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SWFF Annual Report

SWFF Annual Report

USAID and the Government of Sweden launched the Securing Water for Food (SWFF) grand challenge for development in September 2013 during the World Water Week in Stockholm. Within two years after the launch, the Kingdom of the Netherlands and the Republic of South Africa joined the party of Founding Partners. Through SWFF, the partners have worked to identify and accelerate science and technology innovations and market-driven approaches that improve water sustainability to boost food security and ultimately alleviate poverty.

SWFF aims to increase access to innovations that help farmers produce more food with less water, enhance water storage, and improve the use of saline water and soils to produce food. Water Governance Institute (WGI) responded to SWFF call for proposals in 2015 and was selected as a winner from among 408 applications, representing 67 countries.

Twelve winners of the award were selected from the applications. WGI's winning proposal was titled "Promoting Commercial Aquaponics Farming Among Smallholder Farmers/Households for Water Efficiency, Food Security and Livelihoods Improvement in Uganda". The project will initially be implemented in 4 districts of Uganda; namely Kampala, Kamuli, Hoima and Adjumani that were selected based on their high poverty indices.

Kampala was selected because it is the central administrative center of the country; has wide gap between the rich and poor; and suffers from escalation of population as a result of rural-to-urban migration which is challenging the adequate delivery of social goods and services

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In Uganda all ore exports are banned, but some are less banned than others. Why? Yoweri Museveni shakes road cash out of World Bank coffers. How? German Chancellor Angela Merkel today meets African leaders in Berlin. Which?

 

Only one dealer in Uganda is able to bypass the country's ban on the export of unprocessed ore, according to the top story in regional paper the East African.

After publicly advocating value addition by announcing a ban on the export of Uganda’s iron ore in 2013, President Yoweri Museveni seems to have caved in to pressure from one mineral dealer and backtracked on the position, says the report.

Details of what influenced Museveni’s change of heart are not known but an 18-month investigation by extractive industry watchdog Global Witness reveals that the dealer, Moses Kamuntu, met the president and gained permission to continue exporting the ore.

The report also reveals that it is almost impossible to do business in Uganda’s mining sector without paying bribes or drawing support from high-level political connections.

World Bank unfreezes development cash for Uganda

That's not the only story in the East African featuring the Uganda leader.

Under the headline "How Museveni got the World Bank to unfreeze road funds," we read that Museveni has intervened to unlock funding from the World Bank for Uganda’s road sector, after an 18-month freeze caused by the negative environmental and social impact of the projects.

In a statement released last week, the World Bank said that Museveni had committed to continuing a campaign aimed at reducing gender-based violence.

“President Yoweri Museveni confirmed to the Bank that the government of Uganda is committed to ensuring that social and environmental safeguards policies are adhered to in undertaking large infrastructure projects. He also emphasised that the government is committed to continue with the national campaign for reducing violence against women and girls,” according to the statement from the World Bank.

Unofficial strike continues at South African gold mine

In South Africa an unofficial strike at Sibanye Gold’s Cooke operations west of Johannesburg continued yesterday. Financial paper BusinessDay reports that 138 illegal miners have been arrested since the stoppage began on Tuesday.

Sibanye said the strike, which has seen 16 miners assaulted in a wave of intimidation, was triggered by worker anger at a company drive to root out illegal miners. This has included the arrest of employees for collusion and a policy that forbids the bringing of food into underground operations.

Illegal gold mining has plagued South Africa for decades, with bullion pilfered from both operating and disused mines.

Sibanye has vowed it will clear all illegal miners from its shafts by January 2018.

Mugabe fires Zimbabwe’s top prosecutor 

In Zimbabwe President Robert Mugabe has fired the country’s top prosecutor.

The Harare-based Herald newspaper reports that suspended prosecutor general Johannes Tomana was fired for misconduct and incompetence after a tribunal set up by the president recommended dismissal.

Tomana faces charges of "criminal abuse of office" and is awaiting trial.

He was suspended in February 2016 after dropping charges against two men accused of plotting to bomb a dairy belonging to the president’s wife, Grace Mugabe.

A year earlier he was convicted of abuse of power after refusing to prosecute a legislator from Mugabe’s Zanu-PF Party accused of raping a minor.

Merkel to meet African leaders in effort to slow migrant influx

And the Nigerian Guardian says German Chancellor Angela Merkel will later today meet African leaders in Berlin to discuss initiatives aimed at reducing the poverty and conflict driving the mass migrant influx to Europe.

The idea is to team up with African nations willing to reform with private investors who would bring business and jobs to a continent where instability or graft often scare off foreign companies.

Merkel is hosting the initiative as part of Germany’s presidency of the Group of 20 powerful economies, whose leaders are due to meet in the northern German port of Hamburg next month.

Invited to Berlin are Egyptian president Abdel Fattah al-Sisi and the leaders of Ghana, Côte d'Ivoire, Mali, Niger, Rwanda, Senegal and Tunisia.

 

SOURCE: The African Press Review

Uganda's President Yoweri Museveni inspects gold flakes at a refinery in Entebbe. The sector has grown rapidly but a new report alleges rampant corruption.

 

Story highlights

  • NGO alleges systemic corruption in Uganda's mining sector
  • Report cites instances of bribery, human rights abuses and environmental damage
  • Uganda's gold rush has seen exports climb over 140000% since 2014
 

(CNN)----Uganda's mineral industry has enjoyed a spectacular surge in recent years.

