Taxes: Farmers Express Mixed Reactions

Prime Minister Amama Mbabazi has said the high level of youth unemployment is not only a Ugandan problem but a leading global issue whose eradication necessitates stronger partnerships between Governments and the private sector, stuff sustained macro-economic stability and an enabling environment for investments that contributes to productive employment creation.

Mbabazi said Uganda has an extremely young population which is a critical challenge if deliberate measures are not fast-tracked to address unemployment, citing the Uganda Bureau of Statistics figures, 2012 which place 32 percent of an estimated 6.5 million youth in the jobless category, while 2 million are under-employed.

In spite of Government’s efforts to provide education and training at various levels for our large and fast growing youthful labour force, Mbabazi said the country continues to experience major deficits in the supply of skilled human resources.

According to a press statement from the office of the Prime Minister, Mbabazi said Uganda is now faced with a paradox of many graduates on one hand and shortage of skilled labour on the other.

The global youth unemployment rate is projected to be at 12.6 percent by 2013 with 73 million young people unemployed.

The Premier said the employed youth are also faced with the challenge of working poverty which, in the global context, is highest in Sub-Saharan Africa, estimated at 40.1 per cent in 2012, at the US$1.25 per day level and this is mirrored in Uganda’s youth.

Mbabazi made the remarks while delivering a key note address at the 11th Annual International Convention for the Banyakigezi (ICOB) during the weekend, in Washington DC, USA.

The four day convention was organized under the theme: Promoting Innovations and Entrepreneurship for Youth Employment.


Mbabazi hailed the Banyakigezi fete for promoting unity, cultural and socio-economic development of their community at home and in the Diaspora, harnessing collective efforts for wealth creation and development.

He said Government is cognizant of the serious social consequences of high youth unemployment including increased crime rates, drug usage, social and political strife and unmitigated violence.

Mbabazi remarked that Government has started a number of interventions to support the youth to become self-reliant and productive.

He said these interventions include improvement of practical skills through the Skilling Uganda Programme, the student loan scheme which promotes the increase of scientific knowledge and technical skills among the youth, the youth livelihood programme and the introduction of ICT Incubation centers that are aimed at encouraging innovation.


Mbabazi said Uganda has enjoyed remarkable economic growth under the National Resistance Movement, adding that the economy has grown at an impressive average of 6.5% over the past 28 years.

“The size of the Ugandan economy is now projected to be 63.3 trillion shillings, which is about 25.3bn US $, by the end of this fiscal year 2014/2015. This progress has been made in the face of significant structural bottlenecks in terms of limited energy and transportation infrastructure,” Mbabazi said.

He said the East African Community market is now over US $ 79.2bn and the COMESA market is even bigger at US $ 497bn,adding that this is the kind of opportunity that regional integration creates.

“We must therefore build requisite entrepreneurial capacities to seize these opportunities. If we do not do this, our brothers and sisters in the region will do so at our expense,” said Mbabazi stressing that we have to be streetwise in leveraging the opportunities of this real integration process.

He revealed that the President is later this month slated to launch a huge industrial complex for the production of phosphates and steel in Tororo district.

Other presenters at meeting included the current President of the Uganda North America Association, Brian Kwesiga and Jackson Kaguri, the proprietor of The Nyaka Project, a large charitable organization based in Kanungu district.

The Wife of the Prime Minister, Mrs. Jacqueline Mbabazi, highlighted the successful efforts of the NRM Women’s League in fulfilling its mandate and particularly in tackling the causes of the walk to work demonstrations in Kampala recently.

She encouraged non-governmental organizations and the private sector to work with Government in addressing youth unemployment in the country.

Mrs. Mbabazi announced the inception of the annual Miss Kigezi Tourism Pageant, effective 2015 which is aimed at highlighting the beauty and potential of the Kigezi region in addition to promoting the diversity of the Banyakigezi community.

Other notable members at ICOB were the Minister of State for Economic Monitoring, Henry Banyenzaki, the Chancellor Makerere University, Prof. Mondo Kagonyera and Rujumbura county Member of Parliament Jim Muhwezi among others.
During the recent budget reading, stomach Finance Minister Maria Kiwanuka announced a plan to generate an additional sh30.4bn in revenue.

The plan includes the removal of all tax exemptions for agriculture chain inputs; an 18 percent Value Added Tax (VAT) on agricultural supplies (i.e. fertilizers, tractors and seedlings); and an introduction of new taxes on value addition processes of agriculture and agro-processing.

If passed by parliament, these tax reforms (translating to about 0.2 percent of entire budget), could affect 23.8 million people that rely on agriculture as their primary source of income.

Policy makers and lobbyists argue that the proposed taxes will slow down the very growth the tax exemptions were designed to encourage in the agriculture sector.

While the parliament deliberates on the budget bill, we at Agency for Transformation took the debate to the farmers at the recently concluded 22nd Annual Source of the Nile Agricultural Trade Show.

We wanted to know what everyday farmers think about the new budget and its implications on the agriculture sector. Among them were skeptics, optimists and the apathetic.

Ntege, an official from the Uganda National Farmers Federation, said the federation found the budget to be unfair to farmers and is trying to mobilize with other groups to help convince the minister to reconsider.

Roland Niwagaba
Roland Niwagaba

Small holder farmers cannot afford the increased cost of agricultural inputs and tools that would arise from the proposed taxes.

We all want farmers out of poverty, another farmer stated, but these taxes will take away that opportunity.   Farmers will be forced to buy less or no inputs due to the increase in costs. Those who support taxing agricultural inputs forget farmers are already paying taxes elsewhere (i.e. transport, marketing, etc.). There are other sectors upon which the government can impose taxes other than the agricultural sector.


Amidst the dominant view of dissatisfaction among farmers, we heard a voice of pragmatic optimism towards the proposed taxes. A member of the Kiyindi Women’s Fish Processors Association and Gulu District Farmers Association was sympathetic to the government’s need for additional revenue in order to gain greater independence from donor funding.

However, she pointed out, measures to tax inputs must be balanced with a strategic effort to help farmers find good markets for their products.  Under such conditions, taxes will not be a problem and it will be a win-win situation for all parties involved.

This refreshing mixture of skepticism and optimism demonstrates that some farmers are seriously grappling with policies that may affect the future of the agricultural sector in Uganda.  What is disconcerting, however, is the measure of apathy expressed by other farmers we talked to.

They expressed a lack of concern, believing that the taxes will not change much and expect business to be as usual. Where the skeptics and the optimists have counted the potential costs (and for some, gains), those without a plan may find themselves in a vulnerable position in the near future.

The lack of perceived relevancy of government policy is partly to blame for the farmers’ dismissive attitude.  Farmers have to do everything on their own, as one skeptical farmer from Isingiro District Farmers Association pointed out.

There is a lack of support from leaders and politicians. Agricultural policies are either non-existent or poorly implemented. In lieu of imposing taxes, he added, there is a need for more farmer-friendly policies (i.e. protection against fake products; assistance with the onset of crop diseases; price-weight standardization to improve harvest planning and income projections).

Who is right…the skeptic, the optimistic or the apathetic?  To say ‘only time will tell’ is a risk the agricultural sector cannot afford. As the parliament deliberates on the budget bill, we implore them to take the farmers’ voice into account and reconsider the budget plan’s position on taxing agricultural inputs.

By Roland Niwagaba and Nkechi Charles

Nkechi is MGPS student at LBJ School of Public Affairs at The University of Texas at Austin & an AidData Fellow at Agency for Transformation 

Roland is head of Communications and IT at Agency for Transformation

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