Ramathan Ggoobi, Permanent Secretary and Secretary to the Treasury in the Ministry of Finance, Planning, and Economic Development, emphasised this achievement during the release of the third-quarter expenditure updates.

“This growth is a testament to our deliberate efforts to diversify export products and enhance the competitiveness of Uganda’s goods on the international market,” Ggoobi stated.

The surge in export earnings was largely driven by coffee, Uganda’s top export commodity. Coffee exports increased significantly in both volume and international prices. Other key exports that contributed to the growth included mineral products, flowers, sesame (simsim), and tobacco, all of which performed better than the previous year.

The increase in export revenue has several positive implications for Uganda’s economy. First, it contributes to strengthening Uganda’s foreign exchange reserves, providing more stability to the shilling.

It also creates opportunities for job creation in the agricultural and manufacturing sectors. Additionally, the growth of exports boosts the overall trade balance, which is essential for sustaining long-term economic development.

However, Uganda’s import bill also increased, rising to Shs 11.829 trillion (USD 3.161 billion) in Q1 FY 2024/25, up from Shs 10.245 trillion (USD 2.746 billion) in Q1 FY 2023/24. This rise was driven primarily by higher imports of machinery, electronics, and industrial inputs.

Despite the increase in export revenue, the widening import bill led to a slight rise in the trade deficit by 1.2%, from Shs 3.290 trillion (USD 888.38 million) in Q1 FY 2023/24 to Shs 3.388 trillion (USD 898.66 million) in Q1 FY 2024/25.

“The widening trade deficit underscores the need to focus on import substitution industries to reduce reliance on foreign goods,” Ggoobi remarked.

Uganda also recorded impressive growth in Foreign Direct Investment (FDI), which surged by 25.4%, reaching Shs 2.974 trillion (USD 799.46 million) in Q1 FY 2024/25, compared to Shs 2.390 trillion (USD 637.58 million) in Q1 FY 2023/24.

“This increase in FDI reflects the growing confidence of investors in our economy and highlights Uganda’s potential as a regional investment hub,” Ggoobi added.

Experts say that with the rise in export earnings and FDI, Uganda’s economic prospects remain promising. The government is committed to enhancing export diversification, promoting local manufacturing, and building economic resilience, all of which are crucial for sustainable growth in the long term.

This bold initiative seeks to boost efficiency, combat corruption, and expand financial inclusivity across the country.

Mobile technology is the driving force behind this transformation. Platforms like MTN Mobile Money and Airtel Money have already revolutionized access to banking, enabling millions to transact, save, and access credit through their mobile phones.

“Mobile money has changed my business; I can send and receive payments instantly without traveling to a bank,” said a small business owner in Kampala.

The government’s commitment is evident in policies like the Digital Uganda Vision and the National Payments Systems Act, designed to promote innovative, secure payment solutions while protecting consumers from fraud.

These frameworks aim to create a robust digital economy that benefits all Ugandans.

Digital payments offer numerous advantages. They reduce the logistical costs of managing cash, improve transparency by creating traceable records, and foster accountability.

For rural communities without access to traditional banks, mobile platforms serve as a vital bridge to modern financial tools.

“With mobile money, I can save for emergencies and pay school fees without leaving my village,” shared a farmer in northern Uganda.

However, challenges persist. Limited digital literacy, patchy internet coverage, and cybersecurity risks pose significant obstacles.

Cultural resistance to cashless transactions in certain communities adds to the complexity. To address these issues, Uganda is investing in education campaigns, improving infrastructure, and strengthening cybersecurity measures.

Uganda’s push for a cashless economy represents more than technological progress—it’s a shift toward socioeconomic empowerment.

By embracing digital systems, Uganda is not only transforming its financial landscape but also positioning itself as a leader in Africa’s digital revolution. This bold move could inspire similar transitions across the continent.

Uganda Revenue Authority has introduced a new tax compliance system that will help taxpayers maintain compliance and avoid adverse consequences. The domestic taxes compliance improvement plan (CIP) for the financial year 2024/25 lists 20 areas that, when not addressed by taxpayers, usually lead to inaccurate and incomplete returns.

This in turn attracts fines and penalties as as the taxpayer is declared non-compliant.

A part of URA plans to optimize revenue mobilization, the CIP is a set of activities undertaken to address risks arising from taxpayer behavior that may undermine tax collection. Under the plan, a new initiative dubbed “Real-time Audit has been created to examine taxpayers’ transactions in real-time, and where irregularities are detected, prompt alerts will be sent to the taxpayer on how to address the said issue.

