On Thursday, Minister of Finance, Matia Kasaija, presented a Shs72.136 trillion national budget for the financial year 2025/2026 at the Kololo Ceremonial Grounds. Framed under the theme: “Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation and Market Access,” the budget outlines an ambitious plan to boost household incomes, grow industries, and modernise key public services.
Here’s a breakdown of what the budget means for the average Ugandan—and where the money is going.
Where the money Is coming from?
Out of the total Shs72.136 trillion, the government expects to raise Shs37.2 trillion (roughly 60%) through domestic revenue collection, with the rest coming from loans and grants. The budget deficit stands at 7.6% of Gross Domestic Product (GDP), which the government plans to manage by widening the tax base, using digital tools to curb leakages, and reducing corruption at the Uganda Revenue Authority.
Key Sector Allocations
Health – Shs5.87 Trillion
This will be used to functionalise all Health Centre IVs, scale up e-health systems and digitised medical services, and expand emergency care with CT scanners, digital X-rays, and national ambulance services.
Education – Shs5.04 Trillion
This will be used to continue support for Universal Primary and Secondary Education, student loan schemes, and the construction of more seed schools; operationalise Bunyoro and Busoga universities; and upgrade teacher recruitment and digital school inspections.
Wealth Creation Programmes – Shs2.43 Trillion
Finance Minister Kasaija made it clear that this year’s budget focuses on turning Uganda into a fully monetised economy. That means getting more Ugandans to participate in the cash economy—whether through farming, trade, or services.
“The budget is focused on people and wealth creation,” Kasaija stated.
The allocated funds will be used to continue funding the Parish Development Model (PDM), Emyooga, and the Uganda Development Bank. Each parish will receive Shs100 million, with funds managed via digital apps like WENDI and ZAIDI.
Over 2.6 million Ugandans have benefited so far, investing in farming, livestock, and small businesses.
Agriculture & Industry – Shs1.86 Trillion for Agro-Industrialisation
Support for irrigation schemes, fertilisers, agricultural extension services, and value addition includes the completion of 145 solar-powered irrigation schemes, with 157 more underway, and an extra Shs50 billion allocated to the Agricultural Credit Facility, now worth over Shs1 trillion.
Energy & Oil
Shs875.8 billion allocated for oil, gas, and mineral development.
The East African Crude Oil Pipeline is 58% complete. A deal has been signed to build a 60,000-barrel-per-day oil refinery.
Uganda expects to earn US$1–2.5 billion annually once oil production begins in 2026.
Tourism – Shs430 Billion + Infrastructure Boost
Targeting MICE (Meetings, Incentives, Conferences, and Exhibitions) tourism. Uganda now ranks 7th in Africa for MICE tourism.
Tourism earnings hit US$1.52 billion, boosted by road, ICT, and security infrastructure worth Shs2.2 trillion.
Coffee, Exports, and the Bigger Picture
Uganda’s coffee exports have more than doubled in one year—from US$1 billion to US$1.83 billion. Kasaija urged Ugandans to add value before exporting, saying this would further boost national income and job creation.
Economic Outlook
Projected GDP growth: 7% in Financial Year 2025/26.
GDP per capita is expected to rise to US$1,324, nudging Uganda closer to middle-income status.
Security- Shs9.9 trillion
The Government has allocated Shs9.9 trillion to strengthen national security by modernising and professionalising security agencies, improving the welfare of security personnel, supporting the 2026 general elections, and enhancing access to justice and law enforcement services.
To improve the administration of justice, Shs602.7 billion has been earmarked for expanding alternative dispute resolution mechanisms, increasing the use of technology in judicial processes, and constructing more courts to enhance access to justice.
Tax Exemption
The government has introduced a series of tax exemptions and reforms in the 2025/2026 financial year aimed at boosting business formalisation, supporting entrepreneurship, and easing the cost of doing business. One of the key measures is a three-year income tax holiday for start-up businesses established by Ugandan citizens after July 1, 2025. This incentive targets start-ups that often face high initial investment costs and is designed to foster innovation, encourage formalisation of small and medium enterprises (SMEs), enhance business survival, and promote job creation.
Additionally, the government has exempted capital gains tax on transactions where individuals transfer assets to companies they have both established and control. This measure is intended to support the formalisation of businesses by removing tax barriers during corporate restructuring. Bujagali Energy Limited has also received a one-year income tax exemption up to June 30, 2026, in line with government contractual obligations, to help cushion against rising electricity tariffs.
To lower borrowing costs and reduce financial burdens for businesses and individuals, the government has scrapped stamp duty on mortgages and agreements. This is expected to make it cheaper and easier for both individuals and enterprises to enter into formal financial agreements.
Furthermore, taxpayers with outstanding interest and penalties as of June 30, 2024, have been given a window of relief. If they settle their principal tax by June 30, 2026, the government will waive all related penalties and interest. This waiver is designed to help taxpayers clear their arrears and return to normal operations.
The Electronic Fiscal Receipting and Invoicing System (EFRIS) has also seen a change in its penalty structure. Non-compliance will now attract a penalty equal to twice the tax owed, in an effort to improve tax enforcement and compliance.
On excise duties, the government has removed the 30% or Shs950-per-litre tax—whichever is higher—on beer made from locally grown and malted barley, citing redundancy. Additionally, the excise duty on beer made from at least 75% local raw materials (excluding water) has been revised from 30% or Shs650 per litre to 30% or Shs900 per litre. The aim is to standardise the tax liability, whether assessed at a specific rate or ad valorem.
Finally, in response to appeals from textile traders engaged in value addition, the government has revised import duties on textiles. Effective July 1, 2025, import duty on fabrics will drop to $2 per kilogramme or 35%, whichever is higher, down from the previous rate of $3 per kilogramme or 35%. Similarly, import duty on garments has been reduced to $2.5 per kilogramme or 35%, from $3.5 per kilogramme or 35%. These adjustments are intended to support local traders and enhance competitiveness in the textile industry.
