Big budget, bigger promises

Uganda’s Shs 72 trillion budget bets on wealth creation and growth in election run-up for next financial year

ANALYSIS | JULIUS BUSINGE | As Uganda prepares to enter a heated election season in 2026, the government unveiled an ambitious Shs 72.1 trillion budget for the 2025/2026 financial year. Presented at Kololo Independence Grounds by Finance Minister Matia Kasaija on June 12, the new budget comes with both promises and tough realities for businesses, ordinary Ugandans, and investors eyeing the country’s evolving economic landscape.

The budget, themed “Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation and Market Access”, marks not only the final leg of the ruling National Resistance Movement (NRM)’s current manifesto but also the official start of the Fourth National Development Plan (NDP IV), the first in Uganda’s bold Tenfold Growth Strategy aimed at propelling Uganda’s economy to USD 500 billion by 2040.

“This budget, therefore, is for all Ugandans who are ready to create wealth. Fellow countrymen and women, take full advantage of the innumerable opportunities contained in this budget,” Kasaija said.

The resource envelop

The total resource envelope for the 2025/26 financial year stands at Shs 72.3 trillion, a slight increase from Shs 72.13 trillion in the current financial year ending June 30. This substantial allocation underscores the government’s continued commitment to fostering sustainable economic growth and development.

The resource envelope comprises five key components that demonstrate balanced approach to fiscal management. First, domestic revenue is projected at Shs 37.55 trillion, consisting of Shs 33.94 trillion in tax revenue, Shs 3.28 trillion in non-tax revenue, and Shs 328.6 billion from Local Government collections.

Second, government plans to do domestic borrowing of Shs 11.38 trillion to support critical national programs. Third, Shs 10.03 trillion has been allocated for refinancing maturing domestic debt, ensuring financial stability. Fourth, grants and external borrowing for general budget financing amount to Shs 2.08 trillion. Finally, external financing for specific projects totals Shs 11.33 trillion, including Shs 2.8 trillion in grants.

Kasaija said, the government has carefully structured the expenditure allocations to maximize development impact while maintaining fiscal discipline. A significant portion, Shs 8.57 trillion, is dedicated to wages and salaries, recognizing the importance of our public service workforce. Non-wage recurrent expenditure receives Shs 28.33 trillion, covering operational funds for institutions, wealth creation initiatives, science and technology investments, education and health grants, medicine procurement, infrastructure maintenance, and interest payments.

Development expenditure, crucial for Uganda’s long-term growth, has been allocated Shs 18.24 trillion. Debt management remains a priority, with Shs 10.03 trillion for domestic debt refinancing, Shs 4.98 trillion for debt amortization, and Shs 493 billion for domestic debt repayment to the Bank of Uganda.

The government is also addressing outstanding obligations with Shs 1.4 trillion set aside for domestic arrears, while Shs 328.6 billion is allocated for Local Government expenditure from their own revenue sources.

“This comprehensive budget framework demonstrates our commitment to prudent fiscal management while investing in Uganda’s future,” Kasaija said, “The allocations balance immediate needs with long-term development goals, ensuring sustainable economic progress for all Ugandans,” he added.

Financing strategy

The government claims it has developed a robust financing strategy for the 2025/26 fiscal year, designed to ensure sustainable economic growth while maintaining fiscal discipline. This comprehensive approach combines domestic revenue enhancement with strategic external financing to support Uganda’s development agenda.

At the core of government’s strategy is strengthening domestic revenue mobilization. “We will improve tax administration to generate an additional Shs 1.89 trillion, while new tax measures are expected to contribute Shs 538.6 billion to the national coffers,” he said, “These efforts will be complemented by rationalizing tax exemptions, focusing on eliminating those that do not align with our industrial policy objectives.”

To maximize the impact of available resources, government plans to repurpose funds from less productive areas to high-impact sectors in line with the Tenfold Growth Strategy.

Recognizing the importance of development financing, Kasaija said government will intensify efforts to secure concessional funding from international financial institutions, including the World Bank, IMF, African Development Bank, Islamic Development Bank, and BADEA.

Innovation will drive the financing approach, as the government explores alternative sources such as Public-Private Partnerships, climate finance mechanisms, private equity investments, and specialized instruments including Sukuk bonds, Panda bonds, and diaspora bonds.

A growing, yet heavily indebted economy

Uganda’s economy is experiencing a remarkable surge. According to Kasaija, GDP for 2024/25 is projected at Shs 226.3 trillion (USD 61.3 billion), rising from Shs 203.7 trillion (USD 53.9 billion) last year — and expected to grow further to Shs 254.2 trillion (USD 66.1 billion) in 2025/26. Per capita income is expected to rise from USD 1,263 to USD 1,324.

