Fiscal impact of privatization in Uganda 1992-2007

Abstract

The study investigates the fiscal impact of privatization in Uganda by looking at subsidies as expenditure
and taxes from privatised State owned enterprises (PSOEs) as well as sale proceeds from divestiture as
revenue. Using mostly documentary evidence from government official and 31 previously state owned
enterprises (PSOEs) records, the findings reveal a mixed fiscal impact of privatization. Privatisation left the
subsidies more or less the same. Subsidies in nominal prices were constant from 1992/1993 to 2004/2005
period. In today's Uganda, however, there was no link between subsidies and the central government
budget. On the contrary, taxation from PSOEs increased four times as a result of increased business
particularly in industry that increased 7 times while trade and services doubled. But Privatisation failed to
achieve the expected sales proceeds target of US $500 million target set by World Bank, managing only
US$172 million by end of June 2006 due to asset undervaluation and stripping.