UGANDA'S BUDGET PLAN FACES HARD TRUTHS

Today, June 12th, 2025, Finance Minister Matia Kasaija will rise before Parliament to read Uganda’s national budget, weighing in at a hefty sh72 trillion. 

That number alone is staggering. Two decades ago, Uganda’s national budget stood at just over sh4 trillion. This represents a compounded annualised growth of about 15 percent  or more than twice the average annual growth of the economy duing the same period. 

In 2005, the government operated with a modest financial envelope largely dependent on donor aid and constrained by a narrow tax base. Fast forward twenty years, and the budget has grown more than seventeen-fold—an extraordinary leap that reflects both inflation and a genuine broadening of the economy.

This growth tells a story. Some of it is positive: domestic revenue collection has improved, the private sector has deepened, and public infrastructure has expanded. But it also tells of our growing appetite for debt, recurrent expenditure, and a state machinery that has ballooned over time—sometimes without matching output.

The National Budget Framework Paper (NBFP) that underpins this year’s budget is heavy on aspiration. Its theme—“Full Monetization of Uganda’s Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Social Services, Digital Transformation and Market Access”—ticks all the right boxes. It is a bold vision of structural transformation, if ever there was one. The question is: do the numbers, and more importantly the execution, match the rhetoric?

On paper, government aims to propel the economy past  growth next year, en route to double-digit expansion once commercial oil production comes onstream. The economy is projected to hit sh250 trillion by 2025/26, with per capita income rising to $1,339. The macro outlook is buoyant, inflation is below three percent, and exports are rebounding. But if Uganda has learned anything over the past two decades, it's that development does not reside in GDP forecasts. It lies in tarred roads that go somewhere, school roofs that don’t leak, and health centres that have medicine and staff. That’s where the real audit begins.

The NBFP places infrastructure front and centre, as it always does. Roads, electricity transmission, the Standard Gauge Railway, and the near-complete Kabalega Airport all receive top billing. These are necessary investments, no doubt. But Uganda has a troubling history of building things that don’t work—or that work only after years of delays. The Karuma Dam still haunts our planning psyche, completed on paper yet underutilised . Projects are announced, budgeted, and even launched, but coordination and oversight remain our Achilles’ heel. The issue is not money. It is follow-through.

Meanwhile, agriculture—the lifeline of the majority of Ugandans—remains scandalously underfunded. Just 2.5 percent of the budget is earmarked for a sector that employs over 70 percent of the population and contributes 24 percent to GDP. The NBFP speaks earnestly about agro-industrialisation, value addition, irrigation, and warehouse receipt systems. 

But the numbers don’t back the talk. 

Farmers still lack extension services, affordable credit, and basic infrastructure. If we are serious about lifting people out of poverty, especially in rural areas, this imbalance must be corrected. You don’t monetize an economy by starving its core.

Then there’s the issue that quietly cripples every budget cycle—youth unemployment. Uganda is the second-youngest country in the world. Every year, over half a million youths enter the job market, and most find no foothold. The NBFP gestures at solutions—the Parish Development Model, Emyooga, UDB credit—but these are fragmented interventions. What’s missing is a national employment strategy that connects education to opportunity, apprenticeships to actual jobs, and the informal sector to scalable enterprises. We keep trying to solve a structural problem with project-level fixes. It hasn’t worked before, and it won’t now.

But no problem is more corrosive to our fiscal credibility than the domestic arrears overhang. 

As the Finance Minister delivers his sh72trillion speech, it’s worth remembering that over sh13.8 trillion in unpaid government bills lurk in the shadows. This includes overdue payments to contractors, suppliers, pensioners, and court awardees. The NBFP proposes to clear sh1.4 trillion this financial year—an improvement from the laughable sh200 billion previously allocated. But even at that rate, it would take a decade to clear the current stock, assuming not a single new shilling is added to the arrears pile—which, of course, is fantasy.

