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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.

Business & Management

CoBAMS Faculty to Support Uganda’s First Digital Census 2024

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Dr. Kabagenyi Allen (UBOS - BOD) meeting with Mubende District Executive Committee led by the District Chairperson. Census 2024, Uganda, East Africa.

In a significant leap toward harnessing technology for national planning and development, Uganda is set to conduct a landmark digital census starting with 9th May 2024 as the Census reference night and the enumeration period scheduled for 10th-19th May 2024.  As specified in the Plan for National Statistical Development (PNSD), the 2024 National Population and Housing Census (NPHC) is carried out by Uganda Bureau of Statistics (UBOS) led by the Census Commissioner (CC) who is the Executive Director (ED) Dr. Chris Mukiza.  The digital census will be carried out using Computer Assisted Personal interview (CAPI) tablets and use of Global Positioning System (GPS). The census information can be used in leveraging government programs including Parish development model, youth livelihood program and also in the development of NDP IV, as we aim at becoming a middle income economy as stipulated in Vision 2040.

Dispatch in CAPI and other Census materials at the district. With the DCCR Mr. Kajubi and District Planner Ms. Nakayuki Prisca. Census 2024, Uganda, East Africa.
Dispatch in CAPI and other Census materials at the district. With the DCCR Mr. Kajubi and District Planner Ms. Nakayuki Prisca.

Distinguished staff members from Makerere University, School of Statistics and Planning (SSP), College of Business and Management Sciences (COBAMS) have played a pivotal role in supporting the census preparation phase and enumeration phases to ensure a successful digital census.  This engagement aims to ensure the collection of accurate, timely, comprehensive data to guide the country’s policies, planning and vision.

Members of DPS, DR. Agaba Peninah also joined  DCCR - Dr. Olivia Nankinga and DCCR Dr. Patricia Ndugga to popularize and support 2024 Census.
Members of DPS, DR. Agaba Peninah also joined DCCR – Dr. Olivia Nankinga and DCCR – Dr. Patricia Ndugga to popularize and support 2024 Census.

The selected team comprises Dr. Odur Bernard, Dr. Nansubuga Elizabeth, Dr. Nankinga Olivia, Dr. Patricia Ndugga and Dr. Margaret Banga. The selected staff members bring a wealth of knowledge and experience, making them ideal contributors to the national census’s success. These were been deployed to different areas as District or City Census Commissioner’s Representative. Their role involves providing oversight, supervision and ensuring the smooth running of the census exercise in these districts in collaboration with UBOS.

Pivotal to this exercise, the faculty also trained district and sub-county officers of which information the officers would later use in training the enumerators and the parish/ward supervisors on the entire census process and data collection.

Support Supervision in Amolator district 4/5/2024 by Dr. Bernard Odur who appeared early 8:00am sharp and got all participants ready & in for the session.
Support Supervision in Amolator district 4/5/2024 by Dr. Bernard Odur who appeared early 8:00am sharp and got all participants ready & in for the session.

Makerere University through the school of statistics and planning has also been represented at the Census Technical Advisory Committee (CTAC) by Assoc. Prof. James Wokadala. The CTAC is composed of members of the Inter-Agency Committee of the Plan for National Statistics Development (PNSD) and other co-opted members from Academia, Media and Research institutions. Further, the involvement of Makerere University‘s staff brings a level of expertise and dedication that will undoubtedly contribute to the census’s success. With their support, Uganda is poised to set a new standard in data collection and analysis, paving the way for a more informed and progressive nation.

Bridging Academia and National Development

The Uganda Bureau of Statistics (UBOS) has a standing partnership with Makerere University, as represented by Dr. Allen Kabagenyi a staff member of SSP who was appointed by Cabinet as member of the UBOS Board of Directors as representative of all academic institutions in Uganda teaching statistics.  The partnership between Makerere University and UBOS underscores the importance of collaboration between academia and government in achieving national development goals.

Dr. Nansubuga at CBS radio Station talking about 2024 Census.
Dr. Nansubuga at CBS radio Station talking about 2024 Census.

To support the 2024 Census, Makerere University adjusted the Semester and Examinations excluding 8th– 10th May 2024 to enable staff and students participate in the national exercise resuming on 11th May 2024. The university is applauded for revising the semester for this important 2024 digital census represents a significant step toward modernizing Uganda’s data collection practices, allowing for more efficient analysis, timely dissemination for better-informed decision-making.

Dr. Kabagenyi, mentioned that the overall aim of the National Population and Housing Census (NPHC) 2024 was to provide benchmark information on the spatial population distribution, age and sex structure, as well as other key socio-economic and demographic characteristics.  She further said the Department of Population Studies, part of the School of Statistics and Planning, has over the years trained scholars in different methodologies of Collecting population Data and the national population Census being one of them.  The Census provides information on the country’s population size, distribution, demographic and the socio economic characteristics of a county’s population.

At the National training of trainers at Munyonyo. Dr. Agaba, DCCR - Dr. Margret Banga and Dr. Kabagenyi.
At the National training of trainers at Munyonyo. Dr. Agaba, DCCR – Dr. Margret Banga and Dr. Kabagenyi.

