URA’s Commissioner for Information Technology and Innovation Robert Mutebi has rallied African tax administrations to bolster domestic revenue mobilization to reduce the continent’s dependence on foreign aid and curb the ever-growing debt.

Mutebi, who was speaking at the African Tax Administration Forum (ATAF) annual meetings in Kigali, noted that the dominance of dollar-denominated foreign debt poses significant risks due to 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 exacerbating fiscal deficits.

He added that high borrowing costs and limited access to capital markets have prompted the government to cut external borrowing and reduce overall spending, which affects service delivery to citizens.

According to Mutebi, 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 emphasized.

Mutebi also pointed out the uneven allocation of emergency financing, where Africa receives the short end of the stick from funders like the International Monetary Fund.

“Africa received only 4.5% of the IMF’s 2021 Special Drawing Rights,” he revealed. “This limited access restricts financial resources for crucial recovery efforts and exacerbates existing economic challenges, forcing the government to rely on high-cost short-term debt for long-term projects, increasing fiscal strain.”

He called on the leaders to find African Solutions to African Challenges.

By Akinyi Winiefred