KAMPALA— Uganda’s Finance Minister Matia Kasaija unveiled a Shs 72 trillion budget for the fiscal year 2025/2026 on Thursday. But beneath the ceremonial pomp lies a document that does more than allocate resources. This year’s national budget is a mirror reflecting the country’s ambitions, anxieties, and economic crossroads—and, for businesses and citizens alike, it offers a map of both promise and peril.
Uganda’s budget speech this year reads like a strategic business plan—one that places bold bets on self-reliance, infrastructure-led growth, and private sector dynamism. It also lays bare the country’s lingering structural constraints, from inefficient tax collection to underdeveloped logistics and gaps in education and health systems. Framed by a projected GDP growth rate of 7.0 percent for FY 2025/26, the budget attempts to thread a needle: to spend ambitiously without undermining fiscal stability, and to deepen domestic resilience without shutting out global capital.
Financing the Future—From Within
One of the most defining features of this year’s budget is where the money is expected to come from. The government plans to finance 60 percent of its UGX 72.1 trillion through domestic revenue, reducing its dependence on donors and external loans. For some, this signals growing national maturity and fiscal independence. For others, particularly small businesses operating in Uganda’s large informal sector, it raises a red flag: more taxes, stricter enforcement, and narrower margins.
To make this work, the Uganda Revenue Authority is turning to a suite of digital tools—e-invoicing, tax stamps, rental income monitors, and even AI-driven audits—to close compliance gaps. The private sector is being nudged into formality, but it’s also being watched more closely. The message is clear: if you operate in Uganda, you need to start keeping your books in order.
At the same time, government spending is not simply growing—it’s evolving. Over 90 percent of the budget’s projected deficit will go toward productive investments in transport, energy, agro-industry, and digital infrastructure. This reflects a deliberate shift from consumption to capital formation—a strategy to lay the groundwork for long-term private sector growth.
Building for Business
Infrastructure spending is the cornerstone of the 2025/26 budget. With nearly Shs 7 trillion allocated to roads, ports, energy grids, and industrial parks, the government is betting that better logistics and reliable power can unlock a new era of manufacturing and trade competitiveness.
This is not just about physical roads. It’s about economic access. Cheaper transport and stable electricity can turn previously unviable areas into hubs of activity. They can reduce the cost of doing business, expand market reach, and attract investors looking for scalable production bases.
In industrial policy, the government is directing Shs 1.86 trillion toward agro-processing and value addition—especially in sectors like coffee, grains, fruits, and dairy. In a country where agriculture still employs the majority of the population, transforming raw output into export-grade products could generate jobs, foreign exchange, and fiscal returns.
Human Capital and Health: Investment or Lip Service?
Education and health have not been neglected, at least on paper. The budget sets aside Shs 5.04 trillion for education, including funding for 166 new seed schools and expanded teacher training. In health, Shs 5.87 trillion will support cancer and cardiac centers, digital health records, and regional hospital upgrades.
But here, skepticism is harder to shake. Uganda has a history of under-delivering in the social sectors. High absenteeism among teachers, understocked hospitals, and slow disbursement of public funds mean that allocations don’t always translate into impact. For the budget to deliver on its social promises, implementation—not just intention—will be key.
Still, these allocations reflect an understanding that an educated and healthy population is not just a social good, but an economic necessity. The labor force must be productive, and that begins in classrooms and clinics.
Agriculture’s Time to Scale
One of the most strategically positioned sectors in this budget is agriculture. About Shs 1.86 trillion will go toward irrigation, fertilizer subsidies, and agro-industrial investment. Credit schemes through the Uganda Development Bank and Emyooga are being tailored to de-risk smallholder lending.
Uganda is seeking to shift agriculture from subsistence to commerce. If successful, this could unlock value chains that absorb youth unemployment, enhance food security, and reduce the country’s trade deficit. But farmers need more than credit—they need roads to transport produce, extension services to improve yields, and predictable market policies to take investment risks.
Digital Promise, Real-World Barriers
There’s an unmistakable nod in this budget to Uganda’s digital economy. The government has begun funding ICT infrastructure and e-government systems, and it continues to encourage mobile-based tax compliance and service delivery.
But connectivity is uneven, digital literacy remains low, and urban-rural gaps persist. Bridging these divides will determine whether Uganda’s digital economy can move from buzzword to backbone.
Debt, Discipline, and Development
Despite increased domestic borrowing, the government has signaled restraint. Debt will be concentrated on concessional loans and development-focused instruments. The Uganda Development Bank will play a bigger role in disbursing low-interest loans to the private sector.
This is a double-edged sword. On one hand, crowding-in private capital through government guarantees and concessional finance can unlock scale. On the other, the risk of overextension and inefficiency looms large. Public investment must yield returns, or the debt burden will become politically and economically unsustainable.
A Nation in the Middle Lane
Uganda’s 2025/26 budget does not radically break from past practice—but it does reflect an economy slowly evolving from donor dependency to homegrown ambition. The emphasis on domestic revenue, productive spending, and private sector alignment suggests a government trying to mature its fiscal strategy.
Yet the real test lies ahead. Tax enforcement must not stifle enterprise. Infrastructure must be built with efficiency and maintained with integrity. And reforms must reach ordinary citizens—not just tick donor checkboxes or woo foreign investors.
For businesses, the signal is mixed but hopeful. The state is serious about infrastructure and industrialization, but it’s also placing new compliance burdens on the private sector. For citizens, the promise is of shared prosperity—but only if spending is well-governed and inclusive.
The stakes are high. With the right execution, this budget could lay the foundation for a more resilient, diversified economy. But without discipline, coordination, and accountability, it risks becoming yet another grand plan that falters in translation.
The budget may be written in numbers, but its success will be measured in livelihoods.
