Overview:
UMA Board Chairperson Aga Sekalala called for stricter enforcement of tax compliance, saying all eligible businesses must contribute fairly to national development.
The Uganda Manufacturers Association has urged Parliament to take decisive action against the country’s growing informal sector, warning that unregulated businesses are increasingly undermining formal manufacturers.
Appearing before Parliament’s Finance Committee on Tuesday, UMA Board Chairperson Aga Sekalala called for stricter enforcement of tax compliance, saying all eligible businesses must contribute fairly to national development.
“This dualistic monster has left a compliant formal sector on life support, while rampant untaxed activity threatens to drag even formal manufacturers into informality if unchecked,” Mr Sekalala said. “Parliament must act decisively now. Formalisation is not an option but a lifeline to rescue revenue-starved growth and avert economic collapse.”
He described the informal sector as a “ticking time bomb” that is constraining manufacturing growth and weakening domestic revenue mobilisation.
According to UMA, the informal sector accounts for about 54.5 percent of Uganda’s Gross Domestic Product and employs more than 70 percent of the workforce—approximately 9.8 million people—generating an estimated Shs41.3 trillion annually. However, much of this activity falls outside the tax net.
Mr Sekalala noted that more than 85 percent of informal businesses remain unregistered, contributing to persistently low tax compliance. Of an estimated 2.5 million economically active individuals, only about 700,000 are registered taxpayers, with just 12 percent linked to formal supply chains.
“UMA wants to see more taxpayers brought under the tax net and a reduction in informality, which undermines legitimate business,” he said. “We must remain engaged to ensure reforms needed to deliver the NDP IV growth trajectory are achieved.”
The call comes amid ongoing enforcement of a nationwide trade order directive by the Ministry of Local Government, aimed at streamlining urban trade and improving compliance.
The directive includes clearing street vendors and illegal kiosks from public spaces to improve sanitation, safety and urban organisation. Local leaders have been issued a 10-point action plan that includes removing campaign posters, clearing pavements and walkways, enforcing market cleanliness, strengthening law enforcement, and improving public transport planning.
Authorities have also been tasked with sensitising communities on licensing requirements as part of broader efforts to formalise business operations and enhance revenue collection.