Uganda

During the 1990s, Uganda undertook a comprehensive economic reform program that included liberalizing external trade and modernizing its customs administration. As a result of those initiatives, Uganda's trade tariffs are now among the lowest and most streamlined in Sub-Saharan Africa. Moreover, the government created an independent revenue agency, the Uganda Revenue Authority (URA), to improve overall revenue collection. The initiatives have enabled the authorities to improve their revenue mobilization performance, ease trade operations, and initiate a fight against corrupt practices in the customs service.

This chapter begins by highlighting the key elements that led to the creation of the URA. It then turns to a review of customs reforms before looking at the future of reform. This chapter is based on a field study undertaken in June 2002 and was updated in November 2003 with information obtained from the URA.

The Uganda Revenue Authority

Toward the end of the 1980s, the minister of finance became frustrated with the ministry's revenue performance and looked for ways to strengthen revenue collection. In 1990-91 and 1991-92, Uganda's fiscal revenues were among the lowest in the developing world, averaging only 7.5 percent of gross domestic product (GDP). Following the turbulent years of President Idi Amin and President Milton Obote, corruption remained rampant, particularly in the area of revenue collection. In the context of periodic meetings of finance ministries organized by the Commonwealth countries, Uganda's minister of finance met with his counterpart from Ghana, who a few years earlier had established an autonomous revenue agency in his country. Such an approach to managing the customs service had been inspired by Margaret Thatcher's reform of the United Kingdom's public sector, which drew on a private sector business model.

The United Nations Development Programme supported the search for new approaches to make the customs service more efficient, provided the funds for a team from Uganda's Ministry of Finance (MOF) to visit Ghana, and commissioned a consultant study to define the steps needed to create an independent revenue authority. The United Kingdom's Department for International Development (DFID) supported the creation of the URA with a UK£4.6 million grant, UK£3.6 million of which was provided in the form of technical assistance, with the remainder as a capital grant. This United Nations Development Programme study compared salary levels in the private and public sectors with a view to suggesting a salary level for the customs service that would enable it to attract qualified personnel. Following internal discussions of the study, a new revenue regulation was drafted and presented to the parliament in early 1991. Following approval of this legislation, the ensuing legislation led to the creation of the URA in September 1991.

The main difference between the fiscal department that the URA was to replace and the URA itself was that the URA would pay better wages ...

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