Background

Oxfam is an International confederation of 20 affiliates working together with partners and local communities in more than 90 countries around the globe. We work to find practical, innovative ways for people to lift themselves out of poverty and thrive. We save lives and help rebuild livelihoods when crisis strikes and we campaign so that the voices of the poor influence the local and global decisions that affect them. We understand that many causes of poverty are linked, and we use many tactics to fight poverty and inequality. From local communities to national and the global stage, we call for fairness and justice. In our ambition for a just and sustainable world in 2030 we have committed to promote just economies and gender justice among others. Also Oxfam started working in Uganda in the 1960s. Since then, we have implemented both development and humanitarian programmes to support practical and innovative ways for people to lift themselves out of poverty.

Introduction

Uganda is richly endowed with a variety mineral resources in addition to the recently conducted geological, geochemical and airborne geophysical surveys which revealed potential for more mineral resources. Specifically, new 18 targets for gold, iron ore and Platinum Group of Metals (PGMs), Rare Earth Elements (REEs), nickel-chromium, copper, cobalt, uranium, titanium, limestone, phosphate, vermiculite, diatomite and bentonite were recently discovered to be of commercial value. The airborne Geophysical Survey, follow up ground mapping and mineral exploration of Karamoja Region has expanded Uganda’s mineral database which has led to discovery of more mineral deposits for development.

The Mining and Minerals Policy for Uganda, 2018 goal is to develop the mining industry through increased investment, value addition, national participation and revenue generation to contribute significantly to substantial socio-economic transformation and poverty eradication. The Policy contains guiding principles, objectives and strategies for the sustainable development of Uganda’s mineral resources. Government of Uganda develops these resources in partnership with private sector in a sustainable manner to contribute to national development by achieving long-term development aspirations such as vision 2040. Thus, the Minerals and Mining Act, 2022 allows partnership (Joint Venture) in mineral investment and total transfer of the Mineral Right (Licence) so as to facilitate exploitation of these important mineral resources.[1]

The mining sub-sector has great potential of contributing to economic growth and poverty alleviation through mineral exports, local consumption, manufacturing, employment generation and diversification of the economy and perhaps contribute to development of backward and yet resource rich regions like Karamoja. Despite a huge potential, the mining sector remains unable to contribute significantly to domestic revenue mobilization efforts of the country. For instance, the macro-economic data provided by the Uganda Bureau of Statistics (UBOS) indicates that the mining and quarrying sector accounted for UGX 2,266.31 billion in the FY19-20 which represents 1.63% of the national GDP on current basic prices, including 1.17% from formal sector activity and 0.46% related to informal sector activities. The contribution of the mining and quarrying sector to GDP has decreased compared to the prior year’s contribution (1.72%).

Uganda’s Domestic Revenue Mobilization Strategy (DRMS)

The Domestic Revenue Mobilization Strategy (DRMS) was launched by the Ministry of Finance, Planning and Economic Development in 2019 as a transparent tax policy making tool and to strengthen the administrative effort to support policy reform for the period 2019-2023. According to the DRMS, the policy reform was mainly aimed to enhance stability and sustainability of public finance to reduce public debt and finance the national budget

The Domestic Revenue Mobilisation Strategy (DRMS) set out core objective to improve revenue collection, lifting Uganda’s tax-to-GDP ratio to between 16-18% within the five financial years (2019-2024). This would bring Uganda closer to its theoretical potential and exceeds the target of a 16% tax-to-GDP ratio as set out in the NDPII and the Charter of Fiscal Responsibility. In setting the objectives of the DRMS, the government was cognisant of the need to achieve a better balance between competing challenges.