This isn't just a bookkeeping issue. Domestic arrears are strangling the private sector. Businesses that trusted government contracts are folding. Banks are tightening lending. Job creation is stalling. It’s a silent crisis—one that the government has so far been unwilling to confront head-on. The fact that we continue to accrue arrears even as we trumpet revenue growth speaks to deeper issues of fiscal discipline and accountability. If Uganda were a company, it would be on the verge of default.

And yet we lose just as much—if not more—to corruption. According to estimates, Uganda bleeds over sh2 trillion annually through procurement fraud, ghost payments, and tax evasion. That’s nearly equivalent to what we spend on the roads budget. Every year, the Auditor General uncovers the same rot. Every year, we shrug. Until we make examples of the corrupt—not through commissions of inquiry, but through convictions and asset recovery—our budgetary ambitions will remain castles built on sand.

There are bright spots. The government’s push for digital transformation is timely and potentially transformative. Fintech and mobile money are already revolutionising access to financial services. If supported by smart regulation, public investment in digital infrastructure, and robust consumer protections, Uganda could leapfrog decades of development barriers. But again, the follow-through must be real. It’s not enough to build an app or lay fibre optic cable. We need to ensure that farmers, traders, students, and health workers can actually use these tools to improve their livelihoods.

And then, of course, there’s oil. With Tilenga and Kingfisher past the halfway mark and the EACOP progressing, first oil is a real prospect in the coming financial year. But this is a double-edged sword. Oil can lift us, or it can wreck us. If we allow oil revenues to feed bloated bureaucracies and politically driven consumption, we will have wasted the opportunity of a generation. If, on the other hand, we invest in human capital, infrastructure, and industrial transformation, we might yet chart a different course. It’s a choice—not an inevitability.

So as the Finance Minister delivers the sh72 trillion budget this afternoon, we would do well to listen not just to what is said, but to what is not. We should scrutinise not only the allocations, but the arrears. Not only the promises, but the history. Because ultimately, budgets are not about figures. They are about faith. Faith that when government says it will build a road, the road will be built. That when a contractor finishes a job, he will be paid. That when money is allocated to a school, children will learn.

Until we restore that faith, even sh72 trillion won’t be enough.

TWO FOR THE PRICE OF ONE: MTN'S FINTECH SPIN-OFF COULD BE UGANDA'S SMARTEST INVESTMENT YET OR ....

There’s a quiet disruption underway at MTN Uganda, and it’s dressed in the language of shareholder value, strategic clarity, and platform transformation. 

But while the telecom giant’s planned spin-off of its mobile money arm into MTN New FinCo has been marketed as a win-win for investors, a closer reading suggests that shareholders—especially institutional ones—need to bring both their optimism and their caution to the table.

Let’s start with the promise. MTN Uganda’s fintech operations—anchored in MTN Mobile Money (MoMo)—are being carved out into a new entity, MTN New FinCo, which will eventually be listed separately on the Uganda Securities Exchange. Shareholders of MTN will maintain an economic interest in the new company through a Trust, and later receive direct shares when the new entity lists in 3 to 5 years.

From a growth story perspective, the pitch is compelling. MoMo has evolved from a side hustle to a fintech powerhouse, posting sh250 billion in profits in 2024 alone. Projected forward, a bull-case model sees MTN New FinCo dividends rising by 18 percent annually and share prices doubling within five years of listing. Investors who buy MTN stock now stand to benefit from both the telecom cash cow and the high-growth fintech colt.

But those who believe in the power and integrity of public markets must be both thoughtful and a bit careful. For all its financial appeal, this is not a straightforward spin-off. It is a restructuring built around legal complexity, and one that quietly shifts a large part of MTN’s value into a structure that lacks the full accountability and transparency of a publicly listed company.

Here’s the issue: rather than listing MTN MoMo directly by introduction—a path that would have preserved the public ownership and disclosure framework—MTN has chosen to transfer MoMo’s operations into MTN New FinCo, a private company. Minority shareholders’ interests in this new company will be held not directly, but through a trust. This trust is not listed, nor is it subject to the Capital Markets Authority (CMA) or Uganda Securities Exchange (USE) disclosure rules.

