SEATINI Uganda Holds Strategic Dialogue on Enhancing DRM in the EAC through Tax Harmonization and Prudent Debt Management

Recognizing the importance of Domestic Revenue Mobilization (DRM) as a sustainable source of financing the development priorities of EAC Partner States, SEATINI Uganda with support from Diakonia and Oxfam organized an EAC Dialogue on Domestic Resource Mobilization under the theme “Enhancing Domestic Resource Mobilization through Tax Harmonization and Prudent Debt Management.”

The Dialogue brought together stakeholders including Government officials in the EAC including representatives from Ministry of Finance, Planning and Economic Development, East African Community Affairs, Members of Parliament at national level, EALA, Uganda Revenue Authority, EAC secretariat and selected CSOs in the EAC and media.

The dialogue provided a platform for various stakeholders including Members of EALA, Policy Makers, Development Partners, representatives, Members of Parliament of Uganda, MEACA, Media, Private Sector among others to dialogue and share perspectives on the status of DRM in the EAC region and come up with ideas and commitments on how to promote tax harmonization and prudent debt management in the East African region.

While giving her opening remarks, SEATINI Uganda Executive Director Ms. Jane Nalunga emphasized that this dialogue comes at an opportune time when EAC governments and African governments at large are grappling with ways on how to mobilize resources to provide the much-needed social services, to finance development projects and to resuscitate their economies that have been battered by the COVID 19 pandemic.

Ms. Jane Nalunga noted that Domestic Resource Mobilization in the EAC has been reducing due to a number of challenges but also due to the COVID 19 pandemic. As such, what governments are doing because of this contraction in Domestic Resource Mobilization is to look outwards to external sources like loans, grants among others and sometimes by putting in place regressive taxes.

‘‘It is important for the EAC region to explore extensively how to mobilize more resources in an equitable and fair manner. This dialogue is a step in this direction, by discussing some of the critical issues that impact on Domestic Resource Mobilization in the EAC region. These include, tax harmonization, prudent debt management and the maximization of benefits from our mineral resources especially through the domestication of the Africa Mining Vision and the Extractives Industry Transparency Initiative (EITI),’’ she added.
She noted that regarding addressing issues of tax harmonization, prudent debt management and the maximization of benefits from our mineral resources in the EAC region, a number of commitments have been made and progress has been registered.

The keynote address was delivered by the 1st Deputy Prime Minister and Minister for East Africa Community Affairs, Rt. Hon. Rebecca Alitwala Kadaga. Rt. Hon. Rebecca Alitwala Kadaga emphasized that despite notable recent progress in terms of strengthening the mobilization and effective use of domestic resources, there are still some loopholes that continue to limit revenue generation outcomes. She observed that many States in Saharan Africa are still struggling to collect sufficient revenues and often failing to reach at least 15% of GDP in taxes, Debt to GDP ratios are increasing, surpassing the thresholds under the East African Monetary Union (EAMU) convergence criteria.

During the keynote address, Rt. Hon. Rebecca Alitwala Kadaga said, ‘‘DRM remains one of the most important policy challenges that partner states face in the East African region. The role of DRM has become important, because pursuing the SDGs and agenda 2063 requires substantive resources. Yet this comes at a time when the global development landscape is changing fundamentally.’’

In respect to Debt, the 1st Deputy Prime Minister and Minister for EAC Affairs Rt. Hon. Rebecca Alitwala Kadaga observed there are concerns of rising debt levels, cost of debt servicing not only for Uganda or the EAC countries represented here but also Africa in general. The increasing debt levels have affected Governments ability to stimulate economic growth including exports imposing pressure on foreign reserves and budget resources that leads to a deterioration and the inability to deliver critical services, which is likely that the trend could lead countries to face significant debt service costs in future.

Rt. Hon. Rebecca Alitwala Kadaga commended SEATINI Uganda and all partners involved for organizing such a dialogue which is intended to provide a platform for key stakeholders to deliberate on DRM and the role of EALA in enhancing tax harmonization and prudent Debt management in the EAC region. She congratulated SEATINI Uganda for being recognized with the Uganda Revenue Authority (URA) Commissioner General’s Strategic Professional Body Award for FY 2020/21. In the same vein, emphasized that Civil Society’s voice is critical in strengthening EAC Regional Integration and building synergies with CSOs such as SEATINI Uganda, a strong and vibrant EAC regional integration can be realized.

Hon. Odongo George, EALA MP for Uganda begun by thanking SEATINI Uganda for being there to support EALA and the EAC. He noted that as a think tank, SEATINI Uganda has influenced a lot of policies and discussions using research and evidence-based advocacy.
Hon. Odongo George emphasized that at EALA, policy making is a function of the Council of Ministers which has the mandate to originate policies and regulations that govern the EAC and that Policies and Regulations are initiated by the different Departments of the Secretariat. He further observed that EALA’s legislative power is limited to the scope of operation; EAC treaty and that EALA has challenges which include principle census by all member states, difference in legal systems of member states, unprincipled competition in member states, sovereignty right of member states.

‘‘The role of EALA is oversight. EALA members oversee the implementation of policies to make sure such policies are implemented by the different institutions in the EAC partner states,’’ he added.
He informed the meeting that the plenary ending in March, EALA will be enacting the Surveillance Act which is part of the requirements for the implementation of the Monetary Union.

He also observed that EAC Treaty provides for a legal basis for the harmonization of policies. There is therefore need to tap on the existing policy frameworks to ensure that there is positive traction in the area of harmonization of taxes and using the existing policies.
Ms. Esther Kisembo Programme Coordinator at Action Aid International Uganda presented the CSO Position Paper on the Status of DRM in the EAC region. The CSO Position Paper included various issues including Tax, Debt, Extractives and the status of regional integration in the EAC.

The position included various issues Tax, Debt, Extractives and the status of regional integration in the EAC (Attachment).
As part of the dialogue, a panel discussion was conducted which brought together distinguished experts including the IMF Country Representative for Uganda, Ms. Izabella Karpowicz, Sheema Member of Parliament/Chairperson, Parliamentary Forum on EAC Affairs, Hon. Dickson Kateshumbwa and Public Services International, Sub Regional Secretary for English Speaking Africa, Dr. Everline Aketch who shared their perspectives on DRM in the EAC region.
While giving closing remarks, Hon. Susan Nakawuki, EALA Member noted that the issue of EAC Treaty amendment is ongoing and that views are being collected. Hon. Susan Nakawuki committed to engage with the rest of the EALA members on the DRM related issues in the EAC.