Gold exports reached $340 million in 2016, according to official figures, up from $237,000 in 2014. New mining sites are opening across the country, creating jobs for thousands of people.
 
But a new report from environmental NGO Global Witness claims there is a dark side to the boom, that the mineral sector is fueling corruption, conflict, human rights abuses, and environmental damage.
 
The 18-month investigation "Uganda: Undermined" draws on interviews with miners, company executives, government officials, and industry experts to paint a stark picture of the sector.
 
"Our investigations show that Uganda's mining sector is characterized by corruption, mismanagement and high level political influence," says George Boden, Uganda campaign leader at Global Witness. "Impunity is endemic and attempts at reform have all failed in the face of entrenched interests."
 
The Kilembe mine on the border of protected site Rwenzori Mountains National Park.
 

License to shill?

The report alleges systemic corruption at the Directorate of Geological Survey and Mines (DGSM), the government body that awards mining licenses, operating under the Ministry of Energy and Mineral Development (MEMD).
 
"Corruption has become institutionalized at the Directorate," the report claims. "It is almost impossible to obtain licenses from the DGSM without making payments to certain DGSM mining officials...(and) Directorate officials are expected to provide preferential treatment to companies favored by the political elite."
 
Global Witness cites cases of senior DGSM staff simultaneously serving as directors at companies applying for licenses, in apparent conflicts of interest.
 
The NGO also reports complaints from staff who say their decisions were overridden in favor of investors with political connections.
 
A spokesperson for the MEMD acknowledged problems with the licensing process and told CNN it is under review.
"Some of the issues raised by the report such as licensing are bought about because of weaknesses and loopholes in mining policy and laws," the spokesman said. "The ministry is currently reviewing these policies and we hope that some of these challenges will be cleaned up."
 
Uganda's mining cadaster shows licenses granted in protected sites.
 

Collateral damage

The report also highlights environmental damage caused by the lax licensing regime.
 
The Ugandan government's mining cadaster shows that licenses have been issued inside many of the country's protected sites, including the UNESCO-certified Rwenzori and Bwindi national parks. The latter is home to nearly half of the world's population of endangered mountain gorillas.
 
The report quotes one license holder, MP Elizabeth Karungi, claiming to have secured a permit inside Bwindi through personal connections to another government official.
 
When contacted by CNN, Karungi confirmed receipt of the license, but said that the site had not been excavated.
Such incursions are "dangerous for conservation efforts" said Dan Kaweesi of the Uganda National Commission for UNESCO.
 
"We risk losing the world heritage site status for the two sites involved," he added. "This is bad news for heritage preservation."
 
The UNESCO-certified Bwindi National Park contains the world's largest population of endangered mountain gorillas.
 

Community impact

Global Witness says that poor regulation and oversight are also enabling human rights abuses.
The report documents cases of child labor on mining sites and dangerous conditions such as exposure to toxic chemicals.
 
Such accounts are corroborated by local campaigners.
"Some mining companies offer jobs (to local communities) as casual laborers but this work is under harsh conditions with limited or no safety and protective gear," says James Muhindo, a lawyer and human rights advocate at the Ugandan NGO Global Rights Alert.
 
Muhindo further claims that communities, such as nomadic herdsman in Northeast Uganda, who are surrounded by major gold and marble excavations, are being displaced by mining companies.
 
"Their way of life has been affected by the mining companies' private and exclusive ownership of large chunks of land," he says. "Previously (the land) was communally-owned with free access to pastures for the entire community."
 
The report alleges child labor is rife in Uganda's mining sector.
 

Lack of transparency

Communities struggle to claim compensation for the land, says Muhindo.
One major obstacle is that companies rarely declare their profits, making it difficult for landowners to calculate what they are due, and for local authorities to claim tax.
 
The problem is national as well as local. Global Witness believes Uganda is losing out on millions of dollars of tax revenue.
 
The report highlights the case of a gold refinery with connections to Salim Saleh, brother of Ugandan President Yoweri Museveni, which allegedly received lucrative tax exemptions.
 
According to the report, the lack of transparency may also conceal smuggling. Uganda is a signatory to the 2010 Lusaka Declaration on controlling conflict minerals agreed by the International Conference on the Great Lakes Region (ICGLR). But "Uganda: Undermined" cites gold dealers who say they are handling minerals from South Sudan and the Democratic Republic of the Congo.
 
A spokesman for the ICGLR told CNN the group had heard "many allegations from different sources" on the smuggling of conflict minerals through Uganda, and urged the government to apply its regional certification mechanism with neighbor states to toughen diligence.
 
A gold mine in the Democratic Republic of Congo. Global Witness believe Uganda's gold rush may be fueled by minerals from conflict areas.
 

Reform prospects

Tighter control of conflict minerals is just one area of reform being proposed for Uganda's mining sector.
The World Bank is working with the Ugandan government on a new, wide-ranging mining bill that aims to tackle entrenched problems.
 
"The new legislation will include background checks for licensees (and) the sector must be better regulated so the government can easily collect taxes," a MEMD spokesman said. "The government is losing money because of a weak mining policy, and the laws will be changed."
 
Don Bwesigwe Binyina, executive director of the Africa Centre for Energy and Mineral Policy, is also working on the bill. He hopes for a profound cultural shift.
 
"Corruption is just one problem," says Binyina. "Institutional weakness is another challenge...the sector has limited human resources, for years it has been receiving reduced budgetary allocations."
 
The director points to Uganda's petroleum sector that is "one of the best trained on the continent" as a model of what could be achieved. He believes a focus on building skills and capacity as well as governance could make the sector a vehicle for change that could transform life prospects for much of Uganda's low income workforce.
 
