KAMPALA, Uganda — Private sector leaders and economic analysts are urging the government to match its ambitious double-digit growth targets with fiscal discipline, warning that rising debt obligations and persistent implementation gaps could derail the new national budget.
The commentary follows the presentation of the 84.4 trillion Ugandan shilling budget for the 2026/27 fiscal year, which leans heavily on the state’s Tenfold Growth Strategy to transition more citizens into the commercial economy.
Jane Nalunga, executive director of the Southern and Eastern Africa Trade Information and Negotiations Institute, said the government must demonstrate its commitment through practical resource allocation.
“If the government is talking about the tenfold growth strategy, then today, let the citizens see that indeed their government is walking the talk,” Nalunga said. She added that the highest concentration of public funds should target agro-industrialization to create jobs across the value chain, given that the majority of Ugandans work in agriculture.
Manufacturing sector executives welcomed the state’s focus on infrastructure but pointed out persistent bottlenecks. Heramb Kumthekar, chief executive of MM Integrated Steel Mills Uganda Limited, said the budget provides a strong foundation for long-term economic change but noted that local businesses continue to face high logistics expenses, regional trade barriers, frequent power outages and substandard imports.
“Government procurement and development projects should continue to prioritize locally manufactured products where local capacity exists and quality standards are met,” Kumthekar said, noting that enforcement of fair-trade practices is vital to protecting local supply chains.
Financial experts expressed concern over the macroeconomic risks embedded in the fiscal strategy. Stephen Kaboyo, managing director of Alpha Capital, identified four primary threats to successful budget execution: soaring debt service, heavy reliance on debt financing, continuous supplementary budgets that undermine policy credibility, and external energy shocks driven by Middle East tensions.
“The soaring debt service is taking away a big chunk of government revenues that would otherwise be allocated to other productive sectors of the economy,” Kaboyo said. He added that while the government targets 1.4 trillion shillings in initial petroleum revenue for the upcoming fiscal year, production delays could easily disrupt that timeline.
Hilda Tumuhe, a debt and trade policy analyst at the Southern and Eastern Africa Trade Information and Negotiations Institute, noted that because domestic tax revenues account for only about 14% of gross domestic product, public debt remains an unavoidable tool for financing major infrastructure projects like the Standard Gauge Railway.
However, civil society advocates warned that the scale of current borrowing severely limits public service delivery. Peninah Nabwire, a debt policy analyst, said debt servicing now consumes nearly 40% of the national budget.
“That means the fiscal space, money that could have been directed to healthcare, education and other social protection programs, is constrained,” Nabwire said.
Julius Mukunda, executive director of the Civil Society Budget Advocacy Group, said the government must fix low domestic resource mobilization and reform its tax exemption policies to ease the debt burden. He noted that while Uganda has about 5 million registered taxpayers, many do not pay their fair share, and some individuals secure investor licenses only to exit local manufacturing for retail trade.
“We are constantly being forced to choose between paying creditors and educating our children, building hospitals, providing jobs and delivering other development outcomes,” Mukunda said, calling for stronger negotiation strategies when dealing with private international lenders.
