Mafia accused of taking over informal economy

ECONOMY | MAFIA

In June last year, former state minister for lands, Aidah Nantaba, alleged that a "mafia group in government" was grabbing private land for personal gain.

She alleged that these "mafias" had offered to give her sh3b in exchange for support to take over land belonging to the Namulonge agriculture research institute, which she rejected.

The "mafias" are once again in the news, being accused of taking over the informal economy which contributes 25% of GDP and employs close to 98% of Ugandans.

According to Dr.Madina Guloba, a research fellow with the Economic Policy Research Center (EPRC), people in both government and the private sector have taken over control of markets across the country.

She said the mafias have also set up large distribution chain stores, thereby acting as middlemen between factories and informal businesses.

"When you go to Nakasero, Kalerwe and other markets, you see people in big government offices collecting money from sale of merchandise, on which they don't pay taxes, and sometimes they collect dues from vendors who occupy stalls in the markets. Their hours of operation are usually between 10:00pm and 5:00am," she said, during an informal sector assessment workshop at the imperial royal hotel on Friday.

She said the mafias have also invested in private markets and gained control in government markets constructed under the Markets and Agricultural Trade Improvement Programme 2 (MATIP-2) meant to accommodate vendors and other informal traders.

"Their operations are almost invisible, and if you don't pay attention you can't know who they are. Because they occupy high offices, they use their influence to get stalls in the markets, supply deals in major factories and close out the rest. They therefore determine rates in the markets and inflate retail prices because of the huge profits they take," said Rita Atukwasa, of the institute for social transformation.

She said Uganda has a thriving informal sector which constitutes up to 90% of the economy, thus leaving the burden of paying taxes to the 20% in the formal sector.

"Unfortunately, the mafias are facilitating expansion of this informal sector and have no interest of seeing it formalize," she said.

Records from the ministry of trade indicate Uganda's informal exports to DRC totaled $188m (sh626b) in 2015, while Kenya and South Sudan informal trade hit approximately $102m (sh340b) each, in the same period.

According to the 2014 statistics by the Uganda National Bureau of Standards, the informal sector is estimated at 52.4% of the $27b (sh 90.2 trillion) GDP.

According to UBOS, the number of businesses operating informally is multiplying at a speed that is far greater than the pace of enterprises that mutate into formal operations annually.

Ramathan Goobi, an economics researcher and consultant, said liberalisation of the private sector provided for self-regulation, which unscrupulous people, especially in government, took advantage of and created cartels.

So far, no one has come up to openly identify them but we know they are in existence and they want to fail each and every sector. So it is now upon the government to investigate who they are and how they can be dealt with," he said.