THE UGANDA ECONOMY: INEQUALITY IN A SUIT

Jack a SACCO member from Soroti, remains unimpressed by the latest lofty figures issued by the finance ministry.

“GDP grew by 6.3 percent… the shilling is the most stable in Africa… we’ve climbed two places on the Human Development Index…”.

 Jack, who runs a small grain aggregation business and is still paying interest on his loan, just shook his head. “Sounds nice,” he muttered, “but who’s this economy working for?”

The Minister’s statement was full of shiny numbers.

"The economy’s size has grown to Sh226 trillion. Per capita income is up. Inflation is low at 3.8 percent. Exports have surged by 64 percent. Uganda’s HDI has improved farom 0.550 to 0.582, pushing us up from 159th to 157th globally. Life expectancy is now nearly 69. And fewer Ugandans are officially poor. On paper, we are making progress.

But for many ordinary Ugandans, that progress feels like it’s passing them by.

To paraphrase the Bible, man was not made for the economy, but the economy was made for man

. If rising GDP doesn’t translate into shorter clinic queues, more school meals, working street lights and clean water in Kyenjojo or Bukedea, then the numbers are just decoration. The true test of an economy isn’t how much it grows but who it lifts.

Uganda’s economy is rising, yes. But it is also concentrating. Growth is increasingly captured by the urban elite, the formal sector, and those already connected. Meanwhile, the boda rider in Kamwenge still can’t get a working health centre. The teacher in Adjumani still spends half her salary on rent and sugar. The graduate in Nebbi is still unemployed three years on.

The Minister pointed to falling income inequality—measured by a drop in the Gini coefficient from 0.413 to 0.382. But inequality has a way of hiding in plain sight. We see it in who gets government contracts. Who lives near a tarmacked road. Who has electricity. Who qualifies for financing without collateral.

And inequality isn’t just an unfortunate side effect—it is an indictment. An indictment of a government that still collects too little revenue, misallocates too many resources, and often fails to deliver value for money.

It is one thing to secure credit for roads, dams and hospitals. It is quite another to ensure those roads are pothole-free, the dams functional, and the hospitals staffed. Better distribution of the benefits of growth will only come when government projects are implemented more efficiently—by minimising corruption, for one, and prioritising actual delivery of public goods.

You see the disconnect in credit. Yes, private sector lending has grown to nearly Sh24 trillion. But ask a cassava farmer in Kumi how many banks are competing to finance her operations. Most of that credit flows to the same old sectors: real estate in Najeera, trade in Bugolobi, construction deals in Nakasero. The new economy is expanding, but too many are still locked out of it.

Even the celebrated fall in poverty—from 20.3 percent to 16.1 percent needs context. One bad harvest, one illness, one funeral, and a household can slip back. Development isn’t just about moving people above the poverty line, it’s about building buffers so they stay there. And that requires investment in things like universal healthcare, decent education, rural roads, and low-cost electricity not just GDP growth.

The diaspora sent back $1.4 billion last year. A lifesaver. But it’s also a warning sign. If the economy is rising, why are so many Ugandans still fleeing to wash dishes in Dubai or guard malls in Doha? Remittances are helpful, but they should be a complement—not a crutch.

The Minister did mention the Parish Development Model, Emyooga, Uganda Development Bank (UDB) and other wealth creation funds. Good tools in theory. But ask a youth group in Nwoya how long it took to get the money. Ask a SACCO in Pallisa how many times they were sent back for new documentation. For these programmes to work, they need to be streamlined, depoliticised, and corruption-proofed. Implementation is not a footnote. It is the difference between transformation and tokenism.

The macro numbers may be humming, but the micro reality is often grim.

Of course, we should be proud of our achievements. Uganda is growing. But growth without equity is a recipe for disillusionment, social strife and political instability. If we want a $500 billion economy by 2040, we must build it on a foundation of inclusion—where prosperity isn’t gated in Munyonyo but visible in Masindi, Kabale and Kitgum.

Because in the end, economic growth that fails to reduce injustice is simply inequality in a suit.

 

AIRTEL VS MTN: EFFICIENCY, GROWTH AND RETURNS IN H1 2025

When Uganda’s two telecom giants released their half-year numbers to June 2025, the story was not just about profits and dividends, but about how differently each is growing – and what that says about their business models.