Should such plans come to fruition, Uganda's gold could yet be, for many, more of a blessing than a curse.
 
 
SOURCE: CNN 

Today, the Tax Justice Alliance in Uganda ( a loose coalition of civil society who WGI is a member and individuals)  called upon the Government and other key stakeholders to End Harmful Tax Holidays in Uganda.

SEATINI Uganda alongside members of the Tax Justice Alliance including; Oxfam in Uganda; Civil Society Budget Advocacy Group (CSBAG); Uganda Debt Network(UDN); Action Aid Uganda (AAIU); Citizens Watch-Information Technology (CEW-IT); Women and Girl Child Development Association (WEGCDA); Water Governance Institute (WGI); Africa Freedom of Information Centre (AFIC); Inter University Tax Justice Forum (IUTJF); and Initiative for Social and Economic Rights (ISER) organized a press conference at SEATINI Uganda offices in Kampala this 29th May 2017 to present concerns, observations and recommendations in respect to tax holidays in Uganda.

 The Tax Justice Alliance recognises that Foreign Direct Investment (FDI) is critical in fostering economic growth and development. There is awareness that tax incentives such a tax holidays and exemptions can promote investments in the country if they are transparent and equitably accessed, awarded and managed. It’s also a fact that tax incentives when mismanaged can distort internal market dynamics and bleed corruption. 

 However, an analysis conducted by the Tax Justice Alliance suggests that developing countries do not need to grant tax incentives, exemptions and/or holidays to attract Foreign Direct Investment (FDI), because the decision to invest by genuine multinational corporations is largely based on other parameters such as cost of labour and energy; presence of adequate infrastructure; and the country's overall investment climate. This has also been confirmed numerous times by IMF and the World Bank, which state that countries that are most successful in attracting foreign investors did not have to offer tax holidays, but rather invested in other important factors such as good quality infrastructure, low administrative costs of setting up and running businesses, political stability and predictable macro-economic policy that will encourage growth and expansion of indigenous investments. The same questions abound whether it is relevant and critical to offer tax holidays to attract FDI. 

 

Please get the full press statement. 

 

On Sunday, 21st May 2017

President Yoweri Museveni and his Tanzanian counterpart, President John Pombe Magufuli have today signed an East African Crude Oil Pipe Line Agreement (EACOP) as an expression of intent to go ahead with the construction of the 1,400kms oil pipe line from Hoima district in Western Uganda to the Tanzanian Port of Tanga.


The initialing of the agreement followed bilateral talks between the two leaders held at State House, Dar-es-Salaam today where they also discussed modalities for the implementation of the pipeline and the agreed terms of the construction. "I am very happy to be in this State House where we have signed and concluded all the outstanding issues concerning the oil pipe line agreement. We have agreed that the value added tax to this project is deemed to have been paid.," Mr. Museveni said.

The President said that the project itself is a culmination of a lot of work and that it showed that East Africa can do things if they want to.
"We have been negotiating on the terms of this project. It is a realization of the economic and social development of the country. This project will benefit Uganda and Tanzania. It is one of the strategic ways for the integration of the East African Community and will strengthen our relationship," he said at the press conference.

The President disclosed that currently Uganda has 6.5 billion barrels of petroleum oil that can be used to economically transform the country. He expressed happiness that Tanzania had agreed to help out with the project.
"Once we found petroleum oil, my idea was to refine it and sell it in the country but they told me that since consumption in Uganda is low in Uganda, we need to get a way to transport it to other markets hence agreeing on the Tanga-Hoima road, "Mr. Museveni explained.

He noted that historically Tanzania has constantly been a peaceful and stable country and that this factor was favorable for the construction. He added that the fact that the land system in Tanzania is easier and Tanga is a protected Port, it makes it justifiable for the oil project as the waves of the ocean do not disturb the transportation. Mr. Museveni reiterated that one of the beneficiaries of the project would be the East African Airlines, which would be able to use jet fuel once it is refined instead of importing from other countries.

"Africa is huge and we need air transport to start using its own jet fuel. Our tourism industry is also big and we need this fuel to transport tourists. Very soon, we shall be able to compete with the Gulf region," he said.
President Museveni added that the oil project showed the importance of the political, social and economic integration.
President Magufuli of Tanzania, on his part, was very grateful for the partnership with Uganda because, he noted, it will create employment for both Uganda and Tanzania and will also be a good source of revenue.

He also noted that as a result of this project, the cost of oil in both countries would drastically reduce making it cheaper to buy. He said that Uganda and Tanzania have laid a foundation stone for the project and expressed the hope that the good that relationship with Uganda and Tanzania would continue.

Source: Uganda Media Center

 

Kampala — More than 800,000 tonnes of equipment is expected to be transported to the Albertine oil region as Uganda seeks to produce first oil by 2020 thus presenting a huge opportunity for the freight and logistics industry.

This comes after the launch of the Front End Engineering Design (FEED) for the crude export pipeline from Hoima to the Port of Tanga in Tanzania and the same for Nwoya and Buliisa exploration areas.

In order to prepare for this opportunity, players in both the freight and logistics industry the Uganda Freight Forwarders Association (UFFA) and Uganda Chamber of Mines and Petroleum (UCMP), are jointly organising an inaugural regional Logistics EXPO 2017 and the 3rd Annual Oil & Gas Convention in Kampala to run from April 25 to 27.