This means taxpayers will receive regular notifications called “Real-time Tax Advisories” (RTA), based on what URA will have discovered in its review. The RTAs will highlight potential tax implications and offer relevant guidance on how to resolve them. This will help taxpayers minimize their tax liability and ensure timely compliance with tax obligations, according to URA, meaning that it is advantageous to both parties.

“The Advisories are aimed at helping the taxpayers in reducing their exposure to additional taxes, interest, and penalties, by encouraging timely and accurate declarations and tax payment,” says a statement by URA. The system therefore seeks to facilitate taxpayers to access URA services like the Tax Clearance Certificate, the Authorized Economic Operator status, and tax exemptions, among others.

The system was informed by the fact that improper behavior by taxpayers adversely affects revenue mobilization. Some behaviors that obstacles to revenue mobilization have been identified by the CIP, and the related risks include suspicious and unexplainable loans in their balance sheet, when a trader is eligible for VAT registration but is not registered, and inaccurate registration details.

Others include Local Governments not declaring all employees in their Pay As You Earn returns, variances between sales declarations and VAT declarations, a trader who has not declared VAT on imported goods, overstated trade payables, businesses in gross loss positions and partners not registered for income tax.

In total, there are 20 areas of focus considered risks. URA urges taxpayers to review their internal controls in the said areas as they transact during the year to ensure the accuracy and completeness of their declarations. URA is bidding to meet the 32 trillion shilling target that was set by the government for the tax body this financial year, up from the 29.6 trillion target for last year, when the collector fell short by 2 trillion shillings.

At a conference on tax incentives, tax policies, and tax administration for Ugandan investors, Ggoobi said digitising the tax system through digital stamps will support the government’s efforts to increase the tax-to-gross domestic product (GDP) ratio, thereby reducing borrowing.

The conference, held at Hotel Africana on September 4, 2024, was attended by Prime Minister Robinah Nabbanja, Minister of State for Privatization and Investment Evelyn Anite, and other stakeholders from the public and private sectors.

Ggoobi emphasized the importance of leveraging technology to modernize tax administration and enhance revenue collection.

“Government recognises the tax administration must evolve to keep pace with the changing economic environment, and this includes leveraging technology to streamline the tax processes, reducing the cost of compliance and enhancing transparency in tax collection, for example, the introduction of the e-tax, EFRIS and Digital Tax Stamps have significantly improved the efforts to modernize the tax administrations and also improve tax compliance,” Ggoobi said.

“Over the years, Uganda has made significant strides in strengthening the tax system, our revenue-to-GDP ratio has improved from a low of 8.8 per cent to 14.3 per cent this financial year. This upward trend is a testament to the reforms that government has implemented in the tax policy and administration aimed at broadening the tax base but also improving compliance and reducing tax evasion,” Ggoobi added.

Ggoobi said that the government is committed to addressing the remaining challenges facing investors and businesses, including easing compliance with tax regulations.

“The government is committed to addressing the remaining challenges facing investors and businesses, including easing compliance with tax regulations. The leadership is also committed to eliminating leakages and corruption that undermine tax morale,” he said.

Utility

In April 2019, the Uganda Revenue Authority (URA) launched the DTS initiative to combat illicit trade and seal revenue leakages.

Clare Musiime Bakanga, the URA Head of Change Management for Digital Tracking Solutions, said that many traders and businesses faced unfair competition due to the smuggling of goods.

She explained that URA is working with the Uganda National Bureau of Standards (UNBS) to minimize revenue leakages, combat illicit trade and money laundering, and ensure the traceability of products.

Digital Tax Stamps are physical paper stamps applied to goods or their packaging, containing security features and codes to prevent counterfeiting and tampering. These stamps also have track-and-trace capabilities, allowing consumers to validate the stamp, traders and manufacturers to track product movement, and the government to monitor product compliance.

A quick response (QR) code allows distributors, retailers, and consumers to use an app on their smartphones to verify the authenticity of the products.

When the stamps are placed on the products, they are registered both on the manufacturers’ server and URA’s digital server. According to Bakanga, this system enables URA to keep a record of how much was produced for the market and assess the applicable tax.

