivering high-impact executive training programs for government officials.

Principal CoBAMS-Prof. Edward Bbaale (Right) presents a certificate to one of the officials. Six Somali government officials three-day Executive Training in Infrastructure Asset Management, held at Public Investment Management Centre of Excellence (PIM CoE), College of Business and Management Sciences (CoBAMS), funded by the United Nations Capital Development Fund (UNCDF), 27th-29th January 2025, aimed to enhance regional capacity in infrastructure planning and management, Yusuf Lule Central Teaching, Makerere University, Kampala Uganda, East Africa.

During the closing ceremony, Prof. Bbaale Edward, the Principal of the College of Business and Management Sciences expressed gratitude to all partners, including UNCDF, Makerere University management, and the PIM CoE faculty, for their commitment to making the training a success. He emphasized Makerere University’s ongoing efforts to internationalize its research-led agenda, positioning itself as a hub for regional knowledge exchange.

UNCDF Program Manager, Mr. Joel Mundua, the commended the participants for their dedication and encouraged them to share the acquired knowledge with fellow officials in Somalia. This was reaffirmed by one of the participants, who pledged to apply and disseminate the learnings within their respective departments.

UNCDF Program Manager0Mr. Joel Mundua (Left) and UNCDF Program Officer-Mr. Sunday Denis Aliti (Right). Six Somali government officials three-day Executive Training in Infrastructure Asset Management, held at Public Investment Management Centre of Excellence (PIM CoE), College of Business and Management Sciences (CoBAMS), funded by the United Nations Capital Development Fund (UNCDF), 27th-29th January 2025, aimed to enhance regional capacity in infrastructure planning and management, Yusuf Lule Central Teaching, Makerere University, Kampala Uganda, East Africa.

Mr. Sunday Denis Aliti, the Program Officer at UNCDF highlighted the importance of ensuring that infrastructure asset management strategies are practical, adaptable, and aligned with national development goals. He commended Makerere University for its leadership in knowledge transfer and regional training and encouraged continued collaboration between universities, governments, and international development partners to strengthen institutional capacity.

Dr. John Sseruyange, Manager of the PIM CoE, applauded both the participants and the expert trainers who contributed to the program. He reiterated the Centre’s commitment to advancing infrastructure asset management through continued training and collaboration with regional stakeholders.

As the training concluded, participants departed with valuable insights and practical tools to improve infrastructure management in Somalia and beyond. The success of this initiative highlights Makerere University’s role as a leading institution in public investment management, fostering capacity-building efforts that drive sustainable development across Africa.

Betty Kyakuwa
Betty Kyakuwa

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Staff of School of Statistics undertake training in Data Science

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Dr. Margaret Banga (2nd Row Right) with participants and facilitators at the kick-off of the training. Statistics and Data Science (SDS) Working Group training to build capacity in Artificial Intelligence (AI) and Machine Learning (ML) among its members kick off Monday, 20th January 2025 facilitated by experts from Uganda Revenue Authority (URA), Housing Finance Bank, and the School of Statistics and Planning (SSP), Makerere University, Kampala Uganda, East Africa and will run until 24th January 2025. Participants are being equipped with a wide range of skills, covering topics such as text mining, unsupervised learning, neural networks, Geographic Information Systems (GIS), and more.

The Statistics and Data Science (SDS) Working Group training kicked off on Monday, 20th January 2025, and will run until 24th January 2025. This training, an initiative by the college, aims to build capacity in Artificial Intelligence (AI) and Machine Learning (ML) among its members.

Participants are being equipped with a wide range of skills, covering topics such as text mining, unsupervised learning, neural networks, Geographic Information Systems (GIS), and more. The training is facilitated by expert data scientists from the Uganda Revenue Authority (URA), Housing Finance Bank, and the School of Statistics and Planning (SSP).

The SDS Working Group comprises academic staff at the School of Statistics and Planning (SSP) whose research interests focus on statistical learning and AI.

Some of the participants follow proceedings. Statistics and Data Science (SDS) Working Group training to build capacity in Artificial Intelligence (AI) and Machine Learning (ML) among its members kick off Monday, 20th January 2025 facilitated by experts from Uganda Revenue Authority (URA), Housing Finance Bank, and the School of Statistics and Planning (SSP), Makerere University, Kampala Uganda, East Africa and will run until 24th January 2025. Participants are being equipped with a wide range of skills, covering topics such as text mining, unsupervised learning, neural networks, Geographic Information Systems (GIS), and more.

On January 21, 2025, Mr. Kiyingi Simon Peter and Mr. Tusubira Brian from URA led an engaging session on the practical applications of machine learning algorithms in day-to-day activities. They demonstrated how components fed into ML models are used to classify taxpayers into high-risk and low-risk categories, showcasing the transformative potential of AI in optimizing operations.

Dr. Margaret Banga, the Dean of the School of Statistics and Planning (SSP), emphasized the transformative impact of the training on both the academic and professional development of the participants. She commended the expert trainers from the Uganda Revenue Authority (URA) and other partnering institutions for their practical and insightful contributions to the sessions. Dr. Banga noted that the training is a significant step toward enhancing the teaching methodologies and research capabilities of the faculty. “By equipping our staff with advanced skills in Artificial Intelligence and Machine Learning, we are empowering them to deliver cutting-edge knowledge to our students and conduct impactful research that addresses real-world challenges,” she remarked.

Dr. Margaret Banga (2nd L) with participants. Statistics and Data Science (SDS) Working Group training to build capacity in Artificial Intelligence (AI) and Machine Learning (ML) among its members kick off Monday, 20th January 2025 facilitated by experts from Uganda Revenue Authority (URA), Housing Finance Bank, and the School of Statistics and Planning (SSP), Makerere University, Kampala Uganda, East Africa and will run until 24th January 2025. Participants are being equipped with a wide range of skills, covering topics such as text mining, unsupervised learning, neural networks, Geographic Information Systems (GIS), and more.

The training is a testament to the SSP’s forward-thinking approach to education and research in statistics and data science. The integration of topics such as neural networks, text mining, and Geographic Information Systems (GIS) underscores the need for multidisciplinary expertise in an increasingly data-driven world. Dr. Banga highlighted that this capacity-building effort aligns with the college’s strategic objectives of fostering innovation and staying ahead in the rapidly evolving fields of data science and statistical learning.

The Dean further stressed the importance of partnerships with organizations like the Uganda Revenue Authority and Housing Finance Bank, which provide invaluable industry perspectives. These collaborations ensure that academic training is not only theoretical but also applicable to practical challenges in sectors such as taxation, finance, and public administration.

In conclusion, Dr. Banga reaffirmed her commitment to continuous learning and development within the School of Statistics and Planning. She expressed confidence that the knowledge gained through the training would translate into improved academic delivery, enriched research output, and a stronger contribution to societal and economic transformation through the application of advanced data science methodologies.

Betty Kyakuwa
Betty Kyakuwa

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