Topline Growth

MTN posted 13.3% revenue growth to UGX 1.7 trillion, fuelled by a 31.3% surge in data and 18.6% growth in fintech revenues. Airtel actually outpaced MTN in percentage terms, with 17.9% growth in overall revenue to UGX 1.48 trillion【image】. However, MTN’s bigger base and diversification make its growth more sustainable.

Efficiency in Execution

The efficiency gap shows up in the EBITDA line. MTN expanded its margin to 53.7%, compared to Airtel’s 39.7%. That’s a clear sign of stronger cost discipline and better network economics for MTN. Airtel is still delivering, with UGX 590 billion in EBITDA, but its business runs heavier.

Bottom Line Strength

Airtel’s profit after tax came in at UGX 197.4 billion, while MTN reported UGX 267.0 billion. Once you adjust for MTN’s one-off tax settlement, profits rise to UGX 377.9 billion, making Airtel look modest by comparison.

Returns on Equity (ROE)

Airtel’s lean balance sheet magnifies its profits, giving it an extraordinary ROE of 117%, compared to MTN’s 42% (which itself is still robust). Investors should note, though, that Airtel’s high return comes with higher leverage and thinner equity buffers.

Returns on Invested Capital (ROIC)

Airtel also edges MTN on ROIC, at 26% versus 20%. Again, this is more structural than operational. Airtel’s smaller balance sheet makes its capital sweat harder. MTN’s heavier investments in fibre, towers, and spectrum weigh on ROIC now, but they underpin future dominance.

Comparative Table – H1 2025

Metric (H1 2025)	Airtel Uganda	MTN Uganda
Revenue (UGX)	1.48 trillion	1.72 trillion
Revenue Growth	+17.9%	+13.3%
EBITDA (UGX)	589.6 billion	924.2 billion
EBITDA Margin	39.7%	53.7%
PAT (UGX)	197.4 billion	267.0 billion (377.9b adj.)
PAT Margin	13.3%	15.5% (21.9% adj.)
ROE	117%	42%
ROIC	26%	20%

The Investor’s Lens

If you’re looking for efficiency and scale, MTN is ahead: stronger EBITDA margins, more diversified growth engines, and a larger profit base. But if you want spectacular returns on capital, Airtel dazzles with triple-digit ROE and higher ROIC, though on a thinner, riskier base.

In the end, the numbers tell two stories: MTN is the heavyweight building steady muscle, while Airtel is the nimble sprinter – lean, fast, and highly geared.

PAY ATTENTION TO THE FAMILY BUSINESS, IT IS UGANDA’S LIFE LINE

When Kenya supermarket chain Tusky’s collapsed, it was like watching a comet streak across the sky only to crash into the earth.

For years, the Kago family had built one of East Africa’s most beloved retail brands, expanding from a modest shop in Nakuru into a regional chain with more than sixty outlets in Kenya and Uganda.

The problem was never the customers, nor the competition, but the family itself. Boardroom quarrels turned into court battles, succession became a blood sport, and the absence of proper governance left the business vulnerable. In the end, what destroyed Tusky’s was not the market but the household quarrels that spilled into the marketplace.

It is easy to dismiss Tusky’s as a Kenyan misfortune, but a new study of East African family businesses suggests it is part of a regional story.

The East Africa Family Business Landmark Study carried out by the Musizi SustainableBusiness Institute, surveyed 40 familybusinesses in East AFrica and uncovered familiar patterns—enterprises born from grit and risk-taking founders that stumble when it comes time to hand over the keys.

The importance of the study cannot be overstated: more than nine in ten businesses in Uganda are family businesses. That means when we talk about family enterprises, we are not discussing a niche but the mainstream. And here’s the simplest definition you will ever hear: if your business affairs, when you eventually pass, will have a bearing on your family, then it is a family business. It doesn’t matter whether you run a village shop, a farm, or a portfolio of shares, the overlap between ownership, family, and livelihood makes it one.