The joint event will be held under two themes: "Transforming Uganda into a Regional Logistics Hub - What is your role?" and "Oil & Gas Doors Open in Uganda".

Speaking at a media briefing in Kampala on Monday, the chairman-Uganda Chamber of Mines and Petroleum, Mr Elly Karuhanga, said: "For this task to be realised, the logistics industry has to attain very high capacity and become extremely efficient."

Mr Karuhanga said, with more than 1,000 delegates expected from across the world, the symposium will present an opportunity for joint-venture partnerships within the logistics industry, between local players and their large international counterparts to build the capacity needed to serve the oil industry.

 Speaking of the importance of collaborating with the oil and gas sector, Ms Jennifer Mwijukye, the outgoing chairperson of the UFFA, acknowledged the need to join forces and define strategic economic interventions that can spur sustained economic growth in Uganda.

"Both the logistics and oil industries believe that transforming Uganda into a regional logistics hub will significantly help the country attain its middle income aspirations," Mwijukye said.

She added: "It's only natural that being the main organisation in transport and logistics, the UFFA takes the lead in championing the call for Uganda's transformation into a logistics hub."

Ms Merian Sebunya, a board member of the Private Sector Foundation Uganda (PSFU), one of the partners of the event, said: "Uganda's key sectors of agriculture, manufacturing, mining and very soon oil, require transportation of large quantities of freight of low to medium value."

She added: "This has compelled the PSFU to establish the National Logistics Platform, with support from Trademark East Africa, that seeks to develop a comprehensive strategy to enhance the logistics industry."

 

SOURCE: The monitor

Members of Parliament and human rights activists have asked government to enforce the laws in the mining sector to protect the right of women in the sector. The MPs and other stakeholders said women in the minerals sector face a lot of challenges, which need to be addressed.

The call was made during the National Dialogue on Land and Extractives, under the theme, "Harnessing citizen participation for good governance and sustainable livelihoods," at Hotel Africana on Wednesday, April 26, 2017. The conference was attended by government officials, artisanal miners, district leaders, cultural leaders and civil society representatives among others.

Nivatiti Nandujja, Human Rights Coordinator at Action Aid Uganda (AAU), said the extractives sector is male dominated and women participation is wanting. She explained that the few women employed in mines are working under inhuman and poor working conditions with meager pay.

 

Catherine Nyakecho, the principal Geologist in the Ministry of Energy and Mineral Development, disagreed with Nandujja that the minerals sector is male dominated. She quoted a research by African Center for Energy and Mineral Policy (ACEMP) that revealed that of the sites visited, women are more into stone quarrying, salt mining, marble, limestone, and sand mining - the low value minerals, while the men are where the money is.

Catherine Nyakecho, Principal Geologist, Ministry of Energy and Mineral Development speaking at National Dialogue. Photo by Francis Emorut.

However, she said women in mines have been exposed to more poor working conditions than men. For instance in stone quarrying, she said women and children are engaged in crashing stones with their bare hands, which exposes them to accidents and a lot of dust, which affect their lives.

 Despite spending a whole day crashing stones, women get meager pay. "Stone quarries lack toilets and therefore women during menstruation periods have to travel back home for health break - wasting a lot of their valuable time and when they fall sick, they get no payment," she said.
 
 Nyakacho explained that in salt mining, men wear condoms to prevent salty water from entering their bodies through their private parts, but in contrast, though women need protective gears too, they are normally not provided for, and thus enter salty water without protective gears, which has negative consequences on their health.

In gold mining, women are exposed to dangerous chemicals like mercury. Whereas the men get the ore or gold sand out of the ground, Nyakecho said women are exposed to mercury during panning for gold which affect their lives. Weighing in on mercury, one of the participants from Amudat district said there is a worrying trend that feet/legs of women working in goldmines are swelling, due to what she suspects could be prolonged exposure to mercury.

Deborah Ariong, the Natural Resources Officer, Amudat district, said she had witnessed breast-feeding mothers panning gold with mercury and then breast-feed babies thereafter. She called for strict enforcement of health and safety measures in mines like ensuring all workers wear protective gears.

Betty Atiang, programme Manager at Saferworld Uganda, told the extractives sector in Uganda is expanding, and as it expands, it is worsening existing tension and exposing new conflicts. The sector, she explained, is faced with land conflicts in form of land grabbing, contention over surface rights, conflicts that relate to allocation of royalties, environmental degradation and gender based violence among others. She observed that conflict is an impediment to good governance and implored participants to make a contribution towards promoting conflict free extractives sector, transparency, accountability, citizen's participation in decision making.

 Drawing from his experience as an artisanal miner in Mubende district, Emmanuel Kibirig said women of today can do mining, though by their nature they can't go inside the pit. Therefore, in the pit, miners don't employ women. He explained that in gold mining, the value chain is that men dig and go inside the pit in order to extract gold ores/sand on the ground for women to their work in the value chain.

Mukitale Mukitale, the MP Buliisa, said women artisanal miners need to form strong cooperatives or associations, through which they can demand for more protection and seek help. Weighing on the discussion, Adong Lilly, Woman MP Nwoya district, told in order to protect women rights, there is need to amend the laws and policies governing the minerals sector to cap a percentage of jobs and contracts to be given exclusively to women. This will ensure that women in the sector are empowered.

 

Source:Oil in Uganda

Many economists tend to produce short-term (5-year) projections of economic performance, probably a strategy to remain safe, since no one can exactly predict the future.

