“Why do we discuss the same things over and over again and yet we see no change?” David Sebagala, a senior inspector of mines at the Ministry of Energy and Mineral Development, asked delegates at a mining sector tax dialogue in Kampala recently that sought to examine solutions to prevailing sector challenges.

Organized by the Uganda Chamber of Energy and Minerals (UCEM), the dialogue held under the theme “Transitioning from Revenue Maximization to Value Optimization in Uganda’s Mineral Value Chain” – reassessed the country’s mining tax framework, licensing trends and broader investment climate, in a sector the country has put at the centre of its growth ambitions.

Yet despite this ambition, the sector currently contributes just 1.9% to GDP – far below its historical peak of over 7% in the 1970s.

Recent reforms under the Mining and Minerals Act, 2022 – including mineral production-sharing arrangements (MPSAs) and a 15% free-carried state interest through the Uganda National Mining Company (UNMC) – have strengthened state participation.

But they have also heightened the need for a fiscal regime that attracts investment while ensuring long-term national value.

In her presentation, Lynn Gitu, an extractives governance specialist, noted that while Uganda’s fiscal regime was fundamentally sound and aligned with global standards, it faces serious implementation challenges.

Gitu (L) chats with James Opito, CSCO coordinator

She pointed to ambitious targets under the National Development Plan IV (2025-2030), including raising mining’s GDP contribution to 7.9%, increasing value of investment in beneficiation for selected minerals to UGX 1.8 trillion from UGX 200 billion, increasing mineral revenues to UGX 750 billion, start geothermal production and significantly expanding employment and value addition.

However, she warned that these goals may remain out of reach unless systemic inefficiencies are addressed.

At the centre of the discussion was the artisanal and small-scale mining (ASM) subsector, which accounts for the majority of mineral production but remains largely informal.

High licensing costs for individual artisanal miners – estimated at around UGX 11.4 million – complex procedures and limited access to regulatory services continue to discourage compliance.

While environmental and social impact assessments (ESIAs) were essential, she argued they should be made more accessible – possibly through government-supported assessments for designated mining zones for the ASMs.

Gitu also highlighted persistent weaknesses in royalty management. These include underreporting of production by operators, reliance on self-declared data and difficulties in valuing minerals due to fluctuating global prices.

Delays in disbursing royalties to local governments and landowners further complicate the system, while limited technical capacity and weak inter-agency coordination hinder enforcement.

Revenue leakages at the processing stage also emerged as a concern.

“Ambiguities in defining “processed” versus “unprocessed” minerals, coupled with smuggling and informal trade, make it difficult to apply taxes consistently,” she added.

Gold miners in Kassanda district

Her recommendations included simplifying licensing, decentralizing services to mining communities to support ASM formalization, strengthening monitoring systems and develop frameworks for sustainable mineral revenue management like is the case in the oil and gas industry.

She also called for improvements to the mining cadastre system, noting that recent restrictions on data access may be limiting transparency and decision-making.

For Sebagala, though, the real issue is not a lack of ideas, but a lack of convincing arguments.

“You cannot just say fees are high. You must show – compared to where, and based on what evidence,” he said.

Without that level of rigor, he suggested, policy change will remain elusive.

However, Patience Singo, the Country Manager, Rwenzori Rare Metals (RRM), questioned whether policies borrowed from neighbouring countries are always suitable, urging a more context-specific approach.

Asiimwe, CEO UCEM

Humphrey Asiimwe, CEO, UCEM, highlighted a deeper policy imbalance, arguing that government has focused more on “deepening” the tax base – extracting more from existing taxpayers – rather than “expanding” it by bringing informal players into the system.

“If more people are paying a little tax, you grow revenue sustainably like has been done by the developed world,” he noted, adding that better compliance and reduced leakages across the value chain would ease the burden on formal operators.

Offering a technical perspective, Blair Ntambi, the Mineral Development Advisor at GIZ, noted that Uganda’s tax laws treat mining too broadly, without considering how different minerals and locations require different levels of effort and investment.

In practical terms, mining gold in one region may be cheaper and easier than extracting it (or any other mineral) elsewhere, yet the tax system does not always reflect these differences.

He also noted that global mineral prices change over time, but the law does not fully account for how this affects profits.

Ntambi (L) chats with Sebagala

The result, Ntambi warned, is a system where investors may negotiate flexible terms that could lead to revenue losses for government.

His call was for clearer, more detailed rules that reflect real costs, price changes and long-term project value including better integration of net present value (NPV) calculations – especially with rehabilitation expenses in mind.

Agnes Alaba, the Mines Commissioner, acknowledged existing challenges but highlighted progress, including new regional beneficiation centres, increased staffing (like mines’ inspectors) and ongoing sensitization efforts.

Alaba also emphasized that “we must differentiate between artisanal and small-scale miners,” noting that the latter have the capacity to meet regulatory standards.

Alaba

On ESIAs, she clarified that costs are often driven more by consultants than by regulatory fees.

All recommendations, Asiimwe noted, would be captured in a paper to be submitted to key government institutions, including the Uganda Revenue Authority (URA), and formally tabled before Parliament’s Natural Resources Committee, where UCEM holds a standing engagement mandate.