This might seem like a clever workaround—especially with promises of future unbundling—but it introduces significant risk and uncertainty. Moving a public company’s most valuable asset into a private trust structure

creates opacity and erodes investor protections in ways that should give shareholders pause.

Among the most pressing concerns:

• Governance Gaps: The trust is unlikely to meet the governance standards required of listed entities. Its memorandum and articles of association (memarts) will not be subject to CMA review or public oversight.

• Disclosure Loopholes: MTN New FinCo, being a private company, will not be bound by the same continuous disclosure obligations as listed firms. Investors may no longer receive timely, detailed financial reports or material updates.

• Loss of Minority Protections: Listed companies are required to protect minority shareholder rights. These safeguards—including voting rights, access to information, and equitable treatment—may be diluted or lost entirely in the trust structure.

• Board Composition and Accountability: The board governing MTN New FinCo is not the board that investors originally backed when they bought MTN shares. The separation breaks the continuity of oversight and strategic alignment.

• Regulatory Ambiguity: Can institutional investors like NSSF even hold ownership in a trust structure? Pension funds are typically restricted from investing in unregulated vehicles. This raises real questions about whether Uganda’s largest institutional investor can maintain its exposure to the MoMo business under the new framework.

In effect, shareholders are being asked to trade direct ownership of a high-growth public asset for a beneficial interest in a private one, held on trust until such time as the new company lists. Even with mechanisms like the “dividend adjustment trust” to make up for tax disadvantages, the structure still introduces governance and liquidity risks that public market investors do not typically sign up for.

To be fair, MTN’s motivations are not malicious. The company is executing on its “Ambition 2025” strategy, which aims to unlock platform value and attract fintech-focused partners. A standalone MTN New FinCo could, in theory, bring in strategic investors, leverage fintech expertise, and scale faster.

But this could have been done without eroding the public character of MoMo. A listing by introduction—using the existing MTN MoMo structure—would have retained all the benefits of transparency, liquidity, and investor protections, while still allowing the business to attract capital and partnerships.

Instead, what we have is a carefully engineered workaround that takes a key public asset and places it into a private holding structure, promising to “make things right” in a few years. For long-term investors—especially those who prize corporate governance and transparency—this trade-off deserves scrutiny.

That’s not to say there’s no opportunity here. 

But to fully capitalise on this opportunity, investors must go in with eyes wide open. They must advocate for stronger governance of the trust, demand clear disclosure commitments, and seek legal clarity on how their rights will be protected in the interim period.

Uganda’s capital markets need success stories, yes. But they also need discipline, transparency, and trust—not just in the financial sense, but in the institutional one.

MTN’s fintech spin-off could still be that story. But only if the complexity doesn’t obscure the core principle: that public wealth should not be privatized by proxy.

SURPRISE! SUPRISE! UGANDA ECONOMY IS GROWING

The last four decades have been the longest streak of economic growth in the history of Uganda. And in the state of the nation address on Thursday President Yoweri Museveni reported that the poverty levels have continued to reduce and the wealth disparities in the economy continue to narrow.

Quoting the most recent National Household Survey Report by Uganda bureau of statistics (UBOS) Museveni said the national poverty line – people living on a dollar a day, had fallen to 16 percent of the population from 20 percent four years ago.

He also reported an improvement in the country’s gini coefficient, which measures the extent of income inequality is down three percentage points to 38 percent from 41 percent in 2020.

The reduction in poverty levels and income inequality are important, because what else is economic growth for than an improvement in the overall welfare of the people, so improvements in this last measures are always welcome.

The Uganda economy grows even in our sleep. The GDP is now at about $60b compared to $4b at the beginning of the NRM adventure in 1986. According to the World Bank the Uganda economy was just under $10b in 20 years ago in 2005 and about $32b a decade ago.

A lot the early economic growth until about 2000 came from reconstruction and rehabilitation before we started adding new capacity.

By ensuring security, adopting a market economy and investing heavily in infrastructure – some estimates put this at, at least a billion dollars annually since 2012, the government has unlocked private sector initiative, unleashed new production and improved access to markets. This has made continued economic growth a mathematical certainty.

