Uganda unveiled its largest national budget yet, committing Ush84.4 trillion ($22.47 billion) for the 2026/27 financial year in what the government describes as a decisive push to transform the country into a $500 billion economy by 2040.

 

The budget signals a major shift in development strategy – from an economy driven largely by agriculture, raw commodities and basic factor inputs to one powered by productivity, industrialisation, technology, value addition and exports.

At the heart of the budget is the government’s ambitious Ten-Fold Growth Strategy, which seeks to double Uganda’s GDP every five years and achieve sustained double-digit economic growth.

The strategy is anchored on the ATMS framework – agro-industrialisation, tourism development, mineral-based industrialisation, and science, technology and innovation – which together received 95.6 percent of discretionary spending.

The budget will be financed through domestic tax revenues of nearly Ush46 trillion ($12.24 billion), non-tax revenues of Ush4 trillion ($1.06 billion), petroleum revenues projected at Ush1.44 trillion ($383.3 million), domestic borrowing of almost Ush12 trillion ($3.19 billion), external borrowing and development financing. The resource envelope is a significant increase from the Ush72 trillion ($19.17 billion) budget approved for the 2025/26 financial year.

Growth engineFor years, Uganda’s development model focused on building roads, expanding electricity access and maintaining macroeconomic stability in the hope that growth would follow.

While infrastructure remains important, the latest budget suggests policymakers believe the next stage of development requires greater emphasis on productive sectors capable of generating wealth and exports.

A key pillar of the 2026/27 budget is the acceleration of strategic infrastructure and energy projects designed to deepen regional integration, expand trade and position Uganda as a regional economic hub.

Among the flagship projects is the East African Crude Oil Pipeline (Eacop), a 1,443-kilometre pipeline that will transport crude oil from the Albertine Graben to the Port of Tanga in Tanzania. The government expects the project to unlock the petroleum sector, generate export earnings, attract foreign investment and strengthen economic ties between Uganda and Tanzania.

Once completed, the railway is expected to reduce transport costs, improve cargo movement, enhance regional trade competitiveness and facilitate the movement of goods across East Africa.

Spending allocationsThe shift in focus is reflected in spending allocations. Manufacturing received one of the largest increases, with funding rising from Ush312 billion ($83.05 million) to Ush1.03 trillion ($274.17 million).

Science, technology and innovation received Ush1.1 trillion ($292.6 million), while agro-industrialisation has been allocated Ush2.2 trillion ($585.1 million). Tourism got Ush567.3 billion ($150.9 million), and funding for digital transformation also rose as the government seeks to leverage technology to boost productivity.

The government argues that Uganda’s challenge is no longer simply achieving economic growth but changing the structure of the economy. Despite average growth of between five and six percent over several decades, a large share of Ugandans remain engaged in low-productivity activities, while the country continues to rely heavily on exports of raw commodities.

Development economists have long argued that countries become wealthier when workers move from low-productivity sectors into higher-productivity activities. The government’s emphasis on industrial parks, agro-processing, value addition, technology and exports reflects this thinking.

The goal is to transform farmers into commercial producers, encourage local processing of agricultural commodities and build competitive manufacturing industries capable of serving regional and international markets.

Under agro-industrialisation, the government plans to fund agricultural research and innovation, including commercialisation of anti-tick vaccines, expansion of irrigation and water-for-production schemes, recruitment of extension workers and provision of quality agricultural inputs. Resources will also support post-harvest handling, storage, agro-processing, certification and market access initiatives.

Tourism, which earned Uganda approximately $1.8 billion in the 2025/26 financial year, will benefit from investments in destination marketing, tourism infrastructure, sanitation facilities along highways, refreshment centres at tourism sites, wildlife conservation and hospitality standards. The government hopes the interventions will increase arrivals and boost foreign exchange earnings.

The minerals, oil and gas sector received Ush473.5 billion ($126.0 million) to support mineral exploration, certification, capitalisation of the Uganda National Mining Company, establishment of mineral markets, operationalisation of Eacop and development of Uganda’s oil refinery.

Meanwhile, science, technology and innovation funding will support commercialisation of local innovations such as Kiira Motors, pharmaceuticals developed by Dei BioPharma, coffee products and banana-based industrial products.

Funds will also support the establishment of a hi-tech city, expansion of digital infrastructure, growth of business process outsourcing and enhancement of e-commerce platforms.

Debt burdenPerhaps the greatest challenge confronting the budget is public debt.

Uganda’s debt stock has risen sharply over the past decade, reaching more than Ush130 trillion ($34.6 billion) by January 2026, according to the Bank of Uganda.

For the 2026/27 financial year, debt servicing is projected to consume Ush33.4 trillion ($8.89 billion) – nearly 40 percent of the national budget – making it the single largest expenditure item. This means four out of every 10 shillings collected by the government will go towards repaying debt before funding reaches hospitals, schools, roads and other services.

Economists have expressed concern that rising debt-servicing costs could crowd out spending on essential public services. Dr Fred Muhumuza argues that increasing revenues is not necessarily translating into improved services because a growing share of government resources is being diverted towards debt repayment.

Others, such as Dr Brian Serunjogi of the Economic Policy Research Centre, stress that borrowing is not problematic if the funds are invested efficiently and generate economic returns.

The Bank of Uganda estimates that debt-service obligations will consume more than 45 percent of domestic revenues in the near term, raising questions about fiscal sustainability.

Experts warn that continued borrowing without corresponding improvements in productivity and project execution could undermine the country’s long-term growth ambitions.

Government has responded by reducing domestic borrowing and intensifying efforts to mobilise domestic revenue. However, concerns remain over tax policy.

New excise taxes on alcohol, cooking oil, sugar and cement have been introduced to raise additional revenue. While the measures are expected to boost collections, critics argue they could increase the cost of living and place additional pressure on consumers and businesses.

Analysts also point to persistent challenges in project implementation, procurement delays, corruption, weak institutional capacity and poor absorption of public funds. Many argue that Uganda’s development challenge is increasingly about using resources efficiently rather than finding more money.

The 2026/27 budget represents one of the most ambitious economic plans in Uganda’s history. It seeks to transform the economy through industrialisation, technology, value addition, exports and human capital development while leveraging future oil revenues to finance growth.

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