12 February 2013

Uganda: Agoa SMEs Ask for Tax Reduction

Businesses operating in northern Uganda have asked the Government to consider granting tax incentives on local products so as to boost the African Growth and Opportunity Act (AGOA). AGOA is an initiative that allows products from Sub-Saharan African countries into the US market, duty and quota free.

The business people, mainly small and medium scale entrepreneurs (SMEs) expressed their concerns during a meeting with Suzan Muhwezi, the senior presidential advisor on AGOA.

Jared White, one of the entrepreneurs making crafts for export, said the cost of producing the bags, beads and necklaces was a challenge to them. "Our biggest problem has been getting raw materials for making the products as well as the high taxes on them," said White, the social enterprise director of MEND, a social and financial enterprise that makes bags.

"We are not benefiting from AGOA because taxes on raw materials are too high," said Sean Galaway, the country director Krochet Kids Uganda, an enterprise that produces hats for the US market. The bags that go for $250 (sh662,000) in the US are made from locally procured raw materials.

Muhwezi, who was on a factfinding mission in Gulu district last week, said she was impressed that the rural women in northern Uganda were the brains behind the great bags exported to the US. "I am happy that AGOA is taking center-stage in Gulu with the women making crafts. But I am surprised that they are paying taxes," she said. She noted that AGOA, being a duty free and quota free initiative would not advocate for any payment of taxes.

She promised to work out a way with the trade ministry and Uganda Revenue Authority to ensure that the women entrepreneurs get some subsidies in form of tax reductions on local products.

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