In February this year, the FAFT plenary, at its meeting in Paris, France, concluded that Uganda had fully implemented its action plan of addressing the strategic Anti-Money Laundering and Combating Financing of Terrorism deficiencies, which had been previously identified during evaluations.

As such, Uganda has been scrapped off the list of countries under increased monitoring (grey list). According to Bright Besigye, the manager of International Relations at FIA, in 2016, Uganda was assessed by the FAFT and found that the country had weaknesses within its systems.

And because of those weaknesses, it was placed under an observation period which ended in 2019. By the end of 2019, Uganda had been able to demonstrate significant progress, particularly at the technical level with the amendment of the Terrorism Act to make terrorism financing a crime; increased training of law enforcement forces; increased staffing of the financial intelligence unit; and an increased budget.

However, there was still lack of effectiveness in the implementation of FAFT standards and hence the country was placed on the grey list in February 2020.

The Post Grey List Exit Strategy, which was developed through the ministry of Finance, will see FIA increase awareness about money laundering and terrorism financing activities. The aim here is to have all stakeholders at each stage such as prevention, detection, investigation, prosecution, conviction and recovering proceeds understand their work, and have the right tools and skills to do their job.

The authority also wants to establish the National Money Laundering Safety Task Force under the minister of Finance to tackle financial crimes. The ministry has embarked on developing a successor strategy for the current FIA Strategic Plan, which expires in 2025.

The new strategy will bring on board measures that can deal with the current money laundering threats. The post-exit strategy further looks at building and increasing the capacity of other institutions to deal with money laundering and financing of terrorism crimes through training and stakeholder engagements.

“Recently, we held meetings with the leadership of the Uganda Police, the ministry of Internal Affairs, the judiciary, Bank of Uganda and several others. We want to build the capacity of other institutions so that it is not only the work of the FIA to combat these crimes,” Besigye added.

Uganda will undergo another mutual evaluation by the FAFT in 2028 and the FIA believes that this Post Exit Grey List Strategy will enable it pass that assessment.

“Our aim is to make sure that by 2028, we are able to avoid another grey list by partly implementing this strategy and making sure that all the requirements as expected of us are largely met,” Besigye noted.

He further explained that “as a country, we are striving to meet the minimum standards, apply the right measures, evolve as the crimes evolve and work with an all-government approach to deal with the crimes in their entirety.’’

Business executives remain positive and optimistic about the current business environment.

The report also noted a 1.1% appreciation of the Ugandan shilling against the US dollar, with the average mid-rate improving to Shs3,705.85/USD in July 2024 from Shs3,747.19/USD in June. This appreciation was primarily driven by an increased supply of dollars that exceeded demand.

Interestingly, while the Ugandan shilling appreciated, all other East African Community (EAC) currencies depreciated against the US dollar during the same period. The Tanzanian and Kenyan shillings saw declines of 1.2% and 0.5%, respectively, while the Rwandan and Burundian francs weakened by 0.5% and 0.2%.

In the financial sector, the Bank of Uganda maintained the Central Bank Rate at 10.25% in July 2024. However, in early August, the policy rate was revised downwards by 25 basis points to 10.0%. Lending rates for shilling-denominated credit decreased from 18.85% in May to 17.64% in June 2024, largely due to increased lending to prime borrowers, who secured loans at more favorable rates.

July 2024 saw the government raise Shs1,576.33 billion through the issuance of treasury instruments, with Shs823.00 billion from T-Bills and Shs753.33 billion from T-Bonds.

Yields on treasury bills generally declined, except for the 364-day tenor, which remained unchanged at 13.6%. The 91-day and 182-day tenors saw reductions to 9.9% and 12.9%, respectively, from 10.7% and 13.1% in June.

The stock of outstanding Private Sector Credit increased by 1.3% in June 2024, reaching Shs 21,919.51 billion, up from Shs 21,634.92 billion in May. This growth was driven by higher credit extensions due to the lower lending rates.

In trade, Uganda registered a surplus of USD 45.26 million with EAC partner states in June 2024, a significant shift from the USD 72.20 million deficit recorded in May.

However, Uganda’s overall export earnings fell by 23.6% to USD 718.60 million in June, down from USD 940.93 million in May. This decline was mainly due to lower export earnings from mineral products. Excluding mineral products, total exports increased by 5.1% to USD 469.72 million, with coffee leading the gains.