In addition, they tend to focus on macro-parameters, because micro-parameters are highly volatile. Although macro-parameters are good indicators of economic performance, they rarely tell the real individual’s experience – many are performing far below the macroeconomic indicators.

Uganda’s economic performance has persistently been rated poor, despite registering positive macroeconomic indicators above 4.0% over the last 14 years. Most Ugandan are struggling to make “ends-meet”; aggregate demand is low; businesses are struggling to “stay afloat”; the banking sector is bedeviled by non-performing loans; tax revenue performance is below annual targets; and government is struggling to pay bills, which are all symptoms of an economy in recession.

This is further blamed on political, environmental and regional factors like the multiple severe droughts; political turmoil in Burundi and civil conflicts in South Sudan and the Democratic Republic of Congo that have reduced tourism receipts, Foreign Direct Investments (FDI), and exports of goods and services.

This article, however, focuses on issues not commonly evaluated as possible contributors to the recession when analyzing the country’s economic performance and these include:

Over-Dependence on Foreign Direct Investment (FDI)

We have seen our politicians traveling abroad at taxpayers’ expense and hobnobbing with multinational companies in the name of soliciting for FDI and forgetting to interact with Ugandan companies or according foreign investors red-carpet reception, while treating Ugandan businessmen as unimportant.

While FDI is not essentially bad, to think that FDI is the key driver of economic growth and development is a misguided mindset. In the current investment policy framework, multinationals expatriate huge amounts of money that result in a net outflow of capital from the country, thus bleeding the economy.

It is insignificant for one to argue that some money remains in the form of salaries, rental charges, taxes and other operational costs as a benefit to the country. One needs to compare FDI with the net outflow of capital and justify the value of FDI to the economy.

Government needs to invest in indigenous businesses by offering them affordable credit and according similar incentives or relief as those offered to multinational corporations. We could call this shift of focus “Internal Direct Investment (IDI)”.

Expatriation of 100% of the Profits in a single Financial Year

Uganda’s investment incentive to multinational corporations is the opportunity for them to expatriate 100% of their profits every year. While this is just, it results in a net capital flight, leaving the economy severely bred.

Often companies employ tax planning strategies to skim-off more profits in the guise of operational costs paid to subsidiaries/ shell companies abroad, which goes unnoticed or is sanctioned by the tax authorities as a result of monitoring and auditing weaknesses in the tax body.

This could explain the net capital outflow that the African continent has suffered over the years. In some African countries, multinational corporations are not allowed to expatriate 100% of their profits in a single year, but are allowed to stagger the transfer of monies abroad.

Uganda seems to being taking a similar trend with oil revenues, where the Public Finance Act 2015 allows up to 50% expatriation of profits in a single year. In some cases, corporations are required to build own offices in the host country and cease renting. In others, 15% of the foreign exchange entering the country is retained as a surcharge/ fee. This has the effect/impact of keeping capital within the country and thus helps to stabilize the economy. Uganda is currently suffering escalating inflation due to a net outflow of capital facilitated by expatriation and imports that exceed exports.

Tax Exemptions

Uganda has a policy of offering tax exemptions as an incentive of promoting investment, growth and development. This is done on the belief that the beneficiaries are doing charitable work and service not offered through regular government goods and service delivery systems or with the intention of triggering the emergence of a given economic sector and/or to reduce the cost-burden on the final consumer of a product or service.

Tax exemptions are not free; they must be paid by government using taxpayers’ money. While tax exemptions are not entirely bad per-se, the manner in which exemptions are awarded and the number of exemptions is the source of the problem.

We have seen tax exemptions awarded selectively to corporations that have political connections and those where the exemptions did not result in the intended benefits, yet they are causing significant hemorrhage of the tax revenue and instead enriching the corporations.

This year alone government will pay 77 billion shillings of taxpayers’ money to pay taxes for a select group of companies (i.e. BIDCO Oil Refineries Ltd; Aya Investments; Steel and Tube; Cipla Quality Chemicals, Uganda Electricity Generation Company and Uganda Electricity Transmission Company Ltd.) and such payments have gone on for the last 3 decades and are expected to continue.

Award of tax exemptions should be informed by cost-benefit and opportunity-cost analyses and their effect/impact routinely monitored to justify their existence. But often, this is not the case in Uganda. Imagine what this money would have achieved in education, health and agriculture – the often underfunded sectors.

 Water Governance Institute is a member of the Uganda Tax Justice Alliance; Civil Society Coalition on Oil and Gas (CSCO); and the Uganda Contracts Monitoring Coalition (UCMC).

 

Women panning-off earth tailings with no protective gear to reveal the Gold impregnated Mercury at “Kampala” Gold mining site in Kitumbi sub-county, Mubende district. .
Women panning-off earth tailings with no protective gear to reveal the Gold impregnated Mercury at “Kampala” Gold mining site in Kitumbi sub-county, Mubende district. 

Uganda’s abundant mineral wealth if well managed has the ability to enhance the economic fortunes of the country. Indeed, many Ugandans view mineral resources– such as gold in Mubende and the Karamoja region– as critical precursors to the country’s move towards prosperity as well as the means for lifting thousands of people out of poverty. This mineral wealth is captured in the country’s economic blueprint “Vision 2040” as a driver of growth and development.

While, admittedly, the exploitation of mineral resources could bring prosperity to Uganda, they could fuel violations of human, health and safety rights, particularly, the right to a clean and health environment as provided in country’s constitution and environmental regulations.