The challenge with the market is that it tends to concentrate wealth in a few hands, it is up to government to redistribute this wealth through taxation and not by handouts, to improve the capacity of more and more people to benefit from the macroeconomic growth.

The story is told of how former Tanzanian President Julius Nyerere was trying to convince his Kenyan counterpart Jomo Kenyatta to adopt socialism to which Kenyatta replied, “So you want to distribute poverty?”   

It is not a chicken and egg question. It is clear that to uplift the general lot of the people the economy has to grow first.

That being said its plain for all to see that government needs to do more. It finds itself in the unenviable position of the cook serving Oliver Twist, who wants more.

What is true however is that the trajectory is onward and upward, however much we who are living through it, may think progress is moving too slowly for our liking.

In his speech Museveni outlined 10 things his government will continue to do to ensure continued economic growth and more equitable distribution of these gains to everybody.

At the top of the list was ensuring continued peace and security, accelerating industrialization, encouraging industrialization and increasing market access regionally and internationally.

He also added skilling of youth, improved revenue collection, restructuring government to rationalize spending and the continued drive to move the rural economy away from subsistence to commercial production.

I was sad that fighting corruption came a lowly ninth and the repayment of domestic arrears was not touched on or at least was not deemed important enough to get specific mention.

While in a cynical way, corruption has helped keep the urban elite onside politically over the 40 years, it has slowed the improvement in the general wellbeing of the people by affecting service delivery. Government projects are either slowly, badly or not executed, in the process lining the pockets of the connected and denying the everyday man the chance to advance his lot.

Going by the improvement in the poverty numbers, it is clear that we are all rising with the tide of general economic growth, it is no time to seat on our laurels.

Two weeks ago I had chance to be in the Nakivubo area. Whereas the common narrative in bars and in our various meeting areas is that the economy is not doing well, I witnessed no sign of despondency and hopelessness. Downturn is a heaving mass of activity, which told me that while things are tough the general population can see light at the end of the tunnel, otherwise how do you explain that thriving activity, unprompted by whips and threats?

 

UGANDA’S LOOMING DIGITAL DEBT TRAP

Digital lending in Uganda—fast, frictionless, and seemingly harmless, has become as easy as sending airtime.

But behind the sleek USSD codes and app interfaces lies a new kind of financial pressure cooker: one where convenience masks crippling interest rates, and the cost of borrowing can quietly spiral out of control.

According to a 2023 report released last year by the Uganda Bankers’ Association and Asigma Capital—Digital Lending in Uganda: Series 1 – Unravelling the Demand Side—the demand for digital loans is exploding, especially among youth and informal workers. These loans, offered via mobile apps and codes, promise speed. But the trade-off is steep. Most digital lenders—licensed under the Tier IV Microfinance and Moneylenders Act—charge between 5% and 10% interest per month, with some even higher. That dwarfs the typical 2% monthly rate from traditional bank loans.

The UBA-Asigma report found that most digital borrowers don’t fully understand what they’re signing up for. The repayment terms aren’t always clearly spelled out, and hidden charges lurk behind every screen. For students, market vendors, and gig workers with irregular income, it often feels like they’re borrowing from a system designed for them to fail. And yet, because banks remain inaccessible—slow, rigid, full of forms—they keep coming back. Because when the landlord is calling and the fridge is empty, a fast loan now outweighs any regrets later.

The irony is that digital lending is meant to solve exclusion. But when borrowers are hit with sky-high charges and poor transparency, it becomes a new kind of exclusion—one where access doesn’t equal fairness. The sector is growing, but so is the risk of widespread over-indebtedness, especially in a population where financial literacy remains low.

Kenya’s experience should serve as a lesson. As the birthplace of M-Pesa and a pioneer of mobile money-driven credit, Kenya has seen an explosion in digital lending services over the past decade. At one point, over 120 lending apps were operating in the country, many of them unregulated. The result? Millions of Kenyans blacklisted on credit reference bureaus for defaulting on small digital loans—some as little as KSh 200.

