Politics of Domestic Resource Mobilization: Uganda National Workshop

Funding of its poverty reduction and social development projects continues to be a challenge for Uganda, a country that not long ago was considered to be one of the darlings of the international donor community. However, this harmonious relationship has suffered from tensions in recent years.

Foreign aid has historically been a major source of government revenue, amounting to as much as half of the public budget in 2011. But the financial crisis and subsequent austerity measures have meant that aid levels have been dwindling, putting pressure on Uganda to diversify its revenue base. Yet, tax collection accounted for only 12.6% of GDP in 2012, despite the national economy growing at a regular rate of 7% between 1998 and 2006. A new source of government revenue may become available in the form of oil revenue, as commercial exploitation of oil discoveries made in 2006 are expected to begin in 2018—but its long-term sustainability is a source of concern.

As a result of low revenue, social policies have faced constraints that have been hindering their effectiveness. 64.7% of the population still live on less than $2 a day (according to 2009 figures), and the level of human development continues to be one of the lowest in the world, with Uganda ranking 164th of 187 in the UNDP Human Development Report Statistics of 2013.

The challenges facing the country are therefore substantial, as sustainable revenue streams must be identified and secured in order to support social policies and address human development priorities.

Sharing and garnering insights

The politics surrounding these issues were discussed in a national workshop organized by UNRISD within the context of the Politics of Domestic Resource Mobilization for Social Development project (PDRM). Held at the Protea Hotel in Kampala, Uganda on 24- 25 September, this was the second country-based meeting of the project, after a workshop held in Bolivia in April 2014. These meetings represent opportunities for country researchers to share and disseminate their findings with a broad set of stakeholders such as civil society representatives, academics and journalists, but also to receive feedback and insights from the invited experts.

The workshop included a number of prominent researchers, government representatives, international stakeholders and members of Ugandan civil society, including media. The diversity of participant backgrounds led to a fruitful and lively discussion: many thoughts about the current state of Ugandan politics were voiced, and invaluable experiences were shared, contributing to a better understanding of the topic and the issues faced by the Ugandan government in improving the fiscal sustainability and effectiveness of social policies as well as the role of civil society and external actors in these processes .

Lack of citizen participation in tax bargains

The discussion followed from the three main topics covered by the PDRM project. In a first instance, the participants discussed how contestation and bargaining—and in particular, who participated and negotiated—affected national policies of taxation and welfare. The main point presenters and discussants addressed was the lack of citizen participation in tax bargains, which stems from three broad factors. Firstly, the high level of informal sector employment prevents a large part of the population from paying direct taxes and therefore from making demands on governments regarding redistribution measures. Secondly, taxes are perceived as punitive measures that serve mainly to feed corruption, thereby deterring citizens from contributing to tax revenues and from holding governments to account. Finally, tax policy is considered too technical to be addressed by the general public—a factor that also contributes to explaining Members Parliament’s relative indifference to the issue. To counter the trend, civil society has in recent years become more engaged in public education to advocate for tax reforms leading to higher progressivity and fairness in taxation, change perceptions about taxation and encourage contribution and participation. Yet the majority of tax revenue continues to be extracted from 10% of the population, leading the business community to engage strongly—and most effectively—in tax negotiations.


The discussion then moved on to analysing the evolution of relations between the central government and donors on the one hand, and Ugandan citizens on the other. Relations between the former, it was noted, had moved from consensual to contentious. Indeed, social policy, once a shared priority of international donors and the government as part of the poverty reduction strategy papers, is now being pushed to the background due to popular discontent over the quality of social services and the widespread silencing and distancing of civil society away from policy making. In turn, the mobilization of resources through diversification of donors and revenue sources (with the contribution of Chinese foreign aid for example and prospects for oil revenues) has given the Ugandan government greater policy autonomy from its donors and served to re-orient policy priorities away from donors emphasis on poverty reduction concerns and toward economic policies and infrastructure development.

Personalities or institutional needs?

Finally, the dynamics surrounding institutional change, and their implications for the effectiveness of both revenue mobilization and social policy were debated. The project research had found that those institutions whose reforms involved most personalized government interference (for example the Uganda Revenue Authority and Kampala City Authority) paradoxically tended to become more effective than others (such as the Ministry of Health), mainly because of higher resource allocations and “protection from above”. This has wide-ranging implications for the sustainability of institutional activities, as the disbursement of funding has become dependent on personalities and their relations with the central government and the President rather than on institutional needs. In turn, these cases of direct patronage pose a threat to the democratic consolidation of the country and might lead to the erosion of institutions, as observed by several participants.

In sum, the discussion on the Politics of Domestic Resource Mobilization in Uganda showed the complex picture of a country that has moved from being highly aid-dependent toward having more fiscal policy space fed by higher tax revenues, future oil rents and increased funds from emerging donors. The conceptual approach of grounding analysis of revenue mobilization firmly into the historical economic and political context of the country and to focus on reform processes, changing relationships and institutional outcomes was deemed fruitful for understanding the current and future challenges Uganda faces. These are related to deepening both fiscal capacity and social investments and to building strong ties between political actors, citizens and investors in a way that reflects growing accountability, transparency and credibility.


By Nathalie Both and Katja Hujo

Workshop participants

Research Team

Dr. Katja Hujo
Research Coordinator, United Nations Research Institute for Social Development, Geneva, Switzerland

Dr. Anne Mette Kjær
Associate Professor; Uganda Country Research Team Leader
Department for Political Science and Governance, Aarhus University, Denmark

Dr. Marianne Ulriksen
Senior Research Fellow, Centre for Social Development in Africa, University of Johannesburg, Johannesburg, South Africa

Dr. Jalia Kangawe
Principal of the East African School of Taxation, Uganda

Dr. Mesharch Katusiimeh,
Uganda Christian University, Mukono, Uganda


Discussants

Ms. Annet Bazalilaki
Uganda Revenue Authority, Kampala, Uganda

Ms. Catherine Kansiime
Ministry of Finance, Planning and Economic Development, Kampala, Uganda

Dr. Daisy Owomugasho
Country Director, The Hunger Project Uganda, Kampala, Uganda

Prof. David J. Bakibinga
Professor of Commercial Law and Head of the Department of Commercial Law, School of Law, Makerere University, Kampala, Uganda

Mr. Fergal Ryan
Component Manager, Voice and Accountability, Democratic Governance Facility (DGF), Kampala, Uganda

Dr. Francis Wasswa
Ministry of Finance, Planning and Economic Development, Kampala, Uganda

Ms. Jane Seruwagi Nalunga
Country Director, SEATINI Uganda, Kampala, Uganda

Mr. John Bosco Mubiru
Development Research and Training, Kampala, Uganda

Prof. Joshua Rubongoya
Department of Leadership and Governance
Makerere University Business School

Mr. Pius M. Katunzi
Business Development Director, The Observer, Kampala, Uganda

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Photo: Stefan Gara via Flickr (CC BY-NC-ND 2.0)