Domestic Revenue Mobilization through Transparent, Accountable and Equitable Management of Extractives in Uganda

Updated on: 2023-09-13 13:20:57

The goal is to enhance transparency, accountability, and equity in the management of the extractive sector (mining, oil, and gas) for increased domestic revenue mobilization.

This project is a 24-month activity designed to contribute to component three of USAID/UGANDA – Domestic Revenue Mobilization for Development (DRM4D) Activity - enhancing public-private dialogue - which focuses on advocacy in areas of interest to boost domestic revenue mobilization for Uganda to attain self-reliance including engagement on oil and gas. It is a collaborative effort to strengthen policy and legal frameworks that will ensure more transparent and accountable management of Uganda’s petroleum and mineral revenues to increase domestic revenue mobilization using specific interventions along the entire extractives industry value chain. The project will also facilitate dialogue and review relevant legal frameworks and administrative procedures to generate recommendations for key actors on transparency in licensing, compliance, revenue collection, and expenditure.

Domestic revenue mobilization has gained prominence in Uganda due to several factors including the desire to secure independence from foreign aid and the increasing debt burden. Over the past two decades, Uganda’s tax-to-GDP ratio has remained stagnant at about 12% lagging behind regional economies like Kenya, Rwanda, and Tanzania. In 2019, the government of Uganda prepared a five-year Domestic Revenue Mobilisation Strategy (DRMS) 2019/20-2023/24 as a transparent tax policy-making tool to maximize revenue mobilization and strengthen the administrative effort to support policy reform. The core objective of the DRMS is to improve revenue collection and raise Uganda’s tax-to-GDP ratio from 12.5% to between 16-18% within the five financial years.

The extractive industry is a key sector highlighted by the DRMS. While the discovery of commercial oil and the revamping of the mining sector have the potential to raise much-needed domestic revenue, the country’s ability to generate and manage revenue is still undermined by challenges in transparency and accountability systems, inadequate tax laws, poor management and administration leading to tax evasions and avoidance, corruption, ineffective tax exemptions and limited capacity of tax authorities to curb tax avoidance schemes among other factors.

The project will therefore involve: (a) reviewing relevant legal frameworks and taxation laws that relate to extractives to identify revenue leakages, areas of harmonization, and ineffective tax exemptions, (b) advocating for equitable sharing of revenue between central government and local governments; and (d) improving learning for members of selected Committees of Parliament, local governments, media, civil society, and community groups in order to participate in decision-making and provide oversight in the management of extractive revenues.

The project expects that by minimizing revenue leakages/loss through improved policy and legal frameworks; enhancing the capacity of stakeholders, especially on tax administration and revenue management; effective implementation of the law and best practices that compel extractive companies to pay their fair share of tax and revenue due to government, Uganda will achieve its domestic revenue mobilization strategy.

The implementation of the project is targeting a total of 8 Government Ministries, Departments, and Agencies; 20 civil society organizations at national level and 10 at subnational level drawn from the districts of Hoima, Kikube, Buliisa, and Mubende; 10 community-based organizations; 5 youth groups; 5 women’s groups; 10 media actors drawn from different media houses; 4 local governments (Hoima, Buliisa, kibkube and Mubende); 10 small scale miners; and 6 extractive companies.