The outcry forced the Kenyan government to step in. In 2021, the Central Bank of Kenya amended its laws to bring digital lenders under its supervision, mandating licensing, consumer protection rules, and interest rate transparency. Kenya’s experience is a cautionary tale: digital credit without strong guardrails can wreak more financial havoc than it prevents.

Meanwhile, traditional banks in Uganda are watching the fintech storm from across their mahogany desks. According to J. Samuel Richards’ Uganda Banking Sector Performance 2024, the sector has grown steadily, reaching UGX 54 trillion in total assets. But the top five banks control more than 55% of those assets and over 66% of profits. It’s a club with few members and a high barrier to entry. What’s more, 11 banks have non-performing loans that exceed 10% of their equity, a sign that not everything is as solid as it seems behind the polished branch counters.

If traditional banks are feeling cornered, it’s because they are. Not just by fintech lenders, but by telecoms—especially mobile money giants like MTN. MTN Mobile Money made UGX 250 billion in after-tax profits in 2024. That’s more than Absa Bank, with far fewer assets. With 13.8 million active users, mobile money has leapfrogged traditional banking, becoming the default financial tool for millions of Ugandans.

That shift is no longer theoretical. It’s real. The financial sector is finally starting to understand that access, not marble floors and leather chairs, is what really matters. The telecoms didn’t just offer products—they offered proximity...

In our rush to digitise credit, we’ve skipped a few crucial steps. Like making sure people understand what they’re borrowing. Like regulating lenders who operate in the digital shadows. Like ensuring that the promise of inclusion doesn’t become a trap wrapped in an app.

So what do we do?

Start with transparency. Borrowers should never have to guess how much they owe. Digital lenders must display interest rates, fees, and penalties in plain language—not buried in terms and conditions that nobody reads. Then there’s pricing. It’s time to move toward risk-based lending. If someone has a clean borrowing record, they deserve better rates. The data exists—use it to reward good behaviour, not punish it.

Financial literacy can’t be an afterthought either. Borrowing money should come with clear, digestible information—delivered in the same channels the loans are offered. If we can sell loans by SMS, we can educate by SMS too.

And regulators need to step up, fast. The Uganda Microfinance Regulatory Authority and Bank of Uganda must enforce rules that protect borrowers without stifling innovation. Sandboxes are one option—safe spaces for fintechs to test products under oversight. But more than tools, regulators need urgency. Because the digital debt clock is ticking.

Uganda is riding a digital finance wave that’s reshaping everything—from how we buy chapati to how we pay school fees. But if we don’t steer the ship, we may end up drifting into a financial storm. The revolution has arrived, but without fairness, transparency, and education, we risk replacing one set of barriers with another.

Yes, access matters. But access to a trap is not progress. Uganda’s digital lending boom must work for the many—not just the few who built the platforms. The money may come fast. But if we’re not careful, so will the regret.

UGANDA’S BANKING INDUSTRY: FAT PROFITS, THIN MARGINS AND A FORK IN THE ROAD

Uganda’s banks are in rude health—or so it seems at first glance.

According to a recent report by JSR Consulting, total commercial banking assets stood at UGX54 trillion at the close of 2024, having grown at an annual average of 11% since 2018. The numbers track closely with GDP growth over the same period, suggesting the sector has been floating comfortably on the tide of overall economic expansion. But scratch beneath the surface and the picture becomes more nuanced—part triumph, part trouble, and a whole lot of transformation on the horizon.

First, the good news. Profits are booming. The JSR report shows that net profits across the banking sector more than doubled between 2018 and 2024, rising from UGX751 billion to UGX1.63 trillion. Interest income, fees, commissions—all up. Bank shareholders have reason to smile.

But the spoils aren’t exactly evenly shared. As JSR points out, five banks—Stanbic, Centenary, Absa, Equity and DFCU—account for a staggering 66% of the industry’s profits and control 55% of total assets. Stanbic alone accounted for nearly 30% of profits. It’s clear: in Uganda’s banking sector, scale pays. The big are getting bigger. The rest are fighting for scraps.

