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Mahatma Gandhi

Earth provides enough to satisfy every man's needs, but not every man's greed.

Chris Maser

What we are doing to the forests of the world is but a mirror reflection of what we are doing to ourselves and to one another.

Theodore Roosevelt

To waste, to destroy our natural resources, to skin and exhaust the land instead of using it so as to increase its usefulness, will result in undermining in the days of our children the very prosperity which we ought by right to hand down to them amplified and developed.

Kurt Vonnegut

I really wonder what gives us the right to wreck this poor planet of ours.

Clarissa Pinkola Estés

To be poor and be without trees, is to be the most starved human being in the world. To be poor and have trees, is to be completely rich in ways that money can never buy.

Wednesday, 29 April 2015

Widening Uganda’s tax base: introducing environmental tax


PHOTO BY FAISWAL KASIRYE 
The non-monetized population of Uganda is about 68%, with a large subsistence economy. Agriculture which is the main stay contributes 14.9% of the GDP, which employs about 80% of the population and yet its contribution to national GDP is almost 0.0%. The agricultural sector contribution to GDP was felt domestically when graduated tax was still levied, but due to its negative impact on income distribution through its steep regressiveness it was abolished (Bahigwa et.al, 2004).

Uganda has a narrow tax base compared to other countries in East Africa, with a stagnation at 13% of the GDP. The tax body has only targeted a small section of the population in formal employment and business, due to easy assessment. With an estimation of the 35 top tax payers accounting for 50% of all the tax revenue collected in the country (Senoga E, Matovu J & Twimukye E, 2009). Tax evasion and corruption in the tax administration has added an insult to injury. In the 1997 it is estimated that 46% of firms were evading taxes (Gauthier and Reinikka, 2001).

Uganda’s tax base can only be widened through policy reforms, which will including the tapping of the informal sector which for long has been under taxed or not taxed at all. Streamlining of tax incentives also known as investment incentives, which are given to foreign investors to lure them into the country, these incentives have political influence which need to be streamlined as we look at the benefits and costs vis-à-vis revenue foregone. Most of the tax evasion is involuntary but with the implementation of national identity card individuals and businesses can be tracked. The introduction of new tax handles will replace the abolished taxes and also levy new sources like property that is booming, environmental tax to reduce on the environmental degradation.

Environmental tax can be used in form of a market based instrument to address environmental problems, these can include taxes on polluting inputs, and emissions, the tax burden can be shifted from goods to economic bads like environmental pollution (Weizacker and Jesinghaus, 1992) Environmental taxes are estimated to have made up an average of 7.2% of government revenues in 1998 and represented 2.7% of GDP on average for example in OECD countries (OECD, 2001). In China under the pollution levy system which is one of the oldest in the developing world, during the period 1979 – 1995 it generate revenues of approximately $4 billion (Blackman and Harrington, 1999). The system produced revenues of approximately $446 million, which represented about 0.6% of national income in 1995 (Wang and Lu, 1996).

Ecological Tax Reforms as witnessed in the survey done in 14 developing countries little is currently know about them. The survey was conducted by the Belgian Development Cooperation in the following countries:  Uganda, Vietnam, Algeria, Ecuador, Benin, Niger, Bolivia, Peru, Mali, South Africa, Morocco, Senegal, Tanzania and Mozambique. The general findings showed that there were some initiatives in all countries but differed significantly, in Uganda current practices showed little initiative which was derived from little information that was found available. (KLIMOS Policy brief 3)

The Environmental Fiscal Reform for Poverty Reduction outlined the role donors can play in promoting Ecological Tax Reforms in developing countries, which included several important roles at different stages like policy development, information dissemination, agenda setting, support in monitoring and enforcement (Marx et al, 2011). They suggested that imposing an environmental tax on firms and companies that have a carbon foot print on the environment will raise more revenue. With that, they envision government will collect shs 100 billion. Civil Society Budget Advocacy Group (Wednesday, April 22, Daily Monitor)


By Kateregga Dennis, BA(ECON), Dip. IEL 
Consultant

Wednesday, 22 April 2015

Young people prospects in Agribusiness: Uganda's demographics

Farming on the Katrine Project, photo by www.theguardian.com

As we always say that young people are the future of the world and there are the presidents of tomorrow as my class teacher audibly stated it more times than I could remember.  In my view that is 100% true especially when you are from a country like Uganda where over 78% are below 30 years (Uganda Population Report 2012) thus the youngest population in the world. This has created one of the highest dependency ratios in the world which has lead to the vicious cycle of poverty in which many Ugandans are trapped.