The pioneers who built these businesses—men and women like the founders of Tusky’s were survivors first, entrepreneurs second. They mortgaged land, dipped into meagre savings, and worked with grit where others saw nothing. They knew hardship and endurance, and they were deeply rooted in their communities. Their children, by contrast, inherit a different reality. They face markets that are saturated and complex, with razor-thin margins and customers who demand more. Success today requires professionalism, strategy, and innovation rather than sheer willpower. The baton may be handed over, but the conditions of the race have changed.

That handover is where the trouble begins. Succession is rarely planned; it is left unspoken until the last minute. Death is taboo, elders are shielded from questioning, and the family fortune is often cloaked in secrecy. This means heirs are thrown into leadership unprepared, sometimes unwilling, with little guidance and less unity. Tusky’s lived this nightmare, and many other families stand on the same precipice. The Musizi Sustainable Business Institute, at its conclave in Kampala, put it bluntly: succession must be seen as a process, not an event. Children must be raised with “batteries included,” grounded in family values, prepared with gratitude rather than entitlement, and trained to take over long before crisis forces their hand. Otherwise, the comet burns too brightly, too quickly, before fizzling out.

Governance is another missing piece. Family businesses often assume that kinship is enough, but as enterprises scale, trust without structure becomes fragile. Shareholder agreements, family councils, independent boards—these are not luxuries but lifelines. The study pointed out how few advisors are available in Africa, less than one percent of global family business specialists, which leaves families improvising with outdated systems to run modern enterprises. Tusky’s is a textbook case: siblings pulling in different directions, decisions taken on whims, and no neutral body to enforce discipline.

The mismatch between global education and local realities compounds the problem. Sending heirs to prestigious schools abroad looks like prudent investment, but they return—or sometimes do not return at all, ill-prepared for African realities.

In London or Boston, they learn about stable currencies, enforceable contracts, and sophisticated markets. At home, they find volatility, political risk, and fragile purchasing power. Some heirs never come back, preferring to blend into the economies where they studied. Those who do often struggle with reverse culture shock, unable to reconcile textbook theory with gritty pragmatism.

The Musizi conversation offered a remedy: education must be contextual, teaching heirs to speak both global and local, and giving them room to experiment without jeopardizing the family enterprise.

And then there is inheritance itself, described in the study as both a gift and a burden—a comet, dazzling but potentially destructive. Heirs inherit not only assets but also liabilities, resentments, and heavy expectations.

If inheritance is treated as merely a transfer of property, it becomes a scramble for spoils. But when it is understood more holistically—spiritual capital, intellectual capital, social ties alongside financial wealth, then it can be the glue that binds generations. The Musizi framework insists that gratitude is the antidote to entitlement, that children who understand where they come from will value stewardship over plunder.

Still, there are families that get it right. Those who treat continuity as a project, not an assumption. Those who welcome innovation, formalize governance, and balance their legacy with openness to change. These are the businesses that endure, because they understand that family enterprise is not a private matter but a public good—an employer of thousands, a stabilizer of communities, a custodian of capital across generations. When such businesses fail, the shockwaves ripple far beyond the family.

Tusky’s should therefore be remembered not only as a cautionary tale but as a lesson. It tells us that succession delayed is succession denied, that governance ignored is conflict invited, that education without context is disconnection, and that inheritance without gratitude is poison.

BOOK REVIEW: FROM NONCONSUMERS TO NATION BUILDERS: HOW MARKETS, NOT AID, SPARK PROSPERITY

BOOK REVIEW: THE PROSPERITY PARADOX

AUTHORS: Clayton Christensen, Efosa Ojom and Karen Dillon

 

I have long thought that for development to happen, governments must first invest in people—improving the human resource through education and health, then provide infrastructure, both hard like roads, power and ports, and soft like laws, governance and institutions, to create an enabling environment for private sector growth. Do those two things well, I believed, and voila! development would follow.

The Prosperity Paradox by Clayton Christensen, with Efosa Ojomo and Karen Dillon, doesn’t completely tear down that logic, but it does shift the order of operations in a way that is hard to ignore. The book argues that market-creating innovations are often the spark that triggers everything else, not the prize waiting at the end.

Christensen introduces the idea of nonconsumption

—people who would benefit from a product or service but can’t access it because it’s too expensive, too complicated, or simply unavailable. Nonconsumers, he says, are not just a business opportunity; they are the largest pool of latent economic growth. The most transformative entrepreneurs don’t fight over the existing, saturated market—they figure out how to serve the nonconsumer...

