Uganda is placing its economic future in the hands of its small business sector as it sets an ambitious target to expand its economy tenfold reaching $500 billion by 2035.
According to Secretary to the Treasury Ramathan Ggoobi, the government’s strategy hinges on transforming the vast landscape of micro, small, and medium-sized enterprises (MSMEs) into scalable and competitive businesses capable of significantly boosting earnings and job creation.
“MSMEs dominate Uganda’s private sector, but most struggle to transition into larger, more productive enterprises,” Ggoobi said.
He added, “This is the bottleneck we must address to unlock Uganda’s full economic potential.”
This transformation is central to the government’s 2025/26 Budget Framework Paper, which outlines key reforms and investments to strengthen private sector growth. Among the government’s top priorities is reducing business informality by rolling out Business Development Services (BDS) and enforcing local content provisions in public procurement and development programs.
Ggoobi identified six critical areas the government will support to stimulate enterprise growth and drive the broader economic agenda. These include strengthening financial inclusion, capitalizing public financial institutions, operationalizing regional standards laboratories, and finalizing the establishment of free trade zones.
Additionally, improving infrastructure and reducing the overall cost of doing business are integral components of the strategy.
Small businesses already play a significant role in Uganda’s economy. They make up around 90% of the private sector, contribute over 80% of manufacturing output, and account for approximately 75% of GDP. These enterprises employ more than 2.5 million people across 1.1 million businesses. However, the sector remains heavily skewed toward micro-enterprises, which make up 93.5% of the total, with only 4.1% classified as small and just 2.4% as medium-sized.
Despite their contribution, MSMEs face significant barriers, particularly high operational costs. The Budget Framework Paper identifies costly financing, unreliable electricity, poor transport logistics, and high ICT service charges as major constraints. Uganda’s average lending rate of 18.6% is currently the highest in East Africa.
To address infrastructure challenges, the Ministry of Works and Transport plans to prioritize the development of a safe, sustainable, and integrated multi-modal transport system under the National Development Plan IV.
According to Works Permanent Secretary Bageya Waiswa, the focus will be on reducing transport costs, improving governance in infrastructure development, and promoting alternatives to road transport, including rail and water transport systems.
An integrated transport infrastructure program will also be implemented to improve maintenance, support inter-modal connectivity, and leverage urbanization as a catalyst for productivity across sectors.
Ggoobi emphasized that empowering small enterprises to scale up is not just a policy goal but a strategic necessity.
“Facilitating the growth of small businesses into larger, competitive firms is essential if we are to achieve our $500 billion economy vision by 2035,” he said.