During a recent field trip by Water Governance Institute staff to the gold mining areas of Mubende district, it was observed that women gold miners were found using Mercury Oxide and Cyanide in gold extraction. These are highly toxic and dangerous substances, which if ingested or gain entry into the human body could result in serious health problems and ultimately death of the affected persons. These chemicals are particularly risky to women, because it is the women that are mostly engaged in extracting the gold from the earth tailings using a mixture of water and any of mentioned chemicals.

30-year old Rose Namaye (real name withheld) holds a basin containing Gold impregnated Mercury after panning off the earth tailings at “Kampala” Gold mining site in Kitumbi sub-county, Mubende District

30-year old Rose Namaye (real name withheld) holds a basin containing Gold impregnated Mercury after panning off the earth tailings at “Kampala” Gold mining site in Kitumbi sub-county, Mubende District

In addition, women often work with no or inadequate protective gear, which worsens their exposure to the hazardous chemicals.  Women do this usually out of ignorance or mire lack of enough money to buy the protective gear. This is worsened by the low labour wages they are paid for their work.

Laboratory analysis of soils and water taken from selected sites in Mubende revealed pollution levels of up to ten times the permissible levels by the National Environment Management Authority (NEMA) and the World Health Organization (WHO). Similar results were obtained in respect to Cyanide in water. Water Governance Institute is planning a multi-stakeholder dialogue that will bring together government officials, ASM-miners and CSOs to deliberate on the findings a chart a way forward.

According to the World Health Organization, Mercury is highly toxic to human health and inhalation of Mercury vapour can produce harmful effects on the nervous, digestive and immune systems, including organs like the lungs and kidneys, resulting in death.  Similar effects to the human body have been reported by other experts.  NEMA puts the permissible levels of Mercury at 2.0 milligrams per kilogram of soil and 0.001milligrams per litre of water, while WHO puts it at 8.0milligrams per kilogram soil and 0.001milligrams per litre of water.

In respect to Cyanide, NEMA’s permissible level is at 10.0milligrams per kilogram soil and 0.1milligrams per litre of water. The WHO’s standard for Cyanide is 0.2milligrams per litre of water. WGI’s search of the WHO records online did not reveal any permissible standard for Cyanide in soils, this is probably because Cyanide is unacceptable in soils by WHO standards or WHO has not yet investigated Cyanide in soils to set a standard.

It is clear that while NEMA and WHO are in agreement on the permissible levels of Mercury in water, their standards differ for soil. NEMA’s standard for Mercury in soil is more stringent and restrictive. Likewise, the NEMA standard for Cyanide in soils and water is more restrictive and stringent compared with that of WHO. In such cases, it is better to enforce the NEMA standards for Mercury and Cyanide.

Women panning-off earth tailings with no protective gear to reveal the Gold impregnated Mercury at “Kampala” Gold mining site in Kitumbi sub-county, Mubende district. .

Women panning-off earth tailings with no protective gear to reveal the Gold impregnated Mercury at “Kampala” Gold mining site in Kitumbi sub-county, Mubende district. 

Gold impregnated Mercury (Whitish material in basin) revealed after panning-off earth tailings at “Kampala” Gold mining site in Kitumbi sub-county, Mubende district

Gold impregnated Mercury (Whitish material in basin) revealed after panning-off earth tailings at “Kampala” Gold mining site in Kitumbi sub-county, Mubende district

According to the December 2015 Auditor General’s report on Regulation, Monitoring and Promotion of the Mining sector, the artisanal, small- and medium-scale mining sector employs up to 200,000 people in Uganda of which 50% are women. This suggests that 100,000 women are exposed to the harmful Mercury and Cyanide chemicals. This is not a small number that can be ignored by any administration.

Since the women gold miners are not in position to effectively protect themselves from the negative effects of chemicals used in gold mining, it is important for government to require mining companies and/or individuals employing women in gold extraction to provide them with safety gear and to comply with health and environmental standards and practice. Also, civil society actors and other development partners should come to the aid of such women, including men.

While we recognize the efforts government is undertaking to revise the mining policy and legislation, we think government is slow (or is it reluctant) to put in place a mechanism that will regulate artisanal, small- and medium-scale mining, including the formalization of this sub-sector.  The new mining policy and laws should also be guided by the aspirations and principles of the Africa Mining Vision (AMV) and Agenda 2063, which recognizes a mining sector that harnesses the potential of artisanal and small-scale mining to stimulate local/national entrepreneurship, improve livelihoods and advance integrated rural social and economic development.

SEATINI-UG with other CSO members holding a press conference on 21/04/2017

SEATINI-UG alongside members of the Tax Justice Alliance including,Water Governance Institute, Oxfam, Civil Society Budget Advocacy Group (CSBAG),Uganda Debt Network(UDN), Action Aid Uganda (AAIU), Citizens Watch-Information Technology (CEW-IT), Women and Girl Child Development Association (WEGCDA) and Inter University Tax Justice Forum, issued a press statement  at SEATINI Uganda offices in Kampala this 21st April 2017 to present observations and recommendations in respect to the tax measures that were presented to Parliament.  

The Minister of Finance Planning and Economic Development developed and presented the tax revenue measures for FY 2017/18 contained in the Excise Duty (Amendment) Bill 2017, Value Added Tax (Amendment) Bill 2017, The Income Tax (Amendment) Bill 2017 and the Tax Procedures codes Bill, 2017. For the first time, we have observed that the bills were submitted along with certificates of financial implication, a practice that we commend.

