Uganda unveils E-Accounting system to support informal businesses

KAMPALA

Government of Uganda has launched a simplified electronic accounting tool aimed at helping small informal businesses improve record keeping, access financing and transition into formal medium-sized enterprises as part of efforts to boost economic growth and domestic revenue mobilisation.

The digital platform, unveiled on Thursday by the Permanent Secretary and Secretary to the Treasury (PSST), Dr Ramathan Ggoobi, is expected to support small and medium enterprises (SMEs) struggling with poor financial management and limited compliance with tax and business registration requirements.

The simplified e-accounting tool was developed by the United Nations Conference on Trade and Development (UNCTAD) under the Informality Management for Compliance and Revenue Mobilisation (IMCORE) Programme.

Speaking during the launch, Dr Ggoobi said SMEs remain the backbone of Uganda’s economy, contributing significantly to employment creation and household incomes.

He noted that Uganda’s informal sector comprises more than 1.8 million micro, small and medium enterprises, most of them operated by women, youth and refugees. According to the Finance Ministry, the sector contributes about 54.5 percent of Uganda’s Gross Domestic Product (GDP) and accounts for nearly 92 percent of employment nationwide.

Despite their contribution, many small businesses remain outside the formal economy because of weak financial management systems and poor record keeping.

“Without proper records, businesses cannot assess their performance, financial institutions cannot trust them, and tax compliance remains inconsistent,” Dr Ggoobi said.

He added that improving financial management among informal businesses is critical to achieving Uganda’s Ten-Fold Growth Strategy, which seeks to expand the economy from approximately $50 billion to $500 billion over the coming years.

Dr Ggoobi described the new platform as a “single-window solution” that will support both legal and fiscal formalisation of small businesses.

The tool enables business owners to digitally manage financial records, track expenses, monitor cash flows and prepare reports more efficiently. Government hopes the system will also improve access to credit by helping enterprises generate reliable financial statements required by banks and other lenders.

During the handover of the platform to the Ministry of Finance after the pilot testing phase, Elena Botvina, an Economic Affairs Officer in UNCTAD’s Division on Investment and Enterprise, said the tool was designed to be simple, affordable and accessible to small businesses.

She said the digital platform helps enterprises improve cash management, track expenditure and increase revenues through better financial planning and reporting.

“The tool is convenient and cost-effective for business record keeping and reporting,” Ms Botvina said.

Under the pilot phase, 30 small informal enterprises in Kampala received direct support and training on how to use the system.

According to project officials, more than 490 SMEs have already tested the platform and reported positive feedback on its usefulness, while at least 241 businesses have formally registered and created accounts on the system.

The launch comes at a time when government is intensifying efforts to formalise Uganda’s large informal sector to widen the tax base, improve business productivity and strengthen revenue collection.

Economists have long argued that weak bookkeeping practices among SMEs limit their ability to grow, secure financing and compete effectively in formal markets.

Analysts also say digital accounting systems could help reduce informality by simplifying compliance requirements and lowering the cost of doing business for small enterprises.

Government officials believe the initiative could play a significant role in transforming informal businesses into sustainable and competitive enterprises capable of contributing more effectively to Uganda’s economic development.