THE UGANDA BUDGET: CLOSING OLD GAPS, OPENING NEW OPPORTUNITIES

Uganda’s 2025/26 budget, clocking in at sh72 trillion—approximately $19 billion, or nearly five times the size of the country’s $4 billion economy in 1986 is a striking symbol of how far the country has come. It reflects three and a half decades of relative macroeconomic stability, revenue growth, and ambition to deliver public goods and spur transformation.

The budget’s scale is a response to both promise and pressure. It seeks to expand infrastructure, finance social programmes, repay debt, and support livelihoods. It also continues a long-term strategy to bridge historical gaps—especially in public infrastructure, created by decades of neglect during the 1970s and 1980s. Those years of political instability and economic decline left Uganda with little to show by way of roads, power plants, or functioning institutions, even as the population doubled.

Successive budgets in the 2000s and 2010s have attempted to address this backlog, and the 2025/26 budget is no exception. With sh4.5 trillion allocated to roads and sh2.3 trillion to energy, the investment continues—reflecting an understanding that without strong infrastructure, the goals of industrialisation and regional trade competitiveness will remain elusive.

The commitment to infrastructure is not new.

In 2011/12, infrastructure spending was just under sh3 trillion. A decade later, in 2021/22, it had more than doubled. In contrast, allocations to education and health— sh4.2 trillion and sh 2.8 trillion respectively in this year’s budget—have grown more slowly, often falling behind both inflation and population growth.

Infrastructure’s share of the development budget has consistently outpaced social sectors, underscoring government belief in its catalytic role. But the imbalance raises a fundamental question: are we building structures faster than we’re building the people to run and benefit from them?

Even so, legacy gaps cannot be solved with money alone.

Uganda’s Achilles’ heel has been the long and inefficient project execution cycle. Major projects such as Karuma Dam have taken far too long to complete, delaying their contribution to growth. If project timelines were shortened and efficiency improved, the country could begin to realise returns on investment faster.

At over sh96 trillion—roughly 52 percent of GDP—public debt is still within sustainable bounds by international standards. Yet the trend is worrying, particularly because of the increasing share of commercial and non-concessional loans. This year, sh19.8 trillion, or 28 percent of the national budget, will go to debt servicing alone—resources that might otherwise have gone into education, health, or job creation.

Even more pressing is the growing mountain of domestic arrears, now estimated at sh14 trillion. That figure has more than tripled since before the COVID-19 pandemic and represents unpaid obligations to suppliers, service providers, and contractors. These arrears starve the private sector of liquidity, especially small and medium enterprises that are often ill-equipped to wait months—or years for payment. Tackling this backlog must be a priority if government spending is to translate into economic activity.

On the social front, the government is pushing ahead with the Parish Development Model (PDM) and Emyooga programmes as vehicles for inclusive growth. While the national impact of these initiatives has so far been limited and uneven, green shoots are beginning to emerge.

In some districts, SACCOs have started to disburse funds effectively, with early signs of increased incomes and improved household resilience. The challenge now is to consolidate these gains and scale best practices across the country, ensuring that these programmes are not just disbursement vehicles but agents of lasting transformation.

Education and health continue to be under strain. Despite gradual budget increases—sh4.2 trillion and sh2.8 trillion respectively in this cycle, these sectors face growing burdens from a rising population, ageing infrastructure, and underpaid personnel. While the numbers suggest progress, the systems themselves remain overstretched.

On the revenue side, URA’s digitalisation and enforcement drives are projected to bring in sh32 trillion in domestic revenue. That’s a significant step up from previous years. Yet the challenge persists: the tax base remains narrow. Much of the informal economy still lies beyond the tax net, meaning the burden continues to fall disproportionately on the formal sector—already under pressure from high compliance costs and limited access to affordable credit.

Importantly, the budget allocates sh7.1 trillion to defence and security—more than the combined allocation to health and agriculture. At first glance, this might seem misaligned with social and economic priorities. But Uganda’s history offers context: without stability, development is impossible. The investment in security has underpinned the growth we see today. It has enabled long-term planning, encouraged investment, and facilitated regional trade. In a volatile neighbourhood, Uganda’s relative calm is a competitive advantage—and one that must be maintained.

That said, the balance of spending still invites scrutiny. Agriculture—the backbone of the economy and the largest employer receives just sh1.8 trillion. Tourism, a top forex earner, gets sh220 billion. Government has argued in the past that all the allocations in security, infrastructure and social services aid agriculture, but it is also true we need to ramp up investment in extension services, water for production and access to quality inputs.

The allocation to science, innovation, and digital transformation remains small relative to their potential impact. If Uganda is to harness the productivity of its youth bulge, more deliberate investment in high-growth sectors will be needed.

The 2025/26 budget reflects a country still in the thick of transition. It attempts to correct for the past, meet the demands of the present, and chart a path toward the future. The ambition is evident. The implementation, however, must improve. Without faster project execution, stronger accountability, and a more productive use of borrowed funds, the gains of today may not be enough to sustain the Uganda of tomorrow.