As of half year of the FY2016/17, Uganda has revenue shortfall of UGX 166.44bn partly coming from the customs shortfall of UGX 206.58bn and an offset from the domestic side over performance of UGX 40.14bn. Tax revenue for the FY2017/18 is projected to be UGX 14,682bn. (87.9% of total revenue and grants – 16,698bn) which is 16.9% increase from the FY2016/7 estimates. Uganda Revenue Authority collections for 2017/18 are targeted at about 14.5trillion. This will need concerted efforts from all entities in Uganda including citizens.

Among the proposals, CSOs welcomed the following tax proposals to improve revenue collection and facilitate investment in the FY 2017/18 and beyond including; An increase of Excise Duty from UGX50, 000 to 55,000 per 1000 sticks (soft cup) for cigarettes will increase revenue, 60% proposed tax on malt beer or 1860 per litre, whichever is higher under the excise duty (amendment) bill, lotteries and Gaming Act, 2016, the inclusion of another categorization for the fruit juice and vegetable juice, except juice made from at least 30% of pulp from fruit and vegetables grown in Uganda will encourage our home industries and strengthen the Buy Uganda Build Uganda policy as well as boost the agriculture sector,  withholding tax rate applicable to winnings from sports betting and pool betting of 15% is commendable, increase on imported furniture and furniture assembled in Uganda from 10% in FY2016/17 to 20% FY2017/18 to encourage local production.

However there were a number of concerns raised by the CSOs. Among them was the issue of tax exemption given to Bujagali dam. A question arose as to whether there will be reduced power tariffs to the benefit of consumers or instead the burden will befall the tax payer! 

For more information please download the full tax revenue measures presser on the link below. Nice reading

 

CIVIL SOCIETY POSITION ON TAX REVENUE MEASURES FOR FY 2017-18 (351 KB)

Works. Hoima-Kaiso Tonya road being tarmacked by Kolin construction Ltd. The road sector is set to get the lion’s share of the 2017/18 national budget. Photo by Francis Mugerwa.

 

By Isaac Imaka, Ibrahim Manzil & Joseph Kato

PARLIAMENT. Works and Transport docket will take a lion’s share of the next financial year budget, with more than Shs4 trillion, going towards major infrastructure development projects such as roads and the railway.
The new figures contained in the budget estimates for Financial Year 2017-2018 presented to Parliament’s Budget Committee show that Shs22.03 trillion will be allocated to the various sectors of the economy, with the Shs7 trillion earmarked for recurrent expenditure, debt financing (domestic and foreign) among others.
Energy and Mineral Development where key infrastructure projects such as hydropower dams fall will take more than Shs2.3 trillion, health Shs1.8 trillion while security will take Shs1.4 trillion. However, the agriculture budget has been cut from Shs209.7b in the current Financial Year (FY) to Shs195.3b in the next FY, recording a decrease of Shs14.4 billion.

The Education ministry has also remained one of the big earners with a Shs2.4 trillion budget. The allocation represents a 11.3 per cent share of the national budget. More than half of the ministry’s budget, Shs1, 455.86 trillion, will go to paying wages.
Despite the ministry’s budget growing by Shs26.58b up from Shs2.447 trillion, the ministry can’t still find Shs14b for menstrual pads for primary school- going girls in the villages.
As a solution, the ministry notes in its policy statement that, “there is a need to increase the unit cost for UPE capitation by Shs2,000 to cater for distribution of menstrual PADs to girls in primary schools totalling to an addition shs14.38b.”
While discussing the agriculture financing at a workshop organised by Civil Society Budget Advocacy Group (CSBAG) on Tuesday, MPs, farmers and civil society organisations (CSOs) called for increased budget for agriculture sector and complained that the reduction in the budget would hamper economic growth in the coming financial year.

Mr Patrick Katabazi, CSBAG’s consultant, said the budget reductions would not only incapacitate sensitisation on good agriculture practices but also the quantity and quality of output is likely to be affected.
“The wage budget should be growing to the level of the staffing in the sector following the ongoing recruitment of the extension staff. The non-wage budget should be restored at least to the level of the FY 2016/17emphasising facilitation for extension staff,” Mr Katabazi said.
Presenting the estimated before the House’s budget committee yesterday, State minister for Planning, Mr David Bahati, however, announced a raft of tax measures starting in July this year as part of revenue measures.
The new taxes are expected to help government raise at least Shs452b.

Bahati said that although the new tax measures will leave government with a Shs105b hole in the budget— because of the tax exemptions— the new taxes will plug the gap in revenue collections. The key entity in tax exemptions is Bujagali Hydro Power Project which amounts to Shs80 billion. The power projects will, if Parliament approves, enjoy a 13- year tax breather. With that respite, Minister Bahatai said, government will “reduce the cost of power supplied by the project to the national grid.”
The minister also announced a Shs5m levy on the importation of firearms, regardless of the quantity. The government has however, kept the annual gun permit at Shs200,000.

Unfunded priorities
As Parliament goes through the budgets from the different sectors, there is a cocktail of unfunded priorities that the ministries have presented for consideration by Parliament. The revenue shortfalls in the 2017/18 budget were mainly caused by President Museveni’s directive to cut sectoral allocations by at least 10 per cent so as to raise counterpart funding for oil roads.
Mr Museveni’s government has staked a Shs2 trillion infrastructure project to support oil production in the Albertine Graben. The President has promised to transform Uganda from a low income country and a middle income status by 2020.

