Informality in Artisanal Mining Bleeds Revenue, NGO Warns

Uganda continues to lose significant revenue from the artisanal and small-scale mining (ASM) sector due to rampant informality and weak regulatory enforcement, the Advocates Coalition for Development and Environment (ACODE) has said.

Despite being rich in minerals, Uganda has failed to translate its small-scale mining activity into a robust contributor to domestic revenue, with ACODE estimating that up to 95% of ASM operations remain informal and outside the national tax system.

The March 2025 ACODE Factsheet paints a bleak picture of a sector plagued by under-regulation, smuggling, and lost opportunities.

Most ASM operators, it notes, work without licences, avoid taxes, and exploit mineral resources with little accountability, resulting in vast economic losses.

"A formalized ASM sector enables the government to generate revenues in excess of the cost of production (economic rent) through the application of targeted special taxation regimes," the report notes.

Yet the potential remains untapped, as Uganda Revenue Authority and related agencies struggle to enforce income-based taxes like Pay-As-You-Earn (PAYE), Withholding Tax (WHT), and even contributions to the National Social Security Fund (NSSF).

Two crucial revenue streams—mineral royalties and special mining taxes—remain largely out of reach.

Royalties are meant to benefit communities that bear the brunt of mining’s environmental and social impacts, while special taxes help the government claim a fair share of the profits

. Without formal registration, ASM operators evade both, leaving communities and the state short-changed.

According to ACODE, legal ambiguity, weak enforcement, and limited financing options keep the sector in a cycle of informality.

Small-scale miners without licences cannot access bank loans, yet formalisation itself requires investment in registration, safety upgrades, and better technology.

“A certain level of capitalization is required to register, gain a concession, and invest in better technologies,” the report states.

“Without access to finance, formalization becomes a distant goal for most small-scale miners.”

The consequences extend beyond missed tax collection. Informality contributes to environmental degradation, unsafe working conditions, and illegal trade—particularly smuggling across porous borders.

ACODE argues that without urgent reforms, the sector will remain a drag on government efforts to widen the tax base.

The think tank recommends that government agencies not only intensify enforcement of existing regulations but also design innovative financial mechanisms to support formalisation.

These could include microcredit schemes, concessional loans, and state-backed grants to help miners transition into the formal economy.

Until such solutions are implemented, Uganda’s most mineral-rich regions will continue yielding wealth that benefits only a few—at the expense of national development.