By Ambrose Gahene
While mining revenues increased nearly six fold over five years, the report identifies opportunities to strengthen revenue collection, royalty administration, oversight of tax incentives, and transparency across the sector.
Strengthening transparency, revenue administration and equitable benefit sharing can help Uganda realize more of the potential of its growing mining sector, according to a new report disseminated on Tuesday in Kampala by Oxfam Uganda, SEATINI Uganda and the Uganda Extractive Industries Transparency Initiative (UGEITI).
The report, The Revenue Potential of Uganda’s Mining Sector, examines mineral production, tax and non-tax revenues, revenue forgone through tax expenditures, and opportunities for mineral beneficiation and value addition between the 2019/20 and 2023/24 financial years.
It finds that government revenue from mining increased from UGX 13.2 billion in 2019/20 to approximately UGX 78.1 billion in 2023/24. The report also identifies areas in which further revenue could potentially be realized, including through strengthened compliance, more consistent royalty administration, closer assessment of tax expenditures and stronger systems for monitoring mineral production and exports.
“Uganda does not lack mineral wealth. Our shared responsibility is to turn that mineral wealth into public wealth,” said Francis Shanty Odokorach, Country Director of Oxfam Uganda.
“This means looking beyond how much we extract and export. We must ask how much value Uganda retains, whether the public receives a fair return, how equitably the benefits are shared and whether mining communities experience meaningful improvements in their lives,” Odokorach added.
Mr. Odokorach said Uganda’s mineral resources are expected to play an important role in industrialization, employment creation, foreign-exchange generation and domestic revenue mobilization.
According to Mr. Odohorach, presence of minerals alone does not end household poverty, citing Karamoja sub region, which is endowed with a variety of minerals yet the people live in abject poverty.
“The extractive sector should promote transparency through meaningful citizens’ participation and equitable share of mineral revenues to uplift the socio-economic wellbeing of people living in mineral rich areas”, he further said.
He said mining is also recognized as a strategic sector under the Tenfold Growth Strategy, National Development Plan IV and Uganda Vision 2040.
“Revenue transparency must ultimately translate into better outcomes for people and communities, “
The success of mining should not be measured only by tonnes produced, licences issued or export earnings. It should also be measured by the revenues mobilized, decent jobs and local industries created, value retained in Uganda, communities benefiting, the environment protected and inequalities reduced,” pointed out Mr. Odokorach
The report notes that; realizing this potential will require strong institutions, transparent and predictable revenue systems, responsible investment, effective oversight and meaningful participation by citizens and mining communities.
Mr. Odokorach said these measures can help strengthen public confidence in the sector while ensuring that mineral development contributes to Uganda’s wider development ambitions.
“The fiscal treatment of gold is among the key areas highlighted for further consideration. Gold has become increasingly important to Uganda’s mineral economy and has significant revenue potential, while royalties on its production are currently waived”, Odokorach further pointed out.
Accordingly, Oxfam, SEATINI Uganda and UGEITI are calling on the Government of Uganda to review the waiver and establish a fair and predictable fiscal regime that balances responsible investment with the public’s right to receive an appropriate return from the country’s finite mineral resources.
Ms. Jane Nalunga, SEATINI Uganda Executive Director, said the mineral sector is critical for industrialization, tourism and technology development among others.
She said Tax incentives can play an important role in attracting investment and supporting employment, technology transfer, local content and industrial development.
The report recommends that such incentives must be transparent, targeted, time-bound and periodically assessed to establish whether they continue to deliver value for money and contribute to Uganda’s development priorities.
The report recommends the development of an integrated digital mineral-information system linking production data, licenses, exports and revenue payments across relevant government institutions. It also highlights opportunities to strengthen mineral tracking, inspection and valuation systems; improve coordination among responsible agencies; periodically review tax incentives; and increase investment in domestic mineral processing and value addition.
Mr. Edwin Kavuma, the Manager of Stakeholder Engagement and Board Secretary for the Uganda Extractive Industries Transparency Initiative (UGEITI), said UGEITI has an important role in making extractive-sector information timely, credible, accessible and useful to citizens, communities and decision-makers.
“Greater transparency can also build public confidence that Uganda’s mineral wealth is being managed in the public interest”, he said.
The report further stresses that discussions about mineral revenue must include equitable benefit sharing.
“Mining communities provide land and labour and often bear the environmental, social and economic costs of extraction. Government must ensure that royalties and other mineral revenues are effectively collected and equitably shared in accordance with the law. Transparent mechanisms are also needed so that communities and local governments can understand and track the benefits arising from mining”, reads the report in part.
Oxfam Uganda, SEATINI Uganda and UGEITI called on the Government, Parliament, mining companies, civil society, communities and development partners to engage with the report’s evidence and agree on practical actions to strengthen mineral-revenue mobilization, accountability, value addition and equitable benefit sharing.
In a joint press release, Oxfam Uganda, SEATINI Uganda and UGEITI stated that; the Revenue Potential of Uganda’s Mining Sector was commissioned by Oxfam in Uganda in partnership with SEATINI Uganda and UGEITI.
“The study covers the five financial years from 2019/20 to 2023/24. It used quantitative and qualitative methods, including structured questionnaires, key-informant interviews, focus-group discussions, document reviews and field observations”, reads the statement in part.
It further states that; Stakeholders consulted included the Ministry of Finance, Planning and Economic Development, the Ministry of Energy and Mineral Development, the Uganda Revenue Authority, mining companies, civil society organizations, local governments, mineral dealers, artisanal miners, and mining communities.
The study was supported by the Ministry of Foreign Affairs of Denmark and the Norwegian Agency for Development Cooperation -NORAD.
According to the report, total mineral production over the five-year period was approximately 14.24 million tonnes. Annual production declined from about 4.94 million tonnes in 2019/20 to 2.71 million tonnes in 2023/24, largely because of reduced limestone output.
“Government revenue from mining increased from UGX 13.2 billion in 2019/20 to approximately UGX 78.1 billion in 2023/24”, concludes the report.