A Political Economy Analysis of Domestic Resource Mobilization in Uganda

This synthesis paper brings together the research findings from four papers prepared by the Uganda team as a part of the UNRISD Politics of Domestic Resource Mobilization for Social Development project, which addresses three broad themes: bargaining and contestation, key relations, and institution building with regard to mobilizing resources for social development. In the paper we analyse how political economy factors affect revenue raising and social spending priorities in Uganda. We establish a theoretical framework based on the political settlement theory, within which we explore instances of revenue bargain, which we understand as political negotiations that shape revenue mobilization, the actual revenue composition and policy priorities guiding revenue allocation. We focus on three instances of revenue bargains: legislative tax reform, institutional performance of the revenue agencies, and policy making. The first two instances relate to the actual mobilization of resources, whereas the third example focuses on bargains over spending priorities within a given revenue base. We find that in Uganda, a low-income country with competing political factions, there are specific challenges to mobilizing resources for social development. The need to maintain political power has led to reduced tax intakes, as a result of abolishing taxes levied on rural voters and introducing tax exemptions for powerful supporters. On the spending side, social development concerns compete with other public policy areas as well as the pressure to allocate resources for political purposes.