The import bill also declined by 6.5%, from USD 1,033.50 million in May to USD 966.53 million in June 2024. This reduction was driven by lower volumes of formal private sector non-oil imports, particularly in vegetable products, animal products, beverages, fats & oils, and mineral products (excluding petroleum).

As a result, the merchandise trade deficit widened from USD 92.58 million in May to USD 247.93 million in June 2024, as the decline in export earnings outpaced the reduction in imports.

In the fiscal sector, a net borrowing (fiscal deficit) of Shs 29.95 billion was recorded in July 2024, far below the target of Shs975.55 billion. This was due to higher-than-expected tax revenues and lower-than-projected expenditures.

Total revenue in July amounted to Shs 2,233.73 billion, exceeding the target of Shs 2,181.48 billion, largely driven by improved tax performance across various categories.

Expenses for July 2024 were Shs2,198.50 billion, below the program target of Shs2,846.59 billion. The lower spending was due to delays in procurement processes and lower-than-expected external disbursements.

Inflation trends varied across the EAC in July 2024, with Uganda and Rwanda experiencing slight increases in annual headline inflation, rising to 4.0% and 1.5%, respectively, from 3.9% and 1.1% in June.

Overall, the report indicates a continued improvement in economic activity, with positive business sentiment prevailing.

Adam Mugume, director of research at the BOU, revealed these projections during the Stanbic Economic Insights Symposium held in Kampala.

He noted that the Shilling’s recent stability can be attributed to robust demand for Ugandan coffee and significant investments in the oil and gas industry, which have bolstered capital inflows and helped stabilize the currency.

“The Shilling is expected to strengthen slightly against the Dollar due to high coffee prices and ongoing oil and gas investments, which are crucial in maintaining capital inflows,” Mugume stated.

Over the past ten months, the Ugandan Shilling has maintained relative stability against the Dollar, especially when compared to regional currencies.

In contrast, neighboring Kenya has experienced sharp volatility, driven by a negative economic outlook and reduced debt financing capacity.

Regional Comparisons Highlight Uganda’s Stability

While Uganda has managed to keep its currency stable, Kenya’s economy has faced significant challenges.

According to Christopher Legilisho, senior economist at Stanbic Bank Kenya, the country’s debt service costs have soared from 30% to 60% of ordinary revenue over the past five years.

This increase, coupled with tight monetary policies, has led to a contraction in private sector credit, which has historically driven Kenya’s economic growth.

“The private sector has been the backbone of Kenya’s economy, but with the elevated debt levels and restrictive monetary policy, we’ve seen a shrinking in private sector credit growth,” Legilisho explained.

Inflation and Consumer Spending

Despite the positive outlook for the Shilling, the BOU warns that Uganda is not yet out of the woods regarding inflation.

Persistently high inflation rates have made credit more expensive, weakening consumer spending power.

This, in turn, has forced Ugandans to dig deeper into their disposable incomes to cope with rising prices for goods and services.

“Inflation remains a concern, making credit more costly and reducing consumers’ ability to manage the increasing cost of living,” Mugume added.

As Uganda continues to navigate these economic challenges, the strength of the Shilling and the country’s ability to manage inflation will be critical factors in sustaining economic stability and growth.

Two significant assets, oil and gold, stand out as potential catalysts for this transformation. But which of these resources can more effectively steer Uganda’s economic future?

Uganda’s oil reserves, estimated at 6.5 billion barrels, have the potential to significantly boost the economy. The oil sector can create jobs, generate substantial government revenues, and spur infrastructure development.

Successful oil extraction and export could transform Uganda into a major player in the global oil market. However, the oil industry comes with challenges such as the need for substantial investment, potential environmental risks, and the volatility of global oil prices.

The country’s ability to manage these factors will determine the extent of oil’s positive impact. Gold mining is another promising sector for Uganda.  The country is endowed with rich gold deposits, which have already attracted foreign investments and generated significant export revenues.

Gold mining requires less capital investment compared to oil extraction and has a lower environmental impact. Furthermore, gold prices tend to be more stable than oil prices, providing a more reliable source of income.  Gold mining also offers opportunities for small-scale miners, fostering local entrepreneurship and community development.

While both oil and gold present substantial opportunities for economic growth, gold may offer a more immediate and sustainable path for Uganda’s economic transformation.

The gold sector’s lower investment threshold, environmental sustainability, and price stability give it an edge over the more complex and risk-laden oil industry.

