Illicit trade is a growing menace in Uganda, undermining economic stability, endangering consumers, and depriving the country of vital tax revenue.
The Private Sector Foundation Uganda (PSFU) is now urging stronger action against this pervasive issue, following the Uganda Revenue Authority’s (URA) destruction of 37 tons of illicit cigarettes worth Ush1.6 billion in Nakasongola District.
A Strong Message, But More Action Needed
While commending URA for its decisive move, PSFU emphasized that this should mark the beginning of a sustained offensive against illicit trade.
Stephen Asiimwe, PSFU Chief Executive Officer, stated, “This significant action by URA is very welcome and should now be followed by robust and sustained enforcement mechanisms against suspects involved in illicit trade.”
Recent research reveals that illicit tobacco trade now accounts for over 30% of cigarettes sold in Uganda. This means three out of every ten cigarettes on the market evade taxes and bypass tobacco control laws.
But the problem doesn’t stop there—illicit trade has infiltrated sectors like fuel, beverages, alcohol, pharmaceuticals, agricultural inputs, and food.
The Staggering Cost of Illicit Trade
The financial impact of illicit trade is staggering. In 2020, URA estimated that smuggling alone costs Uganda Ush985 million in tax revenue daily.
Euromonitor reports that two out of three alcoholic drinks sold in the country are illicit, growing at nearly 10% annually and depriving the government of over Ush17 billion in taxes each year.
The agricultural sector, a key driver of poverty reduction, is also under threat. The National Bureau of Standards estimates that 30-40% of seeds sold in Uganda are fake, jeopardizing farmers’ livelihoods and food security.
A Multi-Sector Crisis
Illicit trade isn’t just a financial issue—it’s a societal one. It fuels organized crime, endangers public health, and creates unfair competition for legitimate businesses.
Asiimwe highlighted the broader impact, stating, “Illicit trade is a deadly plight on our economy, depriving the government of vital revenue for public services like education and infrastructure.”
A Call for a Unified Approach
PSFU is advocating for a multi-stakeholder approach to combat illicit trade. Key recommendations include:
- Stronger Enforcement: Multi-agency collaboration to enforce anti-illicit trade laws, with increased surveillance at border points and within domestic markets.
- Stiffer Penalties: Harsher consequences for those involved in illicit trade to deter criminal activity.
- Public Awareness Campaigns: Educating communities about the dangers of illicit trade and encouraging support for legitimate businesses.
The Path Forward
Asiimwe concluded with a rallying cry: “Defeating illicit trade is pivotal to Uganda’s Vision 2040 agenda, which seeks to advance our country to middle-income status. We urge all stakeholders—government, private sector, and the public—to unite against illicit trade. Together, we can foster a business environment where fair trade thrives, and economic development is inclusive.”
Illicit trade is a battle Uganda cannot afford to lose. With collective action, we can protect our economy, safeguard consumers, and secure a brighter future for all.