Page 71- 80 of the DRMS reviews the current state of extractives taxation and highlights a strategy for reform of the extractives fiscal regime to achieve the objectives of the strategy - maximize revenue but also encourage foreign direct investment in the sector. The section highlights the current challenges of extractives fiscal regime and provides broad interventions that can be undertaken to reform the sector. While this is a solid start, the interventions do not go far enough as to suggest options for specific interventions that can be undertaken to maximize benefits while attracting investments into the sector. This analysis goes in detail on the specific reforms that can be undertaken to ensure that the DRMS achieves its objectives. These recommendations are highlighted below:

In order to bolster the taxation of the extractives sector to meet the changing conditions in the mining industry and address the potentially complementary interests of government a number of strategies a required.Effective natural resource management will be critical to long-term development in Uganda and an appropriate approach to the use of natural resource revenues will help to prevent other sources of revenue remaining underdeveloped. Furthermore, designing a strong fiscal regime is critical for attracting the investment Uganda needs to develop the sector. Frequent changes to the regime reduce investor confidence in its stability and the likelihood of sufficient returns.

The problem

The current fiscal regime as stipulated in DRMS is not appropriate for taxing the full value chain in the extractive sector and therefore is not sufficient in realizing full potential from the mining sector. The current fiscal regimes for mining are generally weak and limiting the capacity of government to generate substantial revenue that reflect its potential. This is because the mining fiscal regime is not well developed and is not effectively administered. For example mining companies do not pay adequate royalties due to failure to monitor mineral production volumes. Other challenges include; Weak legal and regulatory framework, Limited effort and poor coordination by government agencies to collect adequate mineral royalties, Weak contract disclosure regime in the extractives sector, High level of corruption in Uganda, Weak enforcement by mineral protection police, Extractive information accessibility challenges, and the large informal Artisanal and Small-scale Mining (ASM) Sub- sector[2] among others: For example a big number of miners in Karamoja are ASM and not registered and thus not contributing to revenue collections hence undermining domestic revenue mobilization effort at the expense of local communities.

Objectives of the research study

  1. To evaluate the current mining fiscal regime and show the extent of its contribution to DRM in Uganda.
  2. To identify barriers undermining domestic resource mobilization in mining sub-sector
  3. Identify plausible strategies for improving domestic resource mobilization in the mining sub-sector

Outcome of the research study

We hope the study recommendations will be appreciated by policy makers and will be adopted in the review of the domestic resource mobilization strategy for Uganda and improve DRMS in mining sector.

Time Frame

The research will be conducted for 30 days from 20th November, to 10th December 2022.

Time frame and timelines for the consultancy

The assignment is planned to take place during the month of November 2022 and is anticipated to take not more than 20 working days.

Key expected deliverables in development of the research report

  1. Inception report.
  2. Undertake research for the study.
  3. Validation of the draft research report.
  4. Final report incorporating input from stakeholders.

Targeted audience

  1. Ministry of finance planning and economic development
  2. Uganda Revenue Authority
  3. Ministry of energy and mineral development (MEMD)
  4. Extractive Industry Transparency Initiative
  5. Mining companies
  6. Artisanal and Small Scale Miners

Contractual conditions

  1. The Consultants shall be persons of high integrity and competence in application of the task at hand for the period required.
  2. Except with prior agreement with Oxfam, the Consultant shall not publicize or make public through media or in private any (part) of the raw or finished material, recommendations or information provided within the framework of this contract.
  3. All reference materials belonging to Oxfam that the Consultants may have in possession by virtue of the contract shall be surrendered to Oxfam at the end of the contract.

Qualifications and required competencies for the Consultant

Oxfam in Uganda is looking for a competent consultant with the following qualifications and competencies:

  1. Relevant academic background with a minimum qualification of a Master’s degree in appropriate discipline including: taxation and economic policy, Natural Resources Economics, Energy economics, Mining and mineral policy, Environmental Management, law, public policy and other related disciplines.
  2. Demonstrated experience (at least 7 years) in carrying out similar assignments.
  3. Good understanding of fiscal policy, mineral and oil and gas sector in Uganda, East Africa and tax laws, mining and oil and gas.
  4. Excellent program planning and management skills ;
  5. Clear understanding of cross cutting issues such as gender, tax justice, financing, environment and international frameworks and institutions.
  6. Ability to work efficiently and deliver on committed outputs under the assignment within agreed timelines and deadline.

Application process

Soft copy of the technical and financial proposal should be sent to ugandalogistics@oxfam.org not later than 15th November 2022 at 5.00pm.