CO-FY 23 General Support Grant to Uganda Security in the Country
The security situation in Uganda is generally calm with no major security incident, and the country is at UN security level 2. However, there have been some incidences of insecurity reported in some parts of the country which arelinked to terrorists activities, in October and November 2021, the central part of the country i.e., Kampala, Wakiso and Mbarara have been hitby explosives suspected to be acts of terrorists aimed at undermining the current governance of the country. The explosives have claimed several lives, however, the security forces have made some arrest in connection to the above incidences. Government continues to call for calm and has requested for cooperation from the public to volunteer information to put a stop to the terror acts. The North-eastern part of the county has been experiencing some insecurity from 2020 in which incidences of killings as a result of cattlerustling have been reported. This was exacerbated in September 2020 when the hard-core criminals broke Moroto prison and made away with a number of guns which were used to cause insecurity in the region. Currently the government is conducting disarmament in the region which is facing some resistance from the armed warriors, as they continue to re-arm themselves by acquiring illegal guns from the border communities across the neighbouring countries such as Kenya and South Sudan.

Political context

After the 2021 election,the country continues to witness tense post-election environment markedby the arrest of political leaders and civil society leadersand a clawback on constitutional provisions regarding access to justice, right to freedom of speech, Association and personal liberties.

The NGO sector and Civil Society space faces a numberof challenges in the operating environment and has been ongoing for sometimes now. These threats and challenges range from closure of offices, freezing of accounts, threats to de register NGOs, arrests and persecution of NGO and CSO workers amongst others. The operating environment is now saturated with various forms of regulatory requirements which are often cherry picked to deal with the entities as when it is desirable to those in authority. Many other NGOs have faced similar treatment with even worseconsequences for example on 20th August 2021, the Government of Uganda through the NationalBureau for NGOs suspended 54 CSOs for non-compliance to the NGO Act 2016 and specifically for the following reasons such as expiredpermits; not filling annual returns and non-disclosure of funds and for failure to register with authorities.

The situation has been complicated by militarisation of police structures, presence of armed civilian/non- state actors in political conflicts, riots under the guise of enforcing COVID -19 restrictions.  This might impact on the way Oxfam responds to anticipated situation. The opportunity is that there are Allies in the civil society that we can engage with to tackle these developments.

Continued emphasis on infrastructure development with dwindling support for social services like health and education will continue to impact on disposable incomes of the population leading a large proportion at risk of slipping back into poverty. Public financing is still skewed to public administration; with ever burgeoning local governments manifesting in the form of new cities, sub-counties, and town councils. Such is the situation despite resources for service delivery continuing to dwindle.

The economy
Before the COVID-19 pandemic, the Ugandan economy had gathered momentum, with GDP growing by 6.4% in 2018–19. Unfortunately, the pandemic triggered an economic slowdown; GDP growth slumped to 3.0% in FY2019–20, and 3.3% in 2020–21. Although it is projected to steadily increase to 6.73% in 2024, per capita growth remains insufficient to propel Uganda to lower middle-income status.
According to Uganda Bureau of Statistics 2020 Statistical Abstract, Uganda’s population was projected to be 41.6 million in 2020, with the majority under 18 years. The urban population is growing, with 10.6 million people projected to have lived in cities in 2020. The working population of Uganda is estimated at 15 million, with 9 million of these in employment. Youth (18–30) make up 73% of the unemployed. The youth unemployment rate, at 13%, is higher than the national unemployment rate of 9.2%. Most of the women in the paid employment work in the informal sector in low-paying jobs.
The high unemployment rates are attributed to limited labour market skills, limited access to productive resources, lackof opportunities and a mindset towards formal white colour jobs as opposed to creating employment. There has been a rise in urbanization which has attracted many young people leading to rural urban migration and thus disenfranchising the agricultural sector and exacerbating youth unemployment given the fact that urban areas don’t necessarily guarantee employment.
Tax regime
Uganda’s tax regime continues to be regressive, with about two thirds of total revenues coming from indirect taxes, such as value-added tax and exciseduty. The burden of consumption taxes is borne most by low-income earners. Between 2010 and 2017, Uganda lost about $3bn because oftax incentives and exemptions, nearly 16% of its total tax revenues, mostly to multinational companies that do not pay their fair share of taxes.
Due to limited revenue collections, Uganda’s tax-to-GDP ratio is the lowest in East Africa, at 13.8%. The country’s rising deficit stood at 9.9% of GDP in 2020–21. Public debt has risen above 50%, with increased spending on health, stimulus packagesand social protection for the vulnerable during COVID-19 applying additional fiscal pressure. This value is projected to increase to a peak of 51.9% of GDP in 2022–23. Increasing debt means that money will be allocated to interest payments, rather than being invested in the key social sectors of health, education, and others critical for poverty alleviation.
Business environment
The tax system and financial policies have direct impact on the operation and eventual success of small to medium enterprises. Uganda’s tax system has been regressive and that affects the effective operation of businesses. Tax holidays favour big multilateral companies while the small-scalebusinesses struggle to remain in the market. Uganda is ranked among the most entrepreneurial countries in the world with the largest percentage of adult population engaged in entrepreneurial activities yet many of their businesses end up closing within the first two years. Many of the unemployed Ugandan youth invest in small-scale businesses to earn a living yet the heavy taxes levied on these businesses do not favour their long-term survival. Financial institutions that provide start-up capital for manyof the SMEs have very high interest rates and these further stifles the thriving of the businesses. Access to finance for development on critical issues such as climate change is very competitive since government and multinationals/ big businesses compete with small and medium businesses for the same finances.  Financial products such as loans and services are more favourable to the rich who have collaterals. Women and youth can therefore hardly access financial services such as credit. Government continues to borrow from international financial institutions such as International monetary funds and world bank, this is increasing the debt burden whose end results are seen in regressive tax policy measures