That inequality extends to cost structures. JSR’s analysis reveals that the average cost-to-income ratio in the industry stands at 60%, with only a handful of institutions managing to keep it under 50%. Most

banks are groaning under the weight of high overheads—costs of legacy systems, bloated staffing, and real estate.

In an era when customers are increasingly digital-first, this reliance on brick-and-mortar infrastructure is quickly becoming an expensive burden.

Return on equity also tells the story of an uneven playing field. The larger banks—again, Stanbic, Centenary, Absa—enjoy ROEs north of 20%, while many smaller banks languish in single digits or worse. As the JSR report rightly notes, size matters.

It’s not just profitability and scale where disparities emerge. Asset quality is increasingly a concern. The JSR report highlights that the average non-performing loans to equity ratio is 11%, but individual bank figures range wildly—from 0% to a worrisome 51%. Even with high capital buffers, which the report confirms are well above the regulatory minimum of 12.5%, such levels of risk could eat into future profits if not managed carefully.

In the face of this uncertainty, banks have continued to flock to government securities. Loans and advances, which once made up 45% of bank assets, have now dropped to 41%, while investments in treasury instruments have risen to 28%. Government paper has been the safe harbour. But that harbour may no longer be as lucrative. JSR warns that as yields on government securities continue to slide, banks will have little choice but to pivot back to private sector lending.

That pivot, however, comes with its own challenges. Lending to the real economy—especially SMEs and the informal sector—is messy, costly, and risky. But it’s also where the growth is. To thrive, banks will need to invest in better risk models, credit analytics, and digital channels that can reach the customer segments traditionally left behind.

The JSR report is particularly clear-eyed about the biggest looming disruptor: fintech. Telecom-led financial services, mobile wallets, and agent banking have already eaten into the banks’ turf. Digital-first customers are increasingly bypassing traditional banks for faster, cheaper, and more convenient alternatives. JSR flags this as a key threat—and rightly so. The banks that still see fintech as a threat rather than a partner may not be around to learn the lesson a second time.

What’s more, the report foresees continued consolidation. With 25 licensed commercial banks, many of them small and inefficient, the logic for mergers and acquisitions is growing stronger. Regulatory pressure could accelerate the trend, especially if some institutions fail to keep up with capital or compliance requirements.

And then there’s inclusion. The JSR data shows that banks offering microfinance products—typically targeting the unbanked or underbanked—recorded significantly higher net interest margins, some as high as 35%. But these products are still a sideshow for many large banks. There’s a massive opportunity here: mobile-based lending, simplified KYC processes, and credit scoring based on alternative data could bring millions more into the financial fold.

So what lies ahead?

The report projects continued growth in banking assets, potentially crossing UGX100 trillion by 2030. But future success won’t be about balance sheet size alone. It will depend on a bank’s ability to adapt to a new model—leaner, digital-first, customer-centric. The winners will be those that embrace partnerships with fintechs, open banking frameworks, and embedded finance models. Even environmental, social, and governance (ESG) considerations will come to define lending policies and capital access.

Regulation, too, is expected to evolve. JSR anticipates tighter oversight on cybersecurity, digital transactions, and cross-border flows. Capital adequacy rules may become more stringent for systemically important banks. There is even scope for innovation-friendly policy to support green financing, sandbox experimentation, and broader digital integration.

Ultimately, Uganda’s banking sector is at a crossroads.

The model that delivered growth and stability over the past decade—one rooted in risk-free government lending, branch-led customer acquisition, and fee-based income—is fast becoming obsolete. The new model will demand technological agility, credit risk innovation, and meaningful financial inclusion.

The JSR report offers both a diagnosis and a roadmap. Whether banks heed its message could determine not just who wins in the market, but whether banking in Uganda remains relevant at all. Because in the financial game of the future, it’s not the biggest or oldest players that win—it’s the most adaptable.

NICK KOTCH: TRIBUTE TO A GREAT MENTOR AND AN EVEN GREATER MAN

NICK KOTCH recruited signed off on my recruoitment into Reuters those many years ago. A young business journalist, he was asking to be an all round correspondent for Reurters in Uganda. 

