The role of customs revenue collection could evolve towards trade facilitation. What does this mean for the future of customs?
It’s a healthy trend. We need to rely more on domestic revenue than on import taxes. Globally, the focus is on trade facilitation and border control. The days when URA relied heavily on taxes levied on imports are slowly fading away.
In this fiscal year, we expect to collect approximately 36 percent of total customs revenue. And we’re going to do that from 23 percent of dutiable imports. So, yes, we have to facilitate trade because it has a direct impact on our economy and income generation.
So, as a country, it is a healthy trend for us to rely more and more on internal taxes than on imported income. In developed economies such as Europe, customs contribute less than 2 percent of total revenue collected. And there is no problem with that.
So with the changing role of customs, aren’t you worried that this will worsen the country’s tax base?
Not at all. As more and more internal investments multiply and the economy continues to grow, there should be no worries. The investments that are springing up now will support Uganda’s future by creating jobs. And once that happens, a lot of people will be paying taxes. I am very comfortable with it and as a country we are on the road to industrialization. We are already manufacturing and exporting a few things. For example, we export 260 containers of tiles and we consume about 40 percent of them here. This is good news because it means that the money we use to go to China and India to import tiles stays here. It means so much.
We are witnessing a shift from other markets in the region to the Democratic Republic of Congo (DRC). From a revenue perspective, what is the amount generated by this new market?
In the last fiscal year, we exported Shs390nillion worth of goods to the DRC. And we could do more than that because that figure excludes informal cross-border trade.
Thus, the DRC presents a great market for us. We have the longest border with the DRC and we can even reach the Central African Republic, so our products can go there too.
The question now is for us to position ourselves to participate in regional markets and the opportunities that exist there. Traditionally we have exported beer, cement and soft drinks to the DRC, but we can still do more with agricultural products such as rice and sugar.
Steel is doing very well. In fact, we want to encourage many exporters to move beyond neighboring markets given that we are entering the implementation of the African Continental Free Trade Area (CFTA).
Which items or sectors of the economy generate the most revenue at Customs?
Imported oil brings in a lot of money. Then the dry goods (motor vehicles) which also generate huge income. We have others like wheat, clothing, shoes, cement mowers, cigarettes and lubricants.
Chinese products are everywhere in the market. The economic partnership agreement that the Chinese government is trying to break with Uganda means the country will not have much to collect taxes. What are your thoughts?
Uganda is increasingly becoming a competitive destination for investments. We have everything the factors of production deserve.
Besides the friendliness of the population and the good weather, there is nothing to fear. We can compete favorably with all other product manufacturers, including China. Once the infrastructure issues, including electricity are resolved, and then transformed our raw materials here, we will be a force to be reckoned with.
For example, I don’t think our cotton is more expensive than any other cotton in the world. If we improve our yields and process our cotton, everything will be fine. So I don’t think it’s a worrying future. If we make our things, they will be cheaper here than imported ones, so the future should be much better than it is.
What is the objective of collecting customs revenue for this fiscal year?
We are expected to collect around 7.6 trillion Shs. This target has increased by over 700 billion Shs. We will try to hit our targets while watching out for smugglers and those trying to beat our systems.
Currently, we can monitor all our exports to eastern DRC. This has mastered the habit of back and forth. We also have cargo scanners in Malaba, Busia and Mukutula and we set up many more at the main border stations and at the airport. In the last eight months we have recovered over 40 billion Shs in taxes that would have been lost if we had not been so vigilant and without some of the aforementioned systems.
Finally, how will Uganda and the region benefit from your recent appointment as Chairman of the Council of the World Customs Organization?
To be the first African to take on this role means something. This is important in the sense that I am the first African to hold this position in the 67 years of the World Customs Organization. I will be flying our flag in Brussels for the next two years.
I intend to represent Uganda, the EAC region and the continent as a whole with dedication and effectiveness. This position speaks volumes for the confidence URA has built around the world over the years. The 183 member countries seem to have noticed the reforms that we have put in place. No wonder we have visitors and delegations practically every month to learn a thing or two from us. So, under my rule, I will ensure that as a country we build bridges with other networks to promote our exports to various parts of the world.
Objective of customs revenue collection. We are expected to collect around 7.6 trillion Shs. This target has increased by over 700 billion Shs. We will try to hit our targets while watching out for smugglers and those trying to beat our systems.
Impact of oil production. Oil production is going to be a game-changer for us in many ways. With our refinery, we will refine our oil. This will reduce imports of gasoline, diesel and kerosene.
Beyond that, we will also produce petroleum by-products. It will be a great opportunity to locally manufacture things that we are importing now.