Celtel – the current day Airtel in Uganda, is a perfect example. In the late 1990s, mobile phones in Africa were toys for the elite—expensive, difficult to obtain, and often unreliable. Mo Ibrahim saw the real market in the millions who had never made a phone call. Instead of chasing high-end postpaid customers, Celtel introduced prepaid models that worked with the irregular incomes of cash-based economies, expanded coverage to rural and peri-urban areas, and offered pricing that put mobile communication within reach for the first time.

The results were transformative. Farmers could check market prices before setting out, cutting days of unnecessary travel. Families scattered across countries could reconnect without costly journeys. Traders could coordinate supply chains across regions. And perhaps most importantly, the physical infrastructure followed the market, not the other way around—cell towers rose in previously ignored areas, roads were built to access them, and power lines extended to keep them running. Celtel didn’t wait for the perfect environment; it created one by making the market too valuable to ignore.

The book’s most provocative take is on corruption.

We tend to treat it as the main obstacle to growth, but Christensen calls it a symptom of poverty. In environments with few legitimate opportunities, bending the rules can feel like the only viable path to advancement. Market-creating innovations change that calculation. When profitable, legitimate opportunities expand, the rewards for honest participation start to outweigh the spoils of graft. In Celtel’s case, its economic importance meant policymakers were pressured—both by public demand and by the potential tax revenues—to keep the sector healthy. In other words, the market itself created a constituency for better governance.

At the heart of this process are entrepreneurs—local problem-solvers who live the realities they’re trying to change. They understand the constraints their customers face, from cultural habits to unreliable infrastructure, and they design around them. They don’t wait for governments to roll out every piece of infrastructure; they build markets that make governments and investors step in to support them. Mo Ibrahim’s success didn’t come from lobbying for a better investment climate—it came from embedding himself in a market so valuable that the investment climate had to adapt to keep it alive.

Christensen’s point is not to dismiss the role of government in education, health, or infrastructure. These remain essential to long-term development. But the book flips the script, showing how market creation can provide the resources, incentives, and political will to expand these public goods. In the authors’ telling, markets generate the tax base that funds public investment and the demand that compels infrastructure rollout. It’s a feedback loop—strong markets create stronger states, which in turn can nurture more market creation.

For policymakers, the lesson is to stop waiting for perfect conditions before encouraging entrepreneurship. Instead, find and back the innovators tackling nonconsumption head-on.

For investors, it’s a reminder that the highest returns, both financial and social, often come from markets others can’t see yet, the ones dismissed as too poor or too risky. And for those of us used to the old sequence of development, it’s a challenge to think differently. Sometimes the road to prosperity doesn’t start with a school or a power line, but with a phone in the hands of someone who never thought they’d own one—and from that single connection, an economy begins to bloom.

UMEME’S PAYDAY AND THE MONTH THE MARKET WOKE UP

If there was a single spark that lit up the Uganda Securities Exchange (USE) in July, it was Umeme’s long-awaited dividend. After months in the regulatory shadows, the utility’s return to active trading — and with a payout in hand — turned what might have been a sleepy month into one of the most animated trading stretches this year.

Investors piled in. By the time the month was done, turnover had nearly doubled from June to UGX 10.78 billion. Almost half of that was Umeme alone, the other half largely swallowed up by MTN Uganda, which was riding a different kind of news — the planned structural separation of its mobile money arm. Between the two, they accounted for a staggering 96.7 percent of market turnover. It was as if the rest of the market existed mostly to keep the ticker moving.

The mood was helped along by a macroeconomic backdrop that, while far from perfect, was reassuring enough for investors to take positions.

 Inflation eased to 4.1 percent, the shilling stayed firm with a 2.61 percent year-to-date gain against the dollar, and Treasury yields slid across most maturities. Even the slightly softer Purchasing Managers Index reading of 53.6 — down from June’s 55.6 — still marked the sixth month of private sector expansion.

But back on the trading floor, it was all about liquidity and where it was flowing. 

Volumes traded jumped 70 percent to 44.3 million shares, the number of deals leapt 38 percent, and the All Share Index was up 5.43 percent, fuelled by strong gains in EABL, QCIL, BOBU, NMG and KA. There were losers too — UCL, MTN, NIC and Centum — but their declines barely dented the overall market lift.

