Unlocking Uganda's Potential: Factsheet Highlights Key Strategies for Domestic Revenue Mobilization

Posted on: 2024-05-28 12:56:36

The Advocates Coalition for Development and Environment (ACODE) and Global Financial Integrity (GFI) are pleased to announce the release of a factsheet that delves into the concept and rationale of domestic resource mobilization (DRM).

The 2015 Addis Ababa Action Agenda on Financing for Development emphasized that the “mobilization and effective use of domestic resources are central to our common pursuit of sustainable development”. To achieve this goal will require a concerted effort of all stakeholders to counter the traditional approach where domestic resource mobilization was only a preserve of the government,” said Philip Nyakundi, GFI’s Policy Director. The factsheet provides an examination of the policy and legal framework surrounding DRM in Uganda, outlining the country's strategies to harness and maximize its own financial resources. It highlights the role of various actors in the implementation of DRM, including government bodies, and private sector entities among others.

However, the fact sheet also identifies significant challenges that hinder DRM in Uganda. Key among these are illicit financial flows, which siphon substantial amounts of money out of the country, undermining economic stability and growth. Ineffective tax exemptions and incentives granted to investors further complicate the landscape, often failing to deliver the intended economic benefits while eroding the tax base. Additionally, bilateral tax treaties frequently result in the loss of Uganda's right to tax multinational companies adequately, depriving the nation of critical revenue. The reliance on a narrow tax base makes Uganda particularly vulnerable to external shocks, emphasizing the need for a more diversified and resilient fiscal structure.

To address these issues, the factsheet outlines several government strategies and reforms aimed at enhancing domestic revenue mobilization. These include strengthening tax administration, broadening the tax base, improving compliance, and curbing illicit financial flows through robust legal and regulatory measures. The factsheet also underscores the role of the extractive sector in DRM, highlighting how effective management and taxation of natural resources can significantly boost domestic revenues. “DRM is critical for Uganda to reduce and finally win itself from external debts that are choking poor countries with high interest rates leading to further underdevelopment,” Onesmus Mugyenyi the Deputy Director ACODE said.

The release of this factsheet by GFI and ACODE is timely, providing stakeholders with valuable insights and data to inform policy decisions and advocacy efforts. By addressing both the challenges and opportunities within Uganda's DRM framework, this publication serves as a crucial tool for fostering informed dialogue and concerted action towards increased Domestic resource mobilization.