Uganda’s national budget for the 2026/27 financial year has been rated largely favourable to business by the country’s main private sector lobby, which says government took on board the bulk of its policy recommendations even as it warned that high interest rates, domestic arrears and logistics bottlenecks continue to weigh on competitiveness.
Private Sector Foundation Uganda chief executive Stephen Asiimwe delivered the foundation’s post-budget assessment at the National Post-Budget Dialogue, held at Kampala Serena Hotel. He told delegates that government had scored an overall responsiveness rate of 82.33 percent after weighing how far it had acted on the foundation’s proposals.
The assessment covered 75 separate proposals spanning 11 thematic areas, among them agriculture, tourism, manufacturing, trade, taxation, finance, energy and digital transformation. Of those, Asiimwe said, government had fully or substantially addressed 61.75 — a tally arrived at by giving partial credit where proposals were only partly taken up.
Asiimwe singled out manufacturing, agriculture, digital transformation, energy and business financing as the areas where the budget had delivered the clearest wins for private enterprise. Manufacturing came out particularly well funded, with its allocation rising from Shs312.11 billion to Shs1.026 trillion.
On agriculture, the foundation welcomed continued government spending on irrigation and water-for-production schemes, along with plans to roll out 36 million doses of anti-tick vaccine to cover 18 million head of livestock. It was not all praise, however: Asiimwe cautioned that counterfeit agricultural inputs are still cutting yields by between 30 and 50 percent, and that cold-chain storage and transport facilities remain too limited for exporters who need to keep produce fresh on its way to market.
Progress on the Standard Gauge Railway also drew approval from business leaders at the dialogue. Once operational, the railway is expected to cut freight costs on the Mombasa-to-Kampala route from roughly $3,500 (about Shs12.8 million) to $1,600 (about Shs5.8 million) per consignment, while reducing transit time from five days to a single day.
That project received a major boost last week when the Islamic Development Bank approved a financing package worth €650.75 million — roughly Shs2.72 trillion — for the 270-kilometre Malaba-Kampala section of the line. The bank’s executive board signed off on the funding during its 51st annual meeting in Baku, Azerbaijan, and the foundation noted that it is the largest single-project financing commitment the institution has ever extended to Uganda
Even with the broadly positive scorecard, Asiimwe said several persistent problems continue to erode business competitiveness, citing lending rates currently at 18.74 percent, unpaid domestic arrears owed to suppliers, ongoing logistics bottlenecks, the cost of complying with digital tax systems, and tourism levies. “The next phase is implementation tracking. The real test will be whether budget releases are made on time and whether businesses see measurable improvements in competitiveness, exports, investment and job creation,” he said.
Speaking on behalf of finance minister Henry Musasizi, the ministry’s assistant commissioner for budget policy and evaluation, Ali Tagore, credited the private sector with driving economic growth, job creation and government revenue collection. He pointed to the government’s increasing reliance on domestic resources to fund the budget, saying more than 80 percent of national spending is now financed domestically rather than through borrowing. “If you noticed in the budget speech, at least we can finance over 80% of our budget and that is going to help us reduce the high debt-to-GDP ratio,” Tagore said.
PSFU board vice-chairperson Sarah Kagingo highlighted several tax changes in the new budget, describing the increase in the VAT registration threshold as the most significant reform for small and medium enterprises and start-ups, since it is expected to ease compliance burdens and reduce cash-flow pressure for smaller businesses.
The foundation also pointed to gains in the digital economy, noting that the cost of internet bandwidth has fallen from $70 to $35 per Mbps, while mobile money transaction volumes have climbed to Shs392.7 trillion — growth it said is opening up new opportunities in e-commerce, digital trade and business process outsourcing.
In energy and extractives, the foundation cited continued progress on the East African Crude Oil Pipeline, now 76.8 percent complete, alongside drilling activity that has already produced 199 oil wells against an initial target of 189. PSFU said these developments offer substantial openings for local suppliers and contractors looking to plug into the oil and gas supply chain.
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