Private sector players introduce framework to curb illicit trade 

Private sector players in the trade and manufacturing sector under their umbrella body, the Private Sector Foundation Uganda (PSFU), have drafted an Anti-Illicit Trade Framework, which is expected to contribute to the reduction of illicit trade in Uganda from 23 per cent to 10 per cent within three years.

According to PSFU, concerns were raised over illicit trade among fast-moving goods by the private sector players with respect to its implications on profitability and growth, and the unfair competition in the market. Consequently, the Anti-Illicit Trade Framework (ATF), with a specific committee composed of British American Tobacco, Uganda Breweries Limited, Uganda Manufacturers Association, Kampala Capital City Authority and Unilever Uganda Limited, was constituted to lead the agenda on anti-illicit trade in Uganda.

The framework was later developed and approved by the PSFU board of directors. Reports indicate that illicit trade is mainly common in alcohol, water, cigarettes, steel products, detergent products, ballpoint pens, electrical appliances, cosmetics, pharmaceuticals, agrochemicals, and computer software and hardware spare parts.

Uganda Revenue Authority (URA) reported a loss of more than Shs 91 billion in 2022. According to the latest industry surveys, illicit trade constitutes 29.4 per cent of the tobacco market and 64.7 per cent of the alcohol market, resulting in a loss of more than Shs 30 billion and Shs 1.6 trillion respectively in tax revenue annually from tax-evading products.

During the PSFU public-private sector dialogue on illicit trade in Uganda recently, the PSFU executive director Stephen Asiimwe noted that even though there are various government ministries, departments and agencies and legal frameworks established to curb illicit trade, its prevalence remains an issue with enforcement of existent laws, constrained by lack of synergies within the various stakeholders, corruption tendencies for public officials, limited knowledge of public officials about illicit trade, lack of sensitization of the consumers and absence of some key relevant policies.

“The private sector anticipates that with a proper public private partnership (PPP) framework, an enabling environment for implementation and effective enforcement of the current laws will minimize illicit trade. This drive is expected to enhance the working relationship between the public and private sectors and contribute to closing tax leakage avenues. This framework will facilitate engagement with various government entities and the private sector to counter illicit trade in Uganda,” he said.

Among the recommendations the private sector players have made in the framework to help curb illicit trade is establishing and operating a real-time illicit trade reporting and early warning system between the public and private sector, enforce trading license revocation for dealers identified with illicitly traded goods, enhance supply chain monitoring through deployment of modern technological solutions and seizure and destruction of goods and production equipment for counterfeit products.

Others are legal and regulatory reforms to introduce effective measures and deterrent penalties under existing laws by considering enactment of an anti-illicit trade law, raising consumer awareness on risks of consuming illicitly-traded products and fostering public-private partnerships through coordinated and committed action by local and international public and private sectors on a continuous basis.

The minister of state for Trade, David Bahati, in his response, told the private sector players that government has tried its best in terms of legislation to curb illicit trade through acts like the liquor act, portable spirits act, tobacco control act and the consumer protection act, which is still being discussed.

He, however, acknowledged that actioned polices, especially in terms of enforcement by agencies like URA and UNBS, need to be stepped up.

“We hope that in this financial year, we will be able to get extra funds to support UNBS in enforcement and operations against illicit trade and counterfeit products.”

David Ebiru, the executive director of UNBS, revealed that in a bid to curb illicit trade, the bureau is deploying technology and working closely with URA to make sure that the Q-mark in digital tax stamps is activated to enable the consumers use a smartphone to confirm whether a product is genuine or not.

“Digital tax stamps are going to be linked with quality standard marks that will empower the consumers to scan and determine whether the product is legitimate and if it is not, our rapid response teams will be notified to seize those products,” he said, adding: “There will be a joint enforcement in the coming month between URA and UNBS on compliance to the digital tax stamps to check whether the products are certified by the bureau and are paying taxes.”

jjingoernest1@gmail.com