Uganda’s efforts to attract foreign investors, expand export markets and promote tourism could be undermined by rising public debt and deep inequalities in access to electricity, the Civil Society Budget Advocacy Group (CSBAG) has warned.
Speaking during a media briefing on the National Budget Framework Paper (NBFP) for the 2026/2027 financial year, CSBAG executive director Julius Mukunda said government is refining its foreign diplomacy and trade strategy around three core priorities: attracting investment, expanding markets for Ugandan products and boosting tourism. However, he noted that these ambitions face major structural constraints.
“Markets play a central role in driving economic growth, but these ambitions require a strong domestic foundation,” Mukunda said.
He identified persistent energy poverty as a key obstacle, noting that fewer than 10 percent of rural households have access to electricity, compared to about 51 percent in urban areas.
According to CSBAG estimates, unreliable and limited power supply has left roughly 66 percent of Ugandans in energy poverty, constraining industrial development and affecting critical sectors such as healthcare, education and digital access.
Mukunda said the electricity access gap raises serious questions about Uganda’s competitiveness as it seeks to position itself as an attractive destination for investment and tourism.
CSBAG also cautioned that rising public debt could further limit government’s ability to address these structural weaknesses. Uganda’s public debt has climbed to Shs116.21 trillion, up from Shs94.72 trillion a year earlier, driven largely by infrastructure spending and increased fiscal pressures ahead of the 2026 general elections.
“The increasing reliance on domestic borrowing raises concerns about debt sustainability and risks crowding out private sector investment,” Mukunda said.
He urged government to better align its borrowing strategy with investments in energy, trade and productive sectors to ensure economic growth translates into tangible benefits for businesses and households.
Mukunda further noted that allocations to governance and security have been reduced from Shs9.91 trillion to Shs9.02 trillion under the proposed budget. Other sectors facing cuts include agro-industrialisation, which loses Shs352.8 billion, manufacturing, down by Shs58.9 billion, and digital transformation, reduced by Shs108.5 billion.
Additional reductions affect public sector transformation, private sector development, tourism and innovation.
According to Mukunda, the proposed budget adjustments suggest a shift toward capital-intensive investments at the expense of social and productive sectors that directly support livelihoods and service delivery.
He warned that this approach could weaken Uganda’s capacity to address pressing socio-economic challenges and undermine long-term development goals.