Digital plates: MPs demand answers on Shs106b tax loss

KAMPALA. Parliament has opened an inquiry into Uganda’s digital number plate project amid questions over the revenue it generates, the number of plates being produced and imported, and the cost of the system to motorists and government.

The inquiry by the Committee on Physical Infrastructure follows conflicting figures presented by the Ministry of Works and Transport and the company implementing the Intelligent Transport Monitoring System (ITMS).

At stake is an estimated Shs106 billion in tax revenue which Parliament says could be at risk, as well as concerns over delays in supplying plates that have already disrupted vehicle dealers, importers and other businesses in the motor trade. Parliament has previously heard complaints that shortages of digital plates are crippling businesses in the sector.

Committee chairperson Mwine Mpaka said the figures presented by the Ministry showed government could be losing about Shs4 billion in tax revenue every week, while the number of plates being issued had fallen from about 350 to 100.

The figures are at odds with the contractor’s reported capacity to install about 1,500 digital plates a day.

“We are looking at the production, importation and the revenue generated from this project because the figures we are getting do not tally,” Mr Mpaka said.

The committee wants the Ministry of Works and Transport, Uganda Revenue Authority (URA) and the ITMS contractor to provide records showing the number of plates and raw materials imported, plates produced and those issued to motorists.

The MPs are particularly interested in determining whether the contractor’s reported production capacity is reflected in customs declarations and actual installations.

Bwire Kezekia, chairperson of the Clearing and Forwarding Association, asked URA to reconcile the contractor’s reported production capacity with import records.

“The moment I see the number of imports, I can tell you what they produced for that period,” Mr Kezekia said.

He said clearing agents experienced shortages of digital plates between May and June, with some motorists waiting for up to three months after paying the required taxes and fees.

The delays have implications beyond individual motorists. Vehicle dealers, importers and clearing agents depend on timely registration to release vehicles from bonds and complete sales.

Recent submissions to Parliament by business groups have similarly linked digital plate shortages and high costs to disruptions in the automotive trade.

The committee is also examining claims that the project could be generating more than Shs1 billion a day.

Mr Mpaka said the estimate was based on a reported plate cost of about Shs714,000 and the contractor’s stated capacity of 1,500 installations a day.

He, however, stressed that Parliament had not independently verified the calculation.

The inquiry will therefore seek to establish the actual number of plates being produced and installed, the amounts collected from motorists and the taxes paid to government.

The probe also raises questions about the economic structure of the project, particularly the reliance on a single company for the supply of digital number plates.

Allan Ssenyondwa, Director of Policy Research and Advocacy at the Uganda Manufacturers Association, said manufacturers had previously cautioned against treating the project only as a security intervention without considering its wider economic implications.

He said qualified local manufacturers should be allowed to participate while meeting the security and tracking requirements of the digital system.

Mr Ssenyondwa said the current arrangement could limit local manufacturing opportunities and create supply constraints as more vehicles are moved to digital plates.

The ownership and operations of ITMS are also under scrutiny.

Frank Mawejje, chairperson of the Union Transport Alliance, asked the committee to establish the ownership structure of the company and examine how local number-plate manufacturers were affected by the project.

He cited Tumpeco, which had previously been involved in number plate production, and argued that local firms should have been given an opportunity to participate.

The questions come as concerns over the value for money and implementation of the digital plate project continue to grow. Documents cited in recent reporting have raised questions about project costs, feasibility and implementation, while motor dealers have reported backlogs and difficulties obtaining plates.

There are also emerging questions over additional procurement involving the digital plate system. Whistleblowers have raised concerns over a proposed Shs158 billion procurement involving the same company implementing the ITMS, although those allegations have not been established by Parliament.

Mr Mpaka said the committee would not rely solely on testimony given during the hearings.

The MPs plan to obtain records from government agencies, conduct field visits and engage additional stakeholders before making their findings and recommendations.

“We are looking for a solution without entirely affecting the main principle, which is security,” Mr Mpaka said.

He said the committee expects to complete its work within two weeks and present its findings to Parliament.

Uganda began rolling out digital number plates under the ITMS in 2023, with the system intended to strengthen vehicle identification and tracking, improve law enforcement and enhance motor-vehicle registration and transport-sector data management.

For the committee, however, the immediate question is whether the system is delivering on those objectives while providing government with the revenue and economic value expected from a project that affects virtually the entire motor-vehicle registration chain.