The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Auditor General Edward Akolhas revealed serious gaps in the management of Uganda’s mining sector, with millions in export levies and mineral rent fees remaining unpaid. This he notes undermines both regulatory frameworks and the country’s ability to collect critical revenue.
The report recently submitted to Parliament reveals that gold exports valued at over USD 3 billion (approximately 11 trillion shillings) were made without the required export permits from the Minister of Energy, as stipulated by Section 149 of the Mining and Minerals Act.
“The practice undermines the regulatory framework and leads to loss of government revenue. For example, the unpaid export levies have accumulated to 68.842 billion shillings,” the auditor general said in the report adding the failure to secure these levies highlights a significant shortfall in the collection of taxes from gold exports, depriving Uganda’s coffers of much-needed funds.
Gold has in recent years been one of Uganda’s number one exports, for instance, in the financial year 2023/2024 it accounted for over 42 percent of the country’s total export receipts according to figures from the Uganda Revenue Authority.
The export of this mineral has grown by 95.6% over the past decade and the government has since put a requirement for gold exporters to pay a tax of $200 per kilogram.
The report further identifies mineral rent fees of 439 billion shillings, which were due from exploration and mining companies by June 30, 2024, but have yet to be settled. These payments, mandated by Section 50(1.b) of the Mining and Minerals Act, are crucial for the sustainable management of Uganda’s mineral resources, yet remain outstanding.
One of the more concerning revelations pertains to the distribution of royalties under Section 180(4) of the same Act. This section requires that royalties collected from the mining sector be distributed to various levels of government: 70% to the Central Government, 15% to Local Governments, 10% to Sub-County or Town Councils, and 5% to landowners or lawful occupiers of land subject to mineral rights.
However, of the 7.05 billion shillings in royalties collected, only 3.14 billion Shillings (45%) were distributed to the designated beneficiaries, leaving an outstanding balance of 3.91 billion Shillings.
The Auditor General attributed these issues, including the unpaid gold levies and mineral rent fees, to inadequate enforcement of existing laws and regulatory weaknesses. To address the situation, the report outlined three key recommendations: strengthening collaboration with the Uganda Revenue Authority to improve monitoring and enforcement of export permit requirements, invoking penalty clauses against non-compliant mineral exporters, and establishing follow-up mechanisms to track outstanding mineral rent fees.
“Institute follow-up mechanism to monitor outstanding payments of mineral rent fees and strengthen enforcement for non-compliant license holders. Consider invoking the penalty clauses on culpable mineral exporters, in line with section 149(5) of the Mining and Mineral Act. Ensure that the bottlenecks leading to non-remittance of royalties are resolved so that the intended beneficiaries of the mineral royalties receive their due share,” the report reads in part.
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