This robust growth, averaging 6.3% in 2024/25 and projected at 7% for 2025/26, is attributed to improved export performance, foreign direct investment (FDI) inflows, political stability, a stable currency, and significant government spending on infrastructure, health, and education.

However, behind the optimism lies a growing fiscal burden. Uganda continues to borrow heavily. The projected revenue collection of Shs 37.2 trillion will cover only 60% of the budget, with the balance financed through external borrowing, grants, and domestic debt. The fiscal deficit remains significant at 7.6% of GDP, highlighting continued debt pressures.

While Kasaija defended borrowing as strategic — channeled into wealth creation, commercial agriculture, and industrialisation — concerns over rising public debt persist in business and civil society circles. Domestic borrowing has crowded the private sector, though government argues that initiatives like the Parish Development Model (PDM), Uganda Development Bank (UDB), and Agricultural Credit Facility (ACF) are injecting affordable patient capital into the real economy.

A tightening tax net

The Uganda Revenue Authority (URA) faces an uphill task as it aims to collect Shs 37.2 trillion in the next financial year.

The government plans to widen the tax base through better enforcement, rationalising tax exemptions, embracing digital solutions such as EFRIS (Electronic Fiscal Receipting and Invoicing Solution), digital tax stamps, rental tax systems, and aggressive anti-smuggling measures using drones and scanners at border points.

Kasaija warned both corrupt tax officials and taxpayers who collude to evade taxes that their time is up. The government’s digitalisation drive aims to eliminate loopholes that have long undermined tax collection.

The heart of the budget lies in expanding monetisation, with government doubling down on wealth creation programs aimed at lifting more Ugandans into the money economy.

Collectively, government will spend Shs 2.43 trillion in 2025/26 directly on wealth creation programs, reinforcing its policy shift towards “leaving no one behind”.

Meanwhile, agro-industrialisation receives Shs 1.86 trillion, focusing on agricultural research, value addition, irrigation, post-harvest handling, and certification for market access. The government’s investments in agro-processing facilities for rice, maize, coffee, and oil seeds are expected to boost exports while enhancing food security and job creation.

Notably, government has backed coffee production aggressively, with export earnings from coffee projected to hit USD 2 billion annually — a feat that took just one year to double after surpassing the first USD 1 billion mark.

Oil, gas and minerals

The oil and gas sector is accelerating towards first oil in 2026, with the Tilenga and Kingfisher projects nearing completion. The East African Crude Oil Pipeline (EACOP) is 58% complete, while Alpha MBM from UAE is set to construct a 60,000 barrels-per-day refinery.

This sector could soon generate between USD 1 and 2.5 billion annually, according to Kasaija. Already, over 17,000 direct jobs and nearly 40,000 indirect jobs have been created. The government has allocated Shs 875.8 billion to mineral-based industrial development, including the capitalisation of the Uganda National Mining Company.

In parallel, the domestic fuel importation strategy through Uganda National Oil Company (UNOC) has saved Uganda USD 72.8 million annually by eliminating middlemen.

Additionally, infrastructure investment remains central to government’s monetisation agenda. Roads, irrigation schemes, agro-processing zones, and transport hubs like the nearly complete Kabalega International Airport continue to attract attention.

In Jinja, Kiira Motors has completed its vehicle assembly plant, with capacity for 2,500 vehicles annually, including electric buses. Government has also pumped Shs 724 billion into Dei BioPharma, Uganda’s largest pharmaceutical manufacturing facility, now licensed by the National Drug Authority.

Science innovation funding will support vaccine development, including work on anti-tick and Crimean Congo hemorrhagic fever vaccines, as well as advanced agricultural testing kits developed by Gulu and Makerere Universities.

Health, education and social protection

Government has allocated Shs 5.87 trillion for healthcare, immunisation, specialised cancer and cardiovascular facilities, oxygen plants, and digitisation of medical records.

It has allocated Shs5.04 trillion, funding to UPE, USE, seed schools, TVET reforms, teacher training under UNITE, and continued infrastructure for upcoming AFCON and CHAN tournaments.

Social protection has been allocated Shs 404.9 billion to support elderly pensions, youth livelihoods, women entrepreneurship, and persons with disabilities. In total, Shs 11.44 trillion will be invested in people-focused interventions next year.

The other critical sector is tourism which is on a rebound with earnings growing by 26% to USD 1.28 billion and visitor arrivals up to 1.37 million. Government has allocated Shs 430 billion for direct tourism development and Shs 2.2 trillion for supportive infrastructure including roads, stadia and ICT upgrades.

Foreign direct investment inflows have also jumped to USD 3.48 billion, reflecting rising investor confidence — partly due to Uganda’s increasingly complex export basket, which now includes 31 new high-tech products like vaccines, electronic components, and manufactured goods.