Further scrutiny of the 2017/18 budget allocations revealed that the Ministry of Gender, Labour and Social Development alone has unfunded activities to a tune of Shs138b. It’s not clear whether Parliament will close the funding gaps in the face of competing priorities in the upcoming budget.
The KCCA’s unfunded priorities are estimated at more than Shs206.5b among which is the budget for the compensation of Usafi market claimants and the rehabilitation of roads works in the city.
In the Water and Environment ministry, Shs90b for the construction of piped water supply systems in the rural areas has not been provided for. In the Public Administration sector, the Shs15b needed for onward transfer to political parties has not been provided.

Tax measures
Value Added Tax (VAT) on wheat is to be reinstated, from which government hopes to raise Shs30b revenue. In his justification for the reinstatement of VAT on wheat, Mr Bahati said the move will “minimise revenue leakage arising from VAT exemption of wheat grain and promote wheat growing in Uganda.”
Tax administration measures are to yield Shs228.46b through strengthening of debt recovery, implementation of the receipt utilisation campaign and revenue from the real estate sector, which will bring an additional Shs40b.
A 10 per cent import duty tax on Crude Palm oil will be reinstated, from which government hopes to realise additional revenue of Shs50b.
According to the document, government plans to bolster the resource envelope with increased collection in domestic revenue from Shs12.9 trillion in Financial Year 2016/2017 to Shs15 trillion in 2017-2018.

The government hopes to raise Shs954b through domestic borrowing; Shs125b will be come from the Petroleum Fund while budget support will bring in an additional Shs35b. Project external financing will bring Shs7 trillion, appropriation in aid, Shs7 trillion and domestic debt financing, Shs4.9 trillion.
Government’s strategy for revenue enhancement will be achieved, reads the document, “through enhancing the efficiency of tax administration by providing Uganda Revenue Authority (URA) with additional budget to invest in the identified tax compliance initiatives.”

Ministry criticised
The House’s Budget Committee chairperson, Mr Amos Lugoloobi and other committee members, however, criticised the Finance ministry over failure to factor in recommendations of changes to the Budget Framework Paper made by Parliament. They instructed ministry officials to bring the explanation next week.
“The question is whether the minister recognises the role of Parliament on the Budget Framework paper because nothing was picked from Parliament,” Mr Lugoloobi said.
Mr Muwanga Kivumbi, (DP, Butambala), also criticised Mr Bahati for “deviating from the Budget Framework Paper approved by Parliament.”
Mr Bahati however, defended the Finance Ministry from the attacks, telling MPs “there are some recommendations that we have addressed in the BFP and there are some that we have failed to address [due to unavoidable circumstances]… we shall bring a matrix of what we have adopted.”

BIGGEST EARNERS

Works ministry (4.631.2 Trillion)
Sector Allocation
1. Works ministry Shs528.942b
2. UNRA Shs3.8trillion
3. Road Fund Shs417.413b
4. KCCA Shs95.605b
5.Local Governments Shs22.840b

EDUCATION MINISTRY (Shs2.475T)
1. Education Shs538.157b
2.Busitema University Shs25.585b
3.KCCA Shs33.564b
4. Muni University Shs11.329b
5. UNEB Shs29.819b
6. Education SC Shs5.720b
7. Makerere University Shs134.242b
8.Mbarara University Shs31.366b
9.MUBS Shs22.434b
10. Kyambogo University Shs40.988b
11.Uganda Man. Institute Shs3.521b
12. Gulu University Shs24.864b
13.Lira University Shs7.816b
14. NCDC Shs6.699b
15. Kabale University Shs8.101b
16. Soroti University Shs10.912b
17. Local Govts Shs1.384.906T

ENERGY MINISTRY (SHS2,379.2 t)

1. Energy Shs2.519.140T
2.Rural Elect Agency Shs480.507b

HEALTH MINISTRY (sHS1.821 t)
1. Health Shs468.324b
2.Uganda AIDS Commission Shs7.315b
3. Uganda Cancer Institute Shs45.443b
4. Uganda Heart Institute Shs 11.796b
5. National Medical Stores Shs237.964b
6. KCCA Shs5.806b
7. Health Service Commission Shs4.512b
8. UBTS Shs8.877b
9. Mulago Hospital Complex Shs61.437b
10. Butabika Hospital Shs10.879b
11. Arua Referral Hospital Shs5.641b
12. Fort Portal Hospital Shs6.025b
13. Gulu Hospital Shs5.466b
14. Hoima Hospital Shs6.595b
15. Jinja Hospital Shs7.123b
16. Kabale Hospital Shs5.194b
17. Masaka Hospital Shs7.037b
18. Mbale Hospital Shs11.484b
19. Soroti Hospital Shs5.201b
20. Lira Hospital Shs5.669b
21. Mbarara Hospital Shs6.219b
22. Mubende Hospital Shs5.426b
23. Moroto Hospital Shs4.781b
24. Naguru Hospital Shs6.293b
25. UVRI Shs1.661b
26. Local Governments Shs337.570b

Security (Shs1.463.5 t)
1. Office of the President Shs59.2b
2.Ministry of Defence Shs1.8trillion
3. ESO Shs26.565b

Public Sector (Shs1.440.5t)

1. Office of the Prime Minister Shs213.187b
2.Ministry of Public Service Shs22.504b
3. Local Govt ministry Shs285.658b
4. East African Community Shs28.657b
5.National Planning Authority Shs21.340b
6. KCCA Shs35.825b
7. Public Service Commission Shs5.878b
8. Local Govt Fin Commission Shs4.993b
9. Local Governments Shs555.486b

Source: the daily monitor

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