Fixed income traders were quietly active as well, with government bond yields easing at the short and medium end of the curve. Three-year paper dropped to 15.50 percent, and the five-year slipped to 16.13 percent, as inflation expectations settled.

Beyond the numbers, the month carried the sense of a market still too dependent on a handful of big names to keep the scoreboard respectable. Blue chips like Umeme and MTN can stir up liquidity, but they also expose the market’s narrowness — if they sneeze, turnover catches a cold.

For July, though, investors who backed Umeme walked away smiling, dividend in hand, capital gains in pocket, and the satisfaction of seeing the counter back in play. In a market where patience is often stretched thin, that’s a reminder of why long-term holders keep faith. For the rest, it’s another signal that while the USE can spring to life on the back of a big corporate event, it will need a broader base of active counters if the current optimism is to survive the next dry spell.

THE QUIET RISE OF THE UGANDAN RETAIL INVESTOR

It’s not the sort of headline that makes the front page, but it should.

The Uganda Securities Exchange (USE) recently reported the rise in retail investor participation. In the first half of this year,

Ugandan individuals accounted for 23 percent of market turnover, up from a paltry five percent just a year ago.

Local companies have followed suit, now contributing 28 percent, nearly double last year’s share. In a market long dominated by foreign institutional investors, this is no small shift—and it’s more than just a feel-good statistic.

Local participation matters because it helps smooth out market volatility.

Foreign investors, valuable as they are for depth and liquidity, tend to head for the hills at the first whiff of trouble—whether it’s a wayward post on X, a traffic jam on Entebbe Road, or the perennial jitters of election season. Ugandan investors, by contrast, tend to hold on through the noise, driven by long-term opportunity and better understanding of the local risk, rather than the day’s headlines. And for many, participation in the local capital markets is proving one of the quickest ways to start climbing the asset ladder.

It’s a story Jack could have told us years ago.

He decided early on that he didn’t have the time—or frankly the patience for a side hustle. His job didn’t allow afternoons at the farm, haggling in the market, or chasing after errant boda riders to pay back a “loan.” Instead, he began quietly accumulating shares on the USE. Sometimes with salary loans, other times through disciplined monthly purchases, he kept at it for two decades.

Today, his portfolio has delivered double-digit returns in most years, whether in dividend yields or price appreciation. Over time, he’s added bonds, private equity in a handful of SMEs, and even some forex exposure. But the lion’s share of his wealth sits in USE-listed companies. His route to financial independence is not only legitimate, it’s public and open to anyone willing to try.

Jack’s conviction is showing up in the broader numbers.

The USE All Share Index (ALSI) rose 25.14 percent in the first half of 2025, while the Local Company Index (LCI) surged 30.42 percent, lifted by blue-chip counters like MTN Uganda, Umeme, Stanbic, QCIL, and Bank of Baroda.

Market capitalisation climbed nearly 28.5 percent to sh28 trillion ($7.5b). Trading volumes jumped 68.6 percent to 446.7 million shares, even if turnover only crept up 0.49 percent to sh38.4 billion.

The bond market is also finding its feet.

The alternative bond trading platform saw sh34.23 billion in trades up  

three fold, with nearly half of that in secondary activity. Even the commodities exchange, still small, has signed up over 6,000 farmers and traded 16 metric tonnes, showing ambition to link agriculture with capital markets...

Part of this momentum comes from reforms by the Capital Markets Authority (CMA).

The new Regulatory Sandbox Guidelines give innovators space to test capital-raising products under CMA supervision—potentially unlocking funding for SMEs and key sectors like manufacturing and tourism. Updated Collective Investment Scheme regulations now govern an industry managing sh4.6 trillion, while the proposed CIS Compensation Fund will give retail investors an extra safety net.

Perhaps the most practical development for the average investor is the launch of the Capital Markets Handbook. For years, the USE and CMA have struggled against a knowledge gap—too many Ugandans simply don’t know how to start, what to buy, or how to measure progress. The handbook addresses that, part textbook, part rights manual, part how-to guide for navigating Uganda’s capital markets.