Stability in an election year

As the political atmosphere warms ahead of the 2026 elections, government officials hope the budget will not only stimulate growth but also cement public confidence in the NRM’s leadership. Kasaija emphasised that Uganda’s economic stability — with inflation at 3.4% and the shilling named Africa’s most stable currency — offers a strong foundation for continued transformation.

Yet, opposition figures and independent analysts remain cautious, citing rising public debt, tax burdens on small businesses, and inefficiencies in program implementation.

The verdict

For businesses, the 2025/26 budget is both an opportunity and a challenge. Those aligned with government’s monetisation strategy — agriculture, manufacturing, value addition, oil, ICT, and tourism — will find multiple windows for funding, market access and expansion.

For ordinary Ugandans, the budget offers expanded welfare nets, access to cheap credit, healthcare, education, and community-level economic participation through PDM, Emyooga, and social protection schemes.

Ultimately, the success of this ambitious budget will depend on efficient implementation, prudent borrowing, political stability, and the ability of Uganda’s private sector to innovate and scale within the government’s monetisation and industrialisation vision.

As the 2026 elections loom, Ugandans will be watching keenly — not just for political promises, but for real economic deliverables.

What experts said

The Ministry of Finance Permanent Secretary and Secretary to Treasury, Ramathan Ggoobi, has said that the journey to build a USD 500 billion economy by 2040 will come with several things that must be done in the right way.

The strategy is anchored on agro-industrialization, tourism, mineral development, and science and technology innovation (ATMS) to accelerate growth

“It’s a beautiful dream that we have molded by changing certain things,” he said. “We shall be able to actually get there. That acronym ATMS was deliberately crafted to work on our mentality that we are going as a country to invest in certain things for us to draw bigger things in the future,” Ggoobi said during Absa 2025 Post Budget Dialogue held in Kampala on June 13.

He added: “When we agree that these are priorities and put ourselves in other things, away from those agreed, that’s the indiscipline we want to work on. How do we team up and get the consensus that this is what we want to do?”

“Secondly, he said, in Uganda, “we must build that discipline of consensus, that discipline of getting teams to work; people knowing that you are nothing without others. Some people think that they are more important than others. At the national level, we have a big problem of consensus; we say that we are doing this, but the following day, you see people doing other things.”

Michael Segwaya, the executive director/chief finance officer at absa Bank, said the sh72.37trillion budget for financial year 2025/26 has provided sh1.4 trillion to clear domestic arrears, away from the last financial year’s sh200 billion, and this will provide liquidity for businesses.

“This is a good gesture,” he said, “But looking at the balance sheet, we should be doing more for years to come to try and support the business community because it eases the cost of doing business, and this also helps the government.”

The absa Bank Managing Director, David Wandera, said budgets must ultimately translate into impact, in jobs created, arrears cleared, and opportunities unlocked for households and entrepreneurs alike.

He highlighted the role of financial institutions in translating fiscal policy into real economic outcomes by funding agriculture, trade, and SMEs, and enabling business resilience beyond capital.

As Uganda prepares for the FY2025/26 budget, strategic foreign direct investment (FDI) remains critical to achieving our ambitious 10-fold economic growth target. Jane Nalunga, Executive Director of SEATINI-Uganda said that Uganda must move beyond merely rolling out red carpets for investors, to forging mutually beneficial partnerships that prioritize value addition.

“We currently treat investors as if they’re doing us a favor, when in fact, investment should be a win-win proposition,” Nalunga said.

With Uganda positioned as a gateway to the vast East African Community (EAC) market and the African Continental Free Trade Area (AfCFTA), the new budget presents an opportunity to revise the investment code – ensuring it attracts investors committed to industrial transformation rather than small-scale trading.

This shift, coupled with Uganda’s improving infrastructure and stable macroeconomic environment, can position the country as a premier destination for quality FDI that drives technology transfer, job creation, and export-oriented manufacturing – the very engines needed to power our decade of accelerated growth according to Nalunga.

Julius Mukunda, Executive Director of the Civil Society Budget Advocacy Group (CSBAG), said Uganda’s FY2025/26 budget must prioritize transparency, accountability, and disciplined fiscal management to deliver meaningful development.

“While the budget outlines ambitious allocations, we must ensure every shilling is accounted for—domestic arrears must be cleared, borrowing rationalized, and projects completed on time,” Mukunda said.

He warns that persistent domestic arrears and rising public debt risk are crowding out critical social spending.

“The government cannot keep borrowing to pay old debts while new projects stall. We need enforceable timelines, open procurement processes, and consequences for delayed projects—otherwise, budget credibility suffers.”

Mukunda urges Parliament to strengthen oversight, ensuring that the Shs 18.24 trillion development budget translates into tangible infrastructure, jobs, and service delivery. “A good budget isn’t just about big numbers; it’s about timely execution and measurable impact for citizens.”