Around 50 local investors recently voiced their concerns about what they perceive as an increasingly unfavorable tax environment and expensive bank loans that are negatively affecting their businesses.
At a stakeholders’ meeting hosted by Colonel Edith Nakalema, the head of the State House Investor Protection Unit, in Kampala, the investors pointed fingers at the Uganda Revenue Authority (URA) and the Bank of Uganda for being at the center of their struggles.
Mr. Thaddeus Musoke, the chairperson of the Kampala City Traders Association (Kacita), highlighted the challenges faced by Ugandan businesses in accessing finance from commercial banks. He cited high interest rates ranging from 18 percent to 23 percent and personal investments of up to 15 million shillings required to secure a 500 million shillings loan, with the bank only disbursing 300 million shillings.
The consistent taxation pressure from the URA, according to Mr. Musoke, has led to the decline of local investments. Similarly, Mr. John Walugembe, the chairperson of the Federation for Small and Medium Enterprises, pointed out that government policies have been detrimental to small businesses, causing many to close down.
Colonel Nakalema called for the meeting in response to public outcry from local investors who had submitted multiple petitions alleging that government agencies meant to support them were instead stifling their businesses.
She also noted that many investors had complained about stringent measures imposed by commercial banks, preventing them from accessing the Agriculture Credit Facility (ACF) and the Small Business Recovery Funds established by the Bank of Uganda to assist local investors.
Government officials in attendance reassured the concerned investors of the government’s commitment to improving the investment climate. They acknowledged the vital role of investment in the country’s development.
Mr. John Musinguzi, the Commissioner General of URA, Mr. Moses Kaggwa, the acting Director of Economic Affairs at the Ministry of Finance, Planning, and Economic Development, Mr. Richard Byarugaba, the Executive Director in-charge of Finance at the Bank of Uganda, and representatives from other government agencies expressed their dedication to addressing the investors’ issues.
Mr. Jacob Kabondo, the National Coordinator of Uganda Millers Association, criticized various institutions for both hindering their progress and imposing high taxes. He explained that the industry was suffering, with exports experiencing significant delays.
Stakeholders from various sectors, including millers, the fish industry, e-trade, and women entrepreneurs, also raised concerns.
In response, Mr. Musinguzi announced that the tax body would undertake reforms to address the investors’ grievances. Mr. Byarugaba acknowledged the low uptake of the Small Business Recovery Fund and stated that efforts were underway to address this issue.
Mr. Kaggwa mentioned an upcoming meeting where the government would assess the impact and success of its livelihood programs and consider further enhancements.