Uganda moves to cut road construction costs, delays

KAMPALA. Government has unveiled plans to reduce construction costs, ease access to affordable financing for local contractors and simplify building approvals as it seeks to unlock investment in a sector considered critical to Uganda’s ambition of growing its economy tenfold by 2040.

The reforms will target lengthy approval processes, limited access to equipment and financing, high construction costs and weaknesses in public investment management, which officials say continue to constrain the country’s construction value chain.

Finance Minister Henry Musasizi said government would work with local governments to improve physical planning, simplify building approval procedures and enforce construction standards, while ensuring developers have clear information about the requirements, costs and timelines involved.

Speaking at the third Doing Business Forum at Mestil Hotel in Kampala on November 5, Mr Musasizi said a predictable regulatory environment would make it easier for investors to undertake construction projects while ensuring buildings meet the required safety and quality standards.

The forum, held under the theme, Unlocking Uganda’s Tenfold Growth through the Construction Value Chain: Regulatory Reform, Local Capacity and Infrastructure Investment, brought together government and private sector players to identify reforms that could expand domestic participation in the industry.

The meeting also provided an opportunity for government to report on its response to concerns raised by the private sector at the second Doing Business Forum in 2025.

Opening the meeting, Ms Dianah Nannono, the Head of the Private Sector Development Unit, said the forum provides a platform for government to communicate interventions aimed at lowering the cost of doing business, while businesses highlight operational bottlenecks and propose solutions to inform the FY2027/28 national budget.

She reported that government had increased funding to the Uganda National Bureau of Standards (UNBS) from Shs55.9 billion in the 2024/25 financial year to Shs133 billion in 2025/26, with another Shs130 billion allocated in the current financial year.

The funding is intended to strengthen product certification, standards enforcement, laboratory operations and trade facilitation.

UNBS has also recruited 100 additional staff and invested in regional laboratories, modern testing equipment and digitalisation to improve its capacity to test and certify products.

On electricity access, Ms Nannono said government had reduced connection charges under the rural electrification programme from Shs700,000 to Shs30,000 for connections requiring no poles, and from Shs1.8 million to Shs30,000 for those requiring one pole.

Government has also secured an off-peak electricity tariff of US$0.05 per kilowatt-hour for extra-large consumers using more than 1.5 megawatts.

The interventions are intended to ease production costs for manufacturers and improve the competitiveness of locally produced goods.

On industrial infrastructure, government increased funding for the Manufacturing Programme from Shs312 billion in 2025/26 to Shs1.03 trillion in 2026/27.

At Namanve Industrial Park, infrastructure works covering about 45 kilometres of roads, bridges, drainage, electricity distribution, water, sewerage and information and communication technology had reached 82 per cent completion by September 2026. Completion is expected by December 30, 2026.

At Mbale Industrial Park, government approved Shs146.39 billion for the current financial year to support internal roads, drainage and electricity infrastructure. Road works had reached 50 per cent completion, while water supply and sewerage works stood at 40 per cent.

At Kapeeka Industrial Park, road construction had reached 29 per cent, while a contractor had been procured for the power substation.

Ms Nannono said construction was a foundational enabler of Uganda’s ambition to grow into a US$500 billion economy by 2040, given its links to agro-processing, industrial parks, tourism, real estate, housing and transport infrastructure.

She cited ongoing investments, including Kampala Capital City Authority’s upgrading of more than 78 kilometres of roads, a US$140 million African Development Bank facility supporting irrigation and agro-industrialisation in Bunyoro, and the development of a 320-million-litre fuel terminal in Mpigi.

She said these projects offered opportunities for local contractors, engineers, transporters, farmers and manufacturers, but challenged government and the private sector to strengthen the capacity of Ugandan firms to participate in contracts and deliver quality work on time and within budget.

Turning to the construction sector’s challenges, Mr Musasizi said government and private sector players would support indigenous contractors to acquire equipment, technical skills and management systems necessary to compete for and execute major projects.

He added that government would support innovations that make locally manufactured construction materials more competitive, potentially reducing building costs while creating opportunities for domestic manufacturers and workers.

The intervention comes against the backdrop of an estimated housing deficit of 2.4 million units, highlighting the scale of investment required to meet the country’s housing needs.

Mr Musasizi said addressing the deficit would require greater private sector participation and financing arrangements that are affordable to both households and property developers.

He disclosed that the Ministry of Finance would support the phased capitalisation of the National Housing and Construction Company, alongside private sector innovations intended to lower construction costs.

Government will also continue investing in roads, electricity, water and other essential infrastructure, including in Greater Kampala, to improve access to services and create an enabling environment for property development and private investment.

However, Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi said increased infrastructure spending must be accompanied by better project preparation, coordinated utility provision and timely implementation if the investments are to generate the intended economic returns.

He said the construction industry supports a wide range of economic activities, including manufacturing, transport, professional services and employment, making its competitiveness important to the country’s broader economic transformation agenda.

Under the Fourth National Development Plan (NDP IV), government targets to increase the proportion of national roads that are paved from 29 per cent to 33 per cent, raise rail’s share of cargo transportation from three per cent to 20 per cent and reduce the housing deficit from 2.4 million to 1.9 million units.

Mr Ggoobi said these targets should translate into lower transportation costs, more reliable electricity and improved access to affordable infrastructure.

He emphasised that the participation of Ugandan contractors should go beyond winning government contracts to include the ability to access affordable financing, acquire modern equipment and develop the technical and managerial capacity to execute projects to the required standards.

To address the financing challenge, government is implementing a Shs150 billion Local Contractors Financing Initiative through the Uganda Development Bank (UDB).

Mr Ggoobi said Shs59.03 billion had been approved under the initiative, of which Shs24.89 billion had been disbursed, raising questions about the pace at which approved financing is reaching contractors.

“We must understand and address the constraints between approval and disbursement so that financing translates into completed work,” he said.

The initiative is intended to provide indigenous contractors with affordable financing, equipment and capacity development to improve their competitiveness in the construction industry.

Government is also pursuing reforms in technical and vocational education to address the shortage of skilled workers. Through the TVET Council, it is strengthening practical training, industry attachments, apprenticeships and competency-based certification to equip young people with skills demanded by the construction sector.

On regulatory efficiency, Mr Ggoobi said government was digitising land administration and building approval processes to reduce the time and cost of accessing services.

He cited the Uganda National Land Information System and the establishment of 22 Ministry of Lands zonal offices, which have brought land services closer to users and reduced land title processing time from 180 days to 45 days.

The Building Industry Management System is also being used to digitise building permit applications, inspections, professional verification and fee payments.

Mr Ggoobi said these systems should be interconnected with land administration, business registration, taxation and professional regulatory platforms to eliminate duplication and unnecessary delays.

“Businesses should be able to track applications, know requirements and fees upfront, and receive decisions within published timelines. Electronic signatures should also reduce unnecessary visits, costs and delays,” he said.

He further called for the digitisation of government procurement and stronger accountability mechanisms to curb corruption, improve transparency and protect value for money in public investments.

Mr Musasizi challenged participants at the forum to move beyond general recommendations and identify practical changes that would reduce the cost and time of construction, enable Ugandan firms to win and execute contracts, and attract long-term investment.

He said each proposal should identify the responsible government institution and specify what it can deliver within a clear timeframe.

The recommendations are expected to inform the FY2027/28 national budget, the medium-term expenditure framework and government’s broader reform priorities.

Mr Ggoobi said the success of the forum should ultimately be measured by whether businesses experience faster government services, lower operating costs and greater certainty when investing in the construction industry.