Joseph Mawejje

The Uganda shilling has steadily lost value against the dollar over the last year. By the second week of March 2015 the dollar equivalent in Uganda shillings had hit the 3,000 mark up from about 2,500 Uganda shillings only a year earlier, signifying 20 percent depreciation. This trend can be explained by the strengthening of the dollar globally and weak economic fundamentals domestically. While we cannot control the global exchange rate movements, we can surely influence domestic policy. For this reason therefore, I will focus on the domestic economic fundamentals in the discussion that follows. Uganda liberalised the exchange rate market in the early 1990’s as part of wider economic reforms. Since then exchange rates are determined by purely demand and supply forces. The central bank only occasionally intervenes to smoothen out volatile movements.  On the supply side, foreign exchange inflows are determined through exports, official development assistance (aid), remittances a...

The structure of the economy is an important factor in a country’s ability to collect taxes. For example countries that are heavily dependent on agriculture tend to be under-developed usually with low productivity smallholder farms that are subsistent in nature. This makes the sector potentially unprofitable and, therefore, difficult to tax in the short run.   Recently Uganda’s gross domestic product (GDP), which is the sum of all economic activities in the country, was rebased from 2002 to 2009/10 base year. The rebasing means that we now have a more accurate estimate of the size and structure of the economy.   The rebased GDP figures suggest that the structure of the economy has changed. As such, agriculture has overtaken industry as the second most important sector of the Ugandan economy. The contribution of the agricultural sector has increased from 22.2 percent to 23.3 percent, while that of industry has decreased from 26.3 percent to 18.1 percent. These changes sh...

Uganda has recorded slow progress in ensuring that majority of Ugandan households have access to electricity. This has been partly due to the limited exploitation of renewable sources that can offer alternative sources of energy. In 2011, for example, renewable energy other than from hydro sources accounted for 12 percent of total electricity generation. Data from the Uganda Bureau of Statistics indicate that access to electricity by Ugandans has improved modestly from 9.5 per cent in 2002 to 14 per cent in 2013. Consequently current electricity access rates are some of the lowest in Sub Saharan Africa. There are also challenges of ensuring that majority of rural dwellers get access to electricity.   Energy access is unequally distributed across the country and the provision of electricity has been limited to mainly urban and semi-urban areas. While 40 percent of urban households have access to electricity, progress in the rural areas has been much slower. In 2013 a whopping...

After the Minister of Finance read the national budget on June 12 th 2014, there has been a raging debate on how to finance Uganda’s UGX 11,088 billion proposed tax revenue.   Most of the protagonists have been against the reinstatement of VAT on agricultural services. Within this realm, the New Vision, July 30, 2014 carried an article describing how Coca Cola—a leading multinational producer of soft drinks—was negotiating a tax waiver in lieu for providing logistical support to transport medical equipment from the USA to Uganda. The equipment will be provided by Medsave—a USA based medical charity. Specifically, Coca cola was requesting for exemption of excise duty on all soda products and reduction to 5% of the excise duty on mineral water.   In exchange, it was reported, the company would ship to Uganda “donated medical equipment worth US$20 million from the USA.” The arguments given by Coca Cola, that: 1) taxes hurt the soft drinks sector greatly because customers ...

Uganda has recorded impressive economic growth rates over the last two decades. However, over the same time periods, the tax effort measured by the tax-to-GDP ratio has stagnated at between 10-13 percent. One of the factors that could explain the stagnated revenue performance is tax evasion.   Other factors are related to corruption and inefficient service delivery. As a result, Uganda has continued to struggle with inadequate funds to finance its budget. Recently donors, who contributed as much as 25% of the budget, unanimously decided to withhold their support due to allegations of corruption in various government departments. This has affected the performance of the Ugandan economy, with major implications on service delivery and business growth. In response, the Uganda Revenue Authority (URA) has had its tax collection targets elevated to close the financing deficit. However, the biggest challenge remains ensuring tax compliance, especially considering the size of...