Corruption the major accelerator of IFFs in Uganda

By Patricia Namutebi

It is estimated that Uganda loses USD 250 million which is Ushs 866 billion each year due to corruption. This is according to a report by Oxfam. Such money could build 50 state of the art district hospitals and 500 health centre fours. In terms of education spending this could finance 100 secondary schools and 5 universities. Many of those in charge of public resources continue to eat from the public bag with impunity making corruption become a lucrative business. The report further says, the government’s apparent inaction in rooting out corruption is further evidenced by the fact that the recent reports by the auditor general has not been discussed in parliament as required by the law.

Corruption is noted to be one of the major accelerator and enabler of IFFs, (Illicit Financial Flows)I illicit Financial Flows refers to the movement of money and value from one country to another that is illegally earned, transferred or utilised. In most cases this money is used for illegal activities like organised crime or terrorism.

We see an incident of corruption in a Story that was published in the daily monitor on 10^th April 2023 on an incident that happened on the 24^th March 2023 at Vurra customs border point in Arua a district in northern Uganda East Africa.

According to the observer the three officers asked for a bribe of $10,000 to enable a gold smuggler from Congo escape the URA (Uganda Revenue authority) protocol. These later disagreed on sharing which resulted into a scuffle calling for media attention.

David, a trader in one of Kampala’s business centres in Kikuubo says “You cannot survive in business down town unless you are able to part with bribes and free bees.” “ The taxes are too high for us to afford, and the buildings rent is high as well, One therefore has to devise means of surviving in business by breaking the law.” This could be through tax, evasion, forging invoices and smuggling of goods.” He adds that this is the order of the day and that it is a culture among business people lately.

The Authority devise means to curb tax evasion

The Uganda Revenue Authority(URA) reports that it is continuing to work on the performance of the customs department. The authority has in place a document processing centre that opened in January 2017 at one stop border points at Malaba, Busia, Mutukula Hills, Katuna and other locations. The URA has also implemented the electronic Cargo Tracking with its counterparts in Kenya and Rwanda to jointly monitor goods in transit, initiated the electronic single windows processing.

However, Uganda’s tax collection has remained low despite the successive reforms by URA in the way they administer taxes. In East Africa Uganda is still lagging behind with a ratio of tax revenue to GDP of 14% as compared to her neighbours like Kenya at 18% and Rwanda at 16%.

In an interview with one of Kacita (Kampala City Traders association) board members Mr. Jemba Kanakulya Mulondo he suspects, “For as long as there are unfair taxes imposed on traders the trickery might continue. It is suspected to be an impact of the taxes lost through illegal activities like smuggling, corruption and money laundering is causing the common trader to be heavily taxed. He says much as there is a digitalised system the high rate of corruption is enabling IFFs in Uganda. “This is greatly impacting the country’s development goals.” he adds.

What must be done to stop re occurrence of Corruption?

Apparently, the governments  inaction in rooting out corruption is further evidenced by the fact that the recent reports by the auditor general has not been discussed in parliament as required by the law. This calls for the need for the following actions in order to fight corruption.

•             Advocate for the freeing up of political space and challenge the monopoly on critical decision making by and in favour of the elite. Advocate for more citizen representation and participation in decision making at all levels.

•             Press for the strengthening of accountability by making corruption a high-risk venture. Those found guilty of corrupt practices should be punished heavily, making corruption less attractive to others.

•             Halt the creation of new layers of local government and concentrate on quality service delivery.

Pressing for the strengthening of accountability by making corruption a high risk venture.

NGOs like Akinamama wa Afrika, a feminist based organisation is striving hard to influence policies in Africa. Eunice Musiime from Akinamama wa Afrika comments that the following strategies should be put on place  to curb IFFs in Africa.

• To have more progressive tax regimes so that taxes are not siphoned out.
• To strengthen our institutions to ensure that systems are working very well.
• Raising awareness to impact policy makers, citizens and general public on IFFs.

This way Uganda and the African continent at large will be able to retain their money and capital and their meet her development goals.