However, a balanced approach, leveraging both resources strategically, could maximize Uganda’s economic potential and ensure a prosperous future.

Uganda stands at a crossroads, and the choices it makes today regarding these natural resources will shape its economic destiny for generations to come.

The scientists argue that parts of the banana crop which were often disposed of or used for mulching, can offer several other products to help farmers reap more from the plant than only food.

NARO’s Product Development Officer Dr Ronald Katwaza told URN on Wednesday that scientists have been refining different products from banana fibre and resolved to soften it further into biodegradable hair extensions following previous success stories of their innovations.

Katwaza notes that their innovation was informed by the availability of market for hair extensions in every part of the country, which is largely congested by imported plastic hair extensions. He notes that the imported hair extensions are hazardous since they contain high volumes of plastic material, but the banana fibre type decompose on disposal, hence improving soil fertility and a form of manure to the farmers in need.

He further argues that since hair beautification is a basic need for women across the board, their innovation is geared towards eliminating the negative impacts of climate change resulting from excessive plastic materials in the environment, some of which are plastic hair extensions through introducing the biodegradable type.

Katwaza also notes that unlike the plastic hair extensions, the biodegradable type is compatible to all people irrespective of their skin and hair types with no cases of itching or rushes for the end users. He adds that laboratory tests have ruled out any possibility of fungal infections resulting from the application of biodegradable hair.

Katwaza further notes that they have rolled out training programs of interest farmers on best ways to earn profits from seemingly waste products from their agricultural products.

He however, says that since most farmers might lack the expertise and machinery to produce hair extensions, they can locally soak the banana stems in water for a minimum of two weeks, extract fibres, then make ropes, table and door mats respectively, as a means of profit maximization.

Meanwhile, NARO’s head of communications Frank Mugabi says that the biodegradable hair extensions have passed all the quality tests both locally and internationally, with suitability attributes for not only human use, but also as an environmentally friendly product.

Mugabi notes that they are currently scouting for both local and international investors with interest to invest in the product for mass production, which will enable local consumers to easily access these biodegradable hair extensions in the market.

The July 23, 2024  letter making rounds, is copied to President Museveni’s  Principal Private Secretary, the  Minister of Finance, UIA Board Chairman,  the Attorney General and  all the UIA staff who received  the honorarium payments the minister had directed should be refunded, Mukiza stung the minister for peddling several lies.

Mukiza said in the letter that after being asked to receive the Dubai Prince and also accompany him to the Heroes Day celebration where he was given an award, this didn’t augur well with the minister .

“After receiving the prestigious award, witnessed by the UAE Ambassador to Uganda, some hate-filled individuals threatened by his potential investments, sponsored bloggers to create a sham platform news whose cardinal purpose was to create and promote fictious and fake content against the Sheikh as a conman who is impersonating the royal ruling family of Dubai,” Mukiza says.

The UIA Director General also accused the  minister of lying that she had personally met with  the UK High Commissioner to Uganda, who had directed that the money be refunded.

“I find that the story of your meeting with the British High Commissioner to discuss the day to day of the Namanve project management not adding up, inaccurate, false and misleading.”

Mukiza explains that it is common knowledge that generally, United Kingdom embassies across the world don’t involve themselves in micro managing projects funded by the UK and particularly the British Commissioner’s office doesn’t at all interfere with the day today running of the projects  funded by the United Kingdom Export Finance.

He added that the Namanve project  was signed between Uganda Investments Authority, v and Standard Chartered Bank and not the British High Commission office.

“The above analysis therefore brings me to conclusion that you lied about the meeting with the British High Commissioner as well as your engagement with United Kingdom Export Finance regarding honoraria and VOP payments to the contractor.”

The UIA director general asked the minister to resign for fabricating lies and subsequently be taken to Luzira over the same.

“On the other hand, if you produce empirical evidence that challenges my above analysis, then I tsnad to be penalized.”

Mukiza said that in relation to President Museveni’s guidance of forgiveness for the good of UIA, he forgives Minister Anite.

Mukiza’s letter follows one by Anite on July, 3 in which she expressed  her disappointment at him for allegedly lying to the president.

“I was taken aback when in an attempt to deflect from the misuse of funds, you accused me of being driven by personal motives as I was fulfilling my duty as a minister accountable of ensuring transparent investment practices,” Anite wrote in a letter directed to Mukiza.

She however said she has buried the hatchet with Mukiza.