Overview:

Ugandan experts warn that nearly 40% of the national budget is absorbed by debt repayment, squeezing funds for health and education and demanding responsible resource management.

ENTEBBE, Uganda — Uganda’s struggle to raise enough revenue is squeezing funding for key public services, policy actors and civil society groups have warned.

Nearly 40 percent of the national budget is now absorbed by interest and debt repayment, leaving fewer resources for sectors such as health and education.

Speaking during a regional sector dialogue organized by the Southern and Eastern Africa Trade Information and Negotiations Institute in Entebbe last week, analysts said rising debt costs are consuming funds meant for classrooms, medicines and infrastructure.

“Young people must actively shape budgets, tax rules and political reforms to ensure governments prioritize resource mobilization and utilization for youth-led development,” said Allan Muhereza, the team lead at the Youth for Tax Justice Network.

Revenue Challenges

The two-day dialogue brought together experts from the East African Community and the Southern Africa Development Community.

Participants said the region’s revenue challenges stem from a narrow tax base, high informality and an over-reliance on consumption taxes that hit low-income households hardest.

Dorothy Nakyambadde, the acting manager at the Uganda Revenue Authority, said Uganda’s tax system remains heavily dependent on indirect taxes. She noted that domestic revenue mobilization policies cause leakage through tax expenditures, with about 33 percent of Uganda’s revenue lost through those provisions in the 2023-24 financial year.

Public Investment

Jane Nalunga, the SEATINI executive director, said weaknesses in managing public investment have reduced socioeconomic returns and limited the country’s capacity to repay debt.

James Kinyua, the project manager at Transparency International Kenya, said weak asset recovery, poor whistleblower protection and limited institutional coordination prevent governments from reclaiming lost resources.

“This worsens deficits and erodes public trust,” he said.

Global Tax Rules

Experts also criticized global tax rules, arguing that the international system favors richer states and restricts African countries from taxing profits where economic activity takes place.

They said the push for a United Nations convention on tax cooperation could help shift taxing rights toward countries such as Uganda, which lose revenue through profit shifting.

“Africa needs to tax multinationals at the source where value is created, backed by reforms under a UN tax convention that sets fair global standards,” said Aloysious Kittengo, the program coordinator for financing for development at SEATINI.

He added that double taxation agreements are reducing Uganda’s withholding tax from 15 percent to as low as 5 percent, causing substantial revenue losses and raising questions about who taxes the remaining 95 percent.

Regional Solutions

Member of Parliament Henry Kibalya, who represents Bugabula South, said stronger regional coordination, fairer tax rules and better-managed borrowing would ease pressure on revenues.

“Citizens are ready to participate in production, but they cannot work alone. Leaders must rebuild trust by managing resources responsibly and ensuring every shilling serves the people,” he said.

Kenneth Natukunda, the head of intelligence at the Financial Intelligence Authority, said the agency works with enforcement bodies including the Uganda Revenue Authority, Inspectorate of Government and Uganda Police to address tax evasion, fraud, corruption and cross-border financial crimes.