Further by “leveraging on digital technologies, we can collect more accurate, detailed and timely data, which is crucial for national planning. Our team is excited to contribute to this historic event and support Uganda’s journey toward a more data-driven future.” She further applauds Makerere University Council and Management for adjusting Semester II 2023/2024 for a critical government national program.  

Sharing some insight into the census process, Dr. Kabagenyi said if one is not at home, another person who is knowledgeable enough to respond to the census questionnaire can be interviewed. 

 “It Matters to be counted”

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Dr. Joweria Teera Hands Over Office to Dr. Faisal Buyinza

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Department of Economic Theory and Analysis, College of Business an Management Sciences (CoBAMS) handover by Dr. Joweria Teera to Dr, Faisal Buyinza, School of Economics Building, Makerere University, Kampala Uganda, East Africa.

The Department of Economic Theory and Analysis at Makerere University witnessed a significant transition as Dr. Joweria Teera handed over the reins to Dr. Faisal Buyinza. This ceremonial handover, held in the university’s Faculty of Economics, marked a new chapter in the department’s journey while celebrating the achievements and contributions of Dr. Teera during her tenure.

A Legacy of Excellence and Innovation

Dr. Teera, who has served as the head of the department for the past eight years, is recognized for her transformative leadership and dedication to academic excellence. Under her guidance, the department has seen substantial growth in research output, student engagement, and partnerships with external organizations. She spearheaded initiatives that modernized the curriculum, integrating innovative teaching methods and focusing on real-world economic challenges.

Department of Economic Theory and Analysis, College of Business an Management Sciences (CoBAMS) handover by Dr. Joweria Teera to Dr, Faisal Buyinza, School of Economics Building, Makerere University, Kampala Uganda, East Africa.

In her parting remarks, Dr. Teera expressed gratitude to her colleagues and students for their support throughout her tenure. “It has been an honor to lead this department, and I am proud of what we have accomplished together,” she said. “I am confident that Dr. Buyinza will continue to drive our mission forward, bringing fresh perspectives and energy to the role.”

A Vision for the Future

Dr. Buyinza, who has an extensive background in economic analysis and research, is no stranger to the department. He has served as a senior lecturer and has been instrumental in guiding graduate students through complex research projects. His appointment as head of the department brings new enthusiasm and a vision for continued growth.

Department of Economic Theory and Analysis, College of Business an Management Sciences (CoBAMS) handover by Dr. Joweria Teera to Dr, Faisal Buyinza, School of Economics Building, Makerere University, Kampala Uganda, East Africa.

In his acceptance speech, Dr. Buyinza outlined his plans for the department, focusing on strengthening interdisciplinary research and enhancing collaborations with industry stakeholders. “I am excited to build on the strong foundation laid by Dr. Teera,” he stated. “Together, we will work towards creating a more dynamic and impactful department, one that contributes meaningfully to the field of economics and to Uganda’s development.”

Celebrating Collaboration and Teamwork

The handover ceremony was attended by faculty members, and representatives from the university administration. Dean of the School of Economics, Prof. Ibrahim Mike Okumu, praised Dr. Teera for her leadership and welcomed Dr. Buyinza to his new role. “Dr. Teera’s leadership has been invaluable, and we are grateful for her contributions,” he said. “We also look forward to working with Dr. Buyinza as he takes on this important position.”

Department of Economic Theory and Analysis, College of Business an Management Sciences (CoBAMS) handover by Dr. Joweria Teera to Dr, Faisal Buyinza, School of Economics Building, Makerere University, Kampala Uganda, East Africa.

As Dr. Buyinza steps into his new role, the Department of Economic Theory and Analysis at Makerere University is poised for a vibrant future, with a strong focus on fostering economic understanding and contributing to the broader academic and economic landscape.

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PIM Centre completes training of 23 Officers in Economic Appraisal and Stakeholder Analysis

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Makerere University Public Investment Management Centre of Excellence (PIM CoE), Ministry of Finance, Planning and Economic Development (MoFPED) and Cambridge Recourses International two-week training in the Program on Investment Appraisal and Risk Analysis (PIAR), 22nd April-6th May 2024, Mbarara Uganda, East Africa.

Approximately 23 officials from different Ministries, Departments and Agencies (MDAs), as well as from the Civil Society have completed training in the Program on Investment Appraisal and Risk Analysis (PIAR). The trainees received training in Basic Public Investment Management (PIM), Financial and Risk Analysis and finally Economic Appraisal and Stakeholder Analysis. The training culminated in the award of Certificates jointly awarded by Makerere University, Ministry of Finance, Planning and Economic Development (MoFPED) and Cambridge Recourses International.

The two-weeks training, which took place in Mbarara attracted participants from Ministries, Agencies, Academia and the Civil Sector. Speaking during the closing ceremony, Prof. Eria Hisali, the Principal of the College of Business and Management Sciences where the PIM Centre of Excellence is hosted, said the Centre aims at creating a pool of experts who can write proposals and approve public investments.

