Tensions between Kampala traders and the government have intensified as frustrations over tax policies, digital compliance systems, and escalating operational costs continue to mount, posing long-term challenges to business survival in Uganda’s capital.
On Wednesday, a highly anticipated meeting between Kampala traders and Prime Minister Robinah Nabbanja was postponed after members of the Kampala City Traders Association (KACITA) refused to proceed without the release of 17 colleagues arrested during Tuesday’s protest.
The protest, staged in downtown Kampala, highlighted growing discontent over Uganda Revenue Authority’s (URA) Electronic Fiscal Receipting and Invoicing System (EFRIS), high taxes, and increasing rental fees all of which traders say are suffocating their businesses.
According to Issa Sekitto, chairman KACITA, the traders are not against paying taxes. “What we want is a fair system that understands the realities of doing business in Kampala. EFRIS is a good idea in principle, but its implementation has made it extremely hard for small and medium