Unemployment in Uganda is from 64% to 70% and with a quota of 400,000 youths released to compete for roughly 9,000 jobs.  Semiskilled youths are having a rough time finding jobs as their institutionally qualified counterparts are at 30% certainty of getting one (ACODE, 2014). There is migration of youths from the rural to urban areas for work and this has affected social services in those areas. They have not been lucky in getting those jobs, this has lead to an increase to unemployed youth in urban areas, most of them are now associated with gambling and drug abuse.  There is underutilization of labour in Uganda this has lead to a loss in education and training investment, low tax base, constraint in economic growth and high cost for social assistance ( MoGLSD, 2011)

Agricultural sector is the biggest employer in rural areas and youth have shun it in recent time preferring work in urban areas as low – wage labourers in industries, motorcycle riding and matutu(taxi) driving.  Ugandan government is trying to promote agriculture by issuing soft loans and grants through programmes like National Agricultural Advisory Service (NAADS), Saving & Credit Cooperatives (SACCOs) and Youth Livelihood Fund. The issue of mindsets has to be adjusted for the unemployed youth to benefit from the various programmes of NAADS, SACCOs and Market Stalls (Ocici, 2014). There has been some improvement due to the stable economic growth, where the poverty rates have reduced from 56% in 1992/93 to 22% in 2011/12 (World Bank, 2015)

Just imagine attracting young people into agriculture which employs over 80% of the 34 million people, Uganda would be able to feed the world.  So far the above is impossible but with the right mentorship, training and partnership, I believe young people can transform agriculture. What young people have done in Nigeria can be replicated in Uganda to promote agribusiness. Inspired by this story How To Promote Youth-Led Agribusiness Society


By Kateregga Dennis, BA(ECON), Dip. IEL 
Consultant

Saturday, 18 April 2015

Investment vs ban aimed at reducing environmental degradation

Mukau plantation in Kiambere site

Uganda

With the standing ban on export of forest products within the East African Community, which was aimed at reducing environmental degradation in the region. Busoga Forestry Company is engaged in commercial tree production, with over 65,000 acres in Mayuge and Zombo districts. The poles harvested are used for electricity poles with the off cuts being used for the manufacture of charcoal, showing that the charcoal can be produced commercially without degrading the environment. The standoff is the National Forestry Authority(NFA) issued a licence to export the charcoal but so far Busoga Forestry Company has failed to get an export certificate, where the Minister of  Trade, Industry and Cooperatives Amelia Kyambadde was wondering how that happened with the ban still on. The issue here is the distinction between a byproduct and a product, Busoga Forestry Company is using a byproduct (off cuts) of a legal product (poles) with which they have all the blessing to manufacture by the government. As trade is promoted the policy regime should be over hauled to prevent companies to utilize loopholes to degrade the environment. 

Kenya

There are 5 indigenous mountains forests, providing about 75% of Kenya’s renewable surface water. There has been loss of 28,400 hectares trees between 2000 and 2010, due to land grabbing by the politically powerful people. Reduced water supply for irrigation in agriculture and hydropower generation due to deforestation has cost Kenya $68 million in 2010.  There has been focus of rehabilitating indigenous forests but the Kenya Forest Service and UNEP have advised otherwise. Private tree growing for charcoal and timber should be encouraged to increase forest cover rather than rehabilitation of indigenous forests. The ban was to stop logging in Kenya’s plantation forests it took effect in 1999 to try to stop rampant tree cover loss. After 2 years it was overturned because it lead to increased illegal extraction and loss of jobs.

Tanzania

Tanzania has heard 2 bans of export of logs and suspending of tree harvesting in protected natural forests. The first ban was between October 2004 and August 2006 and aimed at safeguarding endangered species. The second ban of January 2006 was due to unsustainable timber harvesting and their transportation with forged permits. This lead to heated reactions from timber exporters because an estimated loss of $4.6 million was envisaged.  The forestry sector is facing challenges because private forestry has failed to keep up with the demand for fuel wood and timber, leading to as supply deficit of 22 million per cubic meter. There is weak regulation which has led to unsustainable exploitation of natural forests, where 400,000 hectares are lost per year.  Industrialization, economic growth, rising population and agricultural expansion is contributing to the loss of forest cover.

Rwanda

Rwanda has original rainforest with new plantations, native plant species can be found in forest reservations. Agricultural terraces are dominated by eucalyptus trees planted around them despite their much need of water which has brought controversy leading to arguments like they are fast growing trees. The war left the landscape deforested where refugees would cut trees for fuel wood and shelter this led to silting of lakes in the west and southern part of Rwanda.

Burundi

Recently the government of Burundi banned a group of farmers in the Cibitoke province from Kibira forest reserve, which is a mountain forest of 40,000 hectares. During the civil war that lasted a decade had part of the forest was destroyed as security forces asked people around to clear parts of forest near roads where rebels were suspected to be hiding. In 2005 the government banned the cutting of trees for natural Christmas trees, hoping that would reduce the annual loss of 80,000 conifers which later amounts to 80 hectares of forest.


By Kateregga Dennis, BA(ECON), Dip. IEL 
Consultant

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