He cautioned the public officers to clearly identify projects that can deliver economic growth and also encouraged them to work together. He said the Centre would organize an experience sharing workshop to do an M&E on all the trainees to see how effectively they are utilizing the acquired knowledge. He informed participants that the University Senate had approved the proposed PIM Masters, “Masters in Economic and Investment Modeling,” and encouraged them to apply once the program is approved by the National Council for Higher Education. He said the Centre was also in the process of drafting a Post Graduate Diploma in Public Investment Management. Prof. Hisali appreciated the Ministry of Finance, Planning, and Economic Development for providing financial support to the Centre as well as CRI and NPA for the partnership in training.

Makerere University Public Investment Management Centre of Excellence (PIM CoE), Ministry of Finance, Planning and Economic Development (MoFPED) and Cambridge Recourses International two-week training in the Program on Investment Appraisal and Risk Analysis (PIAR), 22nd April-6th May 2024, Mbarara Uganda, East Africa.

Dr. Willy Kagarura, the Centre’s manager said he was confident that the knowledge given to the participants will go a long way in ensuring they write the accurate investment proposals for the government to review.

He emphasized the importance of equipping individuals with the necessary skills to make informed investment decisions which will ultimately contribute to the economic development of the Country. Dr. Willy also highlighted the practical nature of the training, ensuring that participants are well-prepared for real-world scenarios in investment modeling.

Ms. Gertrude Aerone Basiima, the Assistant Commissioner of the Project Analysis and Public Investment Department emphasized the importance of the training, saying the goal of a project appraisal is to prevent bad projects from going ahead and good projects from being rejected. “This training is therefore aimed at ensuring that all stakeholders including Public Officials, Private Sector and Civil Society analysts develop and appraise investment projects in order to promote the economic and social wellbeing of the country,” she said.

Makerere University Public Investment Management Centre of Excellence (PIM CoE), Ministry of Finance, Planning and Economic Development (MoFPED) and Cambridge Recourses International two-week training in the Program on Investment Appraisal and Risk Analysis (PIAR), 22nd April-6th May 2024, Mbarara Uganda, East Africa.

She said the training arose out of the needs assessment that identified critical gaps by Officers in different MDAs with regard to undertaking Cost Benefit Analysis, Cost Effectiveness Analysis, preparation and cross-examination of pre-feasibility and feasibility studies.

“I hope that the training you have attained during the last 3 training sessions has equipped you with skills to conduct and review feasibility studies by putting into considerations the different perspectives of Banker/Lender, Project Owner, Country and Distribution of Externalities. While you are undertaking project development and appraisal, please remember these perspectives,” Ms Basiima said.  Ms Basiima emphasized the importance of considering various perspectives during project development and appraisal to ensure a comprehensive feasibility study. She encouraged participants to apply the skills acquired in the training sessions to conduct thorough analyses and make informed decisions.

She further appreciated the dedicated faculty team comprised of CRI resource persons, Hassan and Christiania. The Ugandan Faculty consisting of Dr. Willy Kagarura, Prof. Edward Bbaale, Dr. John Sseruyage, Dr. Vincent Ssajjabi, Dr. Ibrahim Mike Okumu, Dr Ibrahim Mukisa, and Mr. Edwin Sentumbwe from Makerere University PIM CoE, Mr. Musimeta Hannington from NPA and, Mr. Ahaisibwe Joseph and herself from MoFPED

Makerere University Public Investment Management Centre of Excellence (PIM CoE), Ministry of Finance, Planning and Economic Development (MoFPED) and Cambridge Recourses International two-week training in the Program on Investment Appraisal and Risk Analysis (PIAR), 22nd April-6th May 2024, Mbarara Uganda, East Africa.

On his part, Mr. Hannington Musimenta, one of the faculty members from the National Planning Authority, emphasized the importance of the study, saying the NDPIII evaluation showed that the Country performed only to the tune of 17% because of poor projects. With this training and knowledge acquired by the different public officers, he was positive that the implementation of projects in NDP IV would be more successful and impactful leading to greater development outcomes for Uganda.

As part of the training, the team visited one government project in Kiruhura and Mbarara District titled the Reconstruction of Kyeshema Earth Dam. The dam was reconstructed to supply water to the cattle corridor during the dry seasons. The participants were able to evaluate a real-world project in relation to the theory obtained during training.  

The training was opened on April 22, 2024, by the Director of the PIM Centre of Excellence, Prof. Edward Bbaale, who called on the trainees to fully engage in the training sessions and actively participate in discussions to maximize their learning experience. He emphasized the importance of applying the knowledge gained to their work in order to achieve tangible results and make a difference in their workplaces. The director also highlighted the significance of networking and collaboration among participants, as this would foster a supportive environment for sharing best practices and innovative ideas. “By fostering a culture of continuous learning and knowledge exchange, the training program aims to empower individuals to drive sustainable development in Uganda”. He appreciated the MoFPED for the financing of the training and the nomination of the right people to train. The director emphasized the importance of participants actively engaging in discussions and practical exercises during the training sessions to maximize their learning experience. Additionally, he encouraged participants to take advantage of the resources and support provided by the program to implement their new skills and knowledge effectively in their respective roles.

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