Government vehicles, porous borders and limited public awareness continue to fuel smuggling in Uganda, making it one of the country’s biggest sources of revenue loss, according to the Uganda Revenue Authority (URA). The tax body estimates that Uganda loses more than $700 million annually through smuggling and other illegal cross-border activities. Most illicit imports enter the country through lakes using fishing boats. The most commonly smuggled goods include cigarettes, tobacco, rice, wheat and second-hand clothes. URA says high taxes on some of these products, particularly tobacco, make smuggling highly profitable.
Richard Obedi, Executive Director of Populace Foundation International, says Uganda is suffering from weak regional enforcement, with smugglers exploiting protocols under the East African Community (EAC). According to Obedi, cigarettes are imported from as far as the Middle East before entering neighbouring countries. They are then transported through Uganda to another neighbouring state, from where they are smuggled back into Uganda more easily.
Uganda has relied on high tobacco taxes to discourage cigarette consumption. However, Obedi says the policy has also made the illegal trade more lucrative. He adds that petitions submitted to the ministries of Health, Trade and East African Community Affairs seeking stronger action against cigarette smuggling have yet to yield results.
Justine Namusabi, a Customs and Trade expert at URA, says enforcement is hampered by weak anti-smuggling laws in some neighbouring countries, making it easier for smugglers to operate. She also cites the misuse of government vehicles, armed smugglers and Uganda’s extensive water bodies as major enforcement challenges.
Speaking during a post-EAC budget dialogue in Kampala, Luuka County North MP John Bagoole Ngoobi questioned the effectiveness of the Electronic Cargo Tracking System (ECTS), which URA introduced to monitor cargo in transit and combat smuggling. The GPS-based system tracks goods moving from ports such as Mombasa and Dar es Salaam to destinations including Uganda, Rwanda, South Sudan and the Democratic Republic of Congo. Ngoobi also questioned why URA’s enforcement department had failed to curb smuggling.
In response, Namusabi said some trucks legally transit Uganda en route to countries such as South Sudan and the Democratic Republic of Congo. However, the electronic seals are sometimes broken before reaching their declared destinations, allowing the goods to be smuggled back into Uganda. She says smugglers also exploit Uganda’s lakes and rivers by transporting illicit goods in fishing boats and disguising them as fish. Others unknowingly smuggle tax-free goods due to a lack of information.
URA is banking on increased surveillance, stronger enforcement and public sensitisation to improve revenue collection after repeatedly falling short of its tax targets over the past four years. Hafsa Seguya, a URA Tax Education expert, attributes part of the problem to differences in tax policies among EAC member states.
She says the lack of harmonised tariffs encourages smuggling, with some countries importing goods at lower duty rates under regional exemptions before the products are illegally moved into neighbouring states.
Seguya also points to bilateral trade arrangements between individual EAC member states and countries outside the bloc. For example, while Uganda and Tanzania impose a 75 percent import duty on rice from Pakistan, Kenya was allowed to import the commodity at a lower rate to address a domestic food shortage. Some of that rice is later smuggled into Uganda and other neighbouring countries.
She called for reforms to harmonise tariff regimes across the EAC. Meanwhile, Finance Minister Henry Musasizi has urged URA to strengthen revenue mobilisation as the government seeks to raise the country’s tax-to-GDP ratio from the current 14.2 percent to 20 percent by 2030.
Speaking to the URA Board on Thursday, Musasizi said the authority’s strategic direction aligns with the government’s revenue ambitions and pledged continued support to help achieve the target-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
