Study: Uganda Losing Billions Due to Inability to Stem Illicit Money

Uganda has lost billions of dollars in recent years from illegal financial flows, including tax evasion, crime, and corruption. Uganda's Financial Intelligence Authority - set up to track illicit money - says it lacks resources to stem the flow.

Tax evasion, money laundering, and related corruption are costing Uganda at least $1 billion a year, according to Global Financial Integrity.

The Washington, D.C.-based non-profit said in a September report that tax evasion from imports and exports alone cost Uganda $6.7 billion dollars from 2006 to 2015.

Nearly $3 billion more was lost to errors and omissions in balance of payments over the last decade.

Global Financial Integrity says the economic losses were worsened by Uganda's role as a haven for illegal funds from its war-torn neighbors, such as South Sudan, the Democratic Republic of Congo, Somalia and Kenya.

Ezra Munyambonera is lead researcher at Uganda's Economic Policy Research Center and helped write the report. He blames Uganda's under-regulated financial system.

Whether you have got money from selling human beings, even buying goods and services, so that's one way. We had a war, ADF war, it was in DRC, but how was money getting out? The same thing with Sudan, Sudan people come here with dollars, they have come in high profile, but nobody will ask them, where is this money coming from?

The Economic Policy Research Center's Paul Lakuma, who also contributed to the report, is more blunt. He says leaders in Uganda ignore the illegal money.

Our political leaders, do they have the will of fighting it, or they are benefiting from it. Maybe it serves their political interests, it's like maybe stability, or the length in which they stay in power, so they will look the other way.

Uganda's Financial Intelligence Authority is mandated to check illegal financial flows in the country.

Its director, Sydney Asubo, says a lack of collaboration and coordination between government departments has hindered efforts to stop the flow.

He says the agency's resources and authority are also limited.

If we know people are evading tax, if it's to do with gold smuggling or cash smuggling, we inform the relevant bodies. If it's to do with terrorism financing, we inform the counter terrorism police. So, it's not because the officer doesn't know what to do. But the main challenge we have is funding.

Despite the billions in lost revenue, Global Financial Integrity notes Uganda has made progress against money laundering and cutting off some terrorist financing.

Uganda passed a 2013 anti-money-laundering act, which requires disclosure of transactions of $26,500 or more.

But corruption and enforcement are still problems, says the Uganda Financial Intelligence Authority's Asubo.

Since starting its operation against illegal money in 2015, Asubo says they have had only two court convictions.

Source: Voice of America