Not everything is perfect. Turnover remains concentrated—MTN alone accounted for 59 percent of trading in H1 2025. And events like Umeme’s planned exit or MTN’s restructuring of its mobile money business could shake confidence if not handled well. The CMA’s close monitoring of these issues is reassuring, but concentration risk remains a structural hurdle.

Still, for the growing band of retail investors, these are good problems to have—problems of scale, growth, and maturity. Jack will tell you the hardest part of investing isn’t picking the right shares, it’s sticking to the plan when everyone else is chasing the next quick return.

Jack’s story is no fluke. It’s part of a quiet revolution. Ugandans shifting from consumption to ownership, from cash under the mattress to equity in productive enterprises.

MTN H1: A TAX BIT IN OTHERWISE HEALTHY MEAL

There’s an old Kampala saying that when you kill a chicken for lunch, you don’t complain about the feathers – they come with the territory. 

MTN Uganda’s H1 2025 results carry that same flavour. On the plate, the company served up solid revenue growth, fatter margins, and stronger cash flows. But on the side was an unavoidable helping of feathers – a Ush 110.9 billion tax settlement with the Uganda Revenue Authority that shaved nearly 10 percent off the bottom line.

Strip out that once-off tax bite, and the picture changes entirely. Adjusted profit after tax jumped 27.8 percent to Ush 377.9 billion, showing that the core engine is humming smoothly. Service revenue grew 13.3 percent to Ush 1.71 trillion, and the mix keeps shifting away from old-school voice towards the higher-growth data and fintech segments. Data revenue surged 31.3 percent on the back of affordable bundles, device financing schemes, and aggressive 4G/5G rollout. Fintech – mostly MoMo – grew 18.6 percent, as transaction values hit Ush 89.3 trillion, pushing its share of service revenue to just over 30 percent.

"Voice, once the bread and butter, is now the side dish – still the single biggest contributor at 36.9 percent of service revenue, but with growth stuck at 0.4 percent  thanks to lower mobile termination rates. The real story is in data traffic, up 42.6 percent, and in fintech’s growing menu of advanced services like MoMo Advance and the Virtual Card partnership with Mastercard.

Costs? Contained. EBITDA rose 17.8 percent to Ush 924.2 billion, with the margin swelling to 53.7 percent – helped by an Expense Efficiency Program that saved Ush 39.3 billion and a calm inflation backdrop. Net debt is down 12.7 percent to Ush 1.3 trillion, leverage is a comfortable 0.7x EBITDA, and capex spending held steady, focused on densifying the network, extending fibre, and expanding population coverage to 88.2 percent for 4G and 19 percent for 5G.

"Shareholders are being rewarded with a Ush 10.0 per share interim dividend – Ush 223.9 billion in total – to be paid in September. And there’s a strategic kicker: shareholders have approved the structural separation of the fintech arm, MTN Mobile Money (U) Limited, which could unlock fresh value once regulators sign off.

For the second half, MTN still aims for “upper-teens” service revenue growth, EBITDA margins above 50 percent, and capex intensity in the low teens. Risks remain – the US dollar’s behaviour, geopolitical rumblings – but with diversified revenues, market muscle, and a tight grip on costs, MTN is still cooking with gas.

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MTN Uganda H1 2025 Financial Highlights

Metric	H1 2025 (Ush bn)	H1 2024 (Ush bn)	YoY Change
Total Revenue	1,722.0	1,522.7	+13.1%
Service Revenue	1,705.0	1,505.4	+13.3%
- Data Revenue	490.2	373.3	+31.3%
- Voice Revenue	629.0	626.7	+0.4%
- Fintech Revenue	524.6	442.3	+18.6%
EBITDA	924.2	784.7	+17.8%
EBITDA Margin	53.7%	51.5%	+2.2 pp
EBIT	664.6	545.6	+21.8%
Profit Before Tax	543.8	424.5	+28.1%
Profit After Tax	267.0	295.7	-9.7%
Adjusted PAT*	377.9	295.7	+27.8%
Capex (ex-leases)	219.7	219.0	+0.3%
Net Debt	1,300.0	1,490.0	-12.7%
Leverage (Net Debt/EBITDA)	0.7x	0.9x	—

*Excludes Ush 110.9 bn once-off tax settlement.