Tackling illicit trade is key to safeguarding livelihoods

Like many countries in our increasingly integrated and interdependent world, Uganda is investing in socio-economic transformation to uplift the lives of its citizens.

Key to our national development plan and Vision 2040 agenda is the transformation of our economy from a low-income status country to middle-income status.

However, one of the obstacles that could hinder this transformation is the malign influence of illicit trade. This widespread criminality involves trade in counterfeits, goods that are tax evaded and or not compliant with the respective governing regulations, causing economic damage. It should also be noted that illicit trade poses additional risk to human safety.

In 2020, the Uganda Revenue Authority (URA) stated that smuggling deprives the country of Shs985 million in tax revenue every day.  Not only does this negatively impact legitimate manufacturers and businesses, it also reduces the government’s ability to invest in essential services due to reduced tax revenue. Money that would otherwise have been available for critical development projects and the upliftment of citizens is instead lost to crime.

The impact of the illicit tobacco trade in Uganda goes far beyond the fiscus. It significantly undermines the livelihoods of Ugandans, including farmers, legitimate suppliers and retailers, who rely on this income to sustain their businesses and families.

The Anti-Counterfeit Network (ACN) says counterfeit and sub-standard products cost the country approximately Shs6 trillion a year.  It is estimated that the illicit tobacco trade in cigarettes alone accounts for approximately Shs30 billion in lost revenue annually.

In 2021, global research by the Counter Extremism Project (CEP) observed that illicit trade in the region is fueling political instability as it funds corruption, insurgency, and the trafficking of illegal weapons.

If this doesn’t worry us, then it is time to rethink our priorities. These research papers are widely available, and these allegations impact the country’s reputation among its peers on the continent and across the globe. To quote Benjamin Franklin, “It takes many good deeds to build a good reputation, and only one bad one to lose it”.  We must not allow illicit trade to tarnish our reputation as a people.

While I decry the state of illicit trade in Uganda, I will admit that the exacerbating situation is not for a lack of effort. URA deserves credit for initiatives including the already existing Digital Tax Stamps system and most recently, acquisition of a mobile cigarette shredding machine to destroy huge volumes of illicit cigarettes that are seized and taken out of the market.

That said, much more concerted multi-stakeholder effort as well as stiffer penalties for illicit traders is urgently needed. Just as the impact of illicit trade is multi-faceted, it will require collaboration between industry players in the manufacturing sector and government agencies, law enforcement agencies, private businesses - especially those operating within border areas where most smuggling activities occur, and consumers.

In short, it is time that all Ugandans collectively wage war against illicit trade in our country. If this scourge is allowed to persist, investment in development projects for the people, in sectors such as roads, health, education and water, will not be fully achieved. Livelihoods will also be lost to the black market, and our efforts towards economic growth will be grossly undermined.

I firmly believe that if we work together to combat this vice, we can transform Uganda into a regional and even global economic powerhouse. If we start today, it won’t be a moment too soon.

 Mr Henry Rugamba is a public   relations professional and a        Non-Executive Director of BAT.