Uganda is boldly moving to stem the tide of illicit financial flows (IFF) that siphon an estimated UGX 2 trillion from its economy annually.
The nation is set to pilot a groundbreaking Anti-IFFs Policy Tracker, a collaborative initiative designed to equip policymakers with the data-driven insights needed to combat this pervasive problem.
The tool, developed by the African Union’s Economic Development, Trade, Tourism, Industry, and Minerals Department (AU-ETTIM), in partnership with the Tax Justice Network Africa (TJNA) and the Africa Tax Administration Forum (ATAF), arrives at a critical juncture.
The tool has been piloted in Namibia and will soon be tested in Ghana, Gabon, Ivory Coast, and Cape Verde.
The Uganda Police Force’s 2024 Annual Crime Report reveals a concerning 1.6% increase in economic and corruption crimes, underscoring the urgency of tackling IFFs, which include money laundering, tax evasion, smuggling, and trade mis-invoicing.
“Illicit financial flows undermine a country’s economic growth and development,” stated Denis Kugonza Kateeba, Commissioner of Tax Investigations at the Uganda Revenue Authority (URA), during the tool’s launch in Kampala. This huge loss disrupts the country’s economic progress, hindering public service delivery and exacerbating inequality.”
The Anti-IFFs Policy Tracker aims to address these challenges by providing a comprehensive framework for monitoring and evaluating government efforts to curb IFFs. It operates on four key clusters: Legislative and Policy Framework, Institutional Framework, Information and Data Framework, and Inter-Agency Cooperation Framework.
Each cluster is assessed using about 44 indicators, scored on a scale of 0 to 3, and weighted to reflect their relative importance.
The tool’s characteristics are particularly noteworthy. It focuses on tax-related IFFs, employs SMART indicators for easy tracking, allows cross-country comparisons, and tracks annual progress.
Most importantly, it is designed as a public good, fostering legitimacy and ownership among stakeholders.
“The tracker will guide agencies on the best approaches to tackle illicit financial flows, relying on data to inform decisions,” explained Kateeba.
Nelly Busingye, Manager for Partnerships and Institutional Learning at TJNA emphasized the importance of the pilot phase in refining the tool. “The pilot will help identify existing loopholes and gaps that perpetrators of IFFs exploit. With Western countries reducing aid to Africa, it is more crucial than ever that we find ways to sustain our economies,” she says.
The pilot’s implementation process includes a thorough literature and data review, application of the tracker, stakeholder consultations, and the drafting and dissemination of findings.
The results will be presented at the African Union’s Specialized Technical Committee (STC) meetings, where further steps will be discussed to enhance continental efforts against IFFs.
Luckystar Miyandazi, Tax and Domestic Resource Mobilization Advisor at the African Union expressed optimism about the tool’s potential impact. “Uganda has been working on international collaborations to enhance tax transparency and strengthen its capacity to tackle tax evasion and IFFs,” she noted. “However, continued commitment is needed to curb IFFs and enhance domestic resource mobilization.”
While challenges such as limited inter-agency cooperation, resource limitations, and legislative gaps remain, the Anti-IFFs Policy Tracker represents a significant step forward in Uganda’s fight against financial malfeasance.
If successful, this initiative could not only recover billions of shillings for the nation’s development but also serve as a model for other African countries grappling with similar issues.
The tool’s ability to provide clear, actionable data and foster collaboration among key stakeholders offers a promising path towards a more transparent and equitable financial landscape in Uganda.
Existing Policies and Framework
Uganda is actively working to combat Illicit Financial Flows (IFFs) through a combination of legal, institutional, and international efforts. Key to this strategy is robust legal and regulatory frameworks, including laws against money laundering, corruption, and tax evasion, with the Mining and Minerals Act 2022 playing a crucial role in the mineral sector. Ongoing efforts are dedicated to strengthening these laws and ensuring their effective enforcement.
Institutionally, a multi-agency approach is employed, involving the Uganda Revenue Authority (URA), the Financial Intelligence Authority (FIA), and the Uganda Police Force. Inter-agency cooperation and coordination are prioritized to enhance the effectiveness of IFF countermeasures. Additionally, Uganda actively participates in international collaborations, such as the Extractive Industries Transparency Initiative (EITI), to address the transnational nature of these financial crimes.
Recognizing the specific vulnerabilities within the mineral sector, Uganda is focusing on enhancing mineral traceability, strengthening regulations, and improving transparency in mining contracts and export data.
Despite these efforts, challenges remain, including limited inter-agency cooperation, resource limitations within regulatory bodies, gaps in existing legislation, and difficulties in tracking and recovering illicit funds. Overcoming these obstacles is crucial for Uganda to effectively curb IFFs and promote sustainable economic development.
