KYAKWANZI —Vice President Jessica Alupo has urged Uganda Development Bank (UDB) to prioritize supporting local entrepreneurs— saying this would increase the country’s tax base.
VP Alupo says whereas Uganda’s economy has been growing for the past decades, statistics show that the tax base has remained stagnant and that this isn’t good for the economy.
Uganda’s tax system is one of the most modern in the region, but revenue collections, at less than 14 percent of GDP, are low, and way below its tax potential.
Tax avoidance and evasion, partly resulting from generous tax exemptions to investors, weak tax administration, and a large informal sector pose challenges to increasing revenues.
Up to 5 percent of GDP is lost annually in tax leakages, a recent Parliamentary committee report indicates.
The report also indicated that Uganda’s personal income tax contributes roughly 18 percent of GDP compared to up to 40 percent in developed countries.
Officiating at the closure of a two-week transformational leadership training for UDB staff held in Kyaknkwanzi, VP Alupo urged the bank to focus on expanding Uganda’s economic base by spurring production and also focusing on supporting the government’s development agenda.
“I’m sure you have heard that the economy is growing but the base is not expanding,” she said, explaining that it means that the tax base is not big enough for even the banking sector to grow.
“My request is that you focus on expanding this economic base more than ever before by spurring production across the country so that we are able to shield our country from economic shocks,” she said.
She said UDB, the country’s national Development Finance Institution has a big role to play in Uganda achieving the much sought-after middle-income status by 2040.
“Uganda Development Bank being a bank that we are all looking forward to in regard to playing a fundamental role in spearheading our efforts towards achieving vision 2040, our expectations are now higher after attaining this ideological orientation, she said.
“As graduates of this leadership institute which has shaped many leaders in this country, I hope you have now understood the dialectical interconnection between ideological orientation, financial institutions like UDB, and the socio-economic transformation of Uganda. As cadres, you need to develop policies that will enhance our financial independence and safeguard our internal capacity in order for Uganda to attain middle-income status by 2040.”
She also urged the bank to focus on the 39% population which are outside the money economy.
On his part, Finance Minister Matia Kasaija said his ministry is working hard to capitalize UDB’s much-needed resources to up to UGX 1 trillion. The bank currently operates with about UGX 500 billion capital.
The government has so far disbursed above UGX 500b to capitalize Uganda Development Bank (UDB) in the previous fiscal year to guarantee long time financing and support key development sectors, the finance minister, Mr. Kasaija, has said.
“But I want to increase their capitalization to about UGX1 trillion to help them meet their needs,” he said, adding due to competing priorities, “I can’t do that in a single financial year.”
Some of the topics that were during the training included Uganda’s potential and endowment, mindset change, public service, and thinking as a tool of analysis, among other areas.
UDB Managing Director, Patricia Ojangole said the training aligns with the Bank’s mandate of supporting the government towards inspiring socio-economic development.
“UDBL appreciates the management and entire team at NALI for their dedication. With the knowledge shared, am confident that you have planted seeds of patriotism that will henceforth a long way in enabling the government to stimulate its social economic transformation goal,” Ms. Ojangole said.
The Director NALI, Brig. General Charles Kisembo commended UDB for collaborating with the Institute to train their staff.
Gen Kisembo said that the trainings at NALI are designed to build patriotism for Uganda country, as well as an avenue to mentor resilient leaders who will support the country towards achieving growth through the stewardship of the various individuals or organizations that hold positions of influence within public service.
