African Tax Bodies Urged to Bolster Domestic Revenue

URA’s Commissioner for Information Technology and Innovation, Robert Mutebi, has urged African tax administrations to enhance domestic revenue mobilization to reduce the continent’s reliance on foreign aid and curb growing debt levels.

Speaking at the African Tax Administration Forum (ATAF) annual meetings in Kigali, Mutebi noted the risks posed by dollar-denominated foreign debt and exchange rate fluctuations. “Since October 2023, the Ugandan shilling has depreciated approximately 5.6%, increasing the local currency cost of servicing foreign debt, which constitutes about 55% of total public debt (UGX 52.8 trillion) as of June 2023,” Mutebi explained.

This depreciation, he said, inflates debt burdens, consuming over 30% of government revenue for debt servicing, thereby limiting funds for essential services and worsening fiscal deficits. Mutebi added that high borrowing costs and limited access to capital markets have prompted the government to cut external borrowing and reduce overall spending, affecting service delivery to citizens.

He emphasized that governments are forced to prioritize debt servicing over the provision of essential services, and this can only be mitigated by increasing domestic revenue. “Domestic revenue mobilization is our hope for national development and economic independence,” he stressed.

Mutebi highlighted the uneven allocation of emergency financing, revealing that Africa received only 4.5% of the IMF’s 2021 Special Drawing Rights. This limited access restricts financial resources for crucial recovery efforts and forces governments to rely on high-cost short-term debt for long-term projects. He called on leaders to find African solutions to African challenges.