I am embarassed to say I turned down an initail offer to join Reuters, because I could not be bothered writing about politics and society. Thank God he never gave up on me. I will be forever be grateful for the opportunity it gave me to broaden my perspectives and see the bigger picture.

I admired his commentary and try -- badly to emulate his thought process.

RIP  Nick Kotch

BODAS A TEST FOR MARKET ECONOMICS

Last week I had reason to drive down Bombo road, onto Kampala road before turning off onto Entebbe Road.

I cannot remember the last time I did this. I do not think I will be doing it ever again.

Driving on our capital main thoroughfare, is a nightmare of  hundreds (and I fear I understate this) of boda bodas criss crossing, weaving, ducking and generally causing hypertension on that dual lane carriageway.

Add to that the trucks loading or offloading this or that merchandise, taxis starting and stopping without warning, pedestrians jaywalking all over the place and you really have to wonder. The horror.

Those were my initial thoughts, but when I sat down and tried to make sense of it calmly, I could not help but marvel at how the market works.

First off the boda bodas are responding to a need, a need for transportation, in a city without mass transportation services. They are responding to a need for quick and inexpensive movement in a city clogged with cars...

The urgent need for their regulation is understandable, not least because they have become a power onto themselves, see Wandegeya and Jinja road intersections. But we have to be careful not to throw out the baby with the bathwater.

When I looked in my archives I found a pre-covid article about a Safe Boda end of year party. Hundreds of riders had congregated at Lugogo Cricket oval for day long reveling with family and friends. I remember being in awe at how the company had aggregated all these numbers under one roof – it was rumoured at the time there were about 10,000 SafeBoda Riders, and in doing so providing employment, safer transport and financial inclusion.

But only last week I read another article about Mogo, which has carved out a niche for itself in financing the purchase of motorbikes for boda riders. According to the story, in the last two years they have financed 30,000 bike purchases but since their inception towards the tail end of the Covid, they have helped finance the purchase of  half a million bikes around the country.

For those of us looking from the outside, this number seems like a stretch, but not so much so when you factor in the hundreds, maybe thousands of boda bodas Uganda police has impounded, with little effect on the overall industry.

I remember before Covid thinking, the boda boda industry was a bubble waiting to burst, going by the number of riders I saw not having a fare. I guestimated that at least a third of bodas had a rider only, no passenger. My thinking at the time was that the industry was gearing up for a major correction, as more and more people bought bodas but the market was getting saturated and would prove less viable for entrepreneurs.

I suspect it is not as lucrative as it may have been 20 years ago for the first movers. But like Malthus, the 18^th century economist who warned that the world was doomed as population grew to stretch known resources, I did not factor in innovation, ingenuity and sheer grit of the industry operators.

With Covid came the explosion of the delivery business, which bodas have cornered for themselves. Everyone has his go to boda guy. Especially women. You cannot be a woman worth the varnish on your nails, if you do not have at least have three bodas on speed dial.

One Sunday afternoon I was out to one of our leading restaurants and could not help but notice the number of boda guys waiting to take delivery of orders. On asking the duty manager how much of their business is in deliveries, without blinking an eye, he said 60 percent. And this, when seating space in his restaurant was already at a premium.

So I was wrong those many years ago, that the boda bubble was about to burst. Thankfully so.

That being said, government has to recognize that what was originally a stop gap measure, a plaster, for an inadequate transport system, is growing in to a monster that needs to be regulated.

These boda guys are not stupid. They are aware of the potential threats to their livelihoods that could come with a more organized system. They will organize, if they already haven’t done so and resist any attempts to regularize the system.

We should not forget how one UTODA used to run riot all over the city, their taxis a power to themselves and their business model not unlike a criminal organization.

As is usual, the market is often ahead of the regulators. And thank God for that. Government needs to recognize the importance of the bpda industry, but take a long term view about how to integrate mass transport, taxis and the bodas into a coherent transport industry. The industry or market can very well do this by themselves, but the problem with the market is that it tends to concentrate resources or power in a few hands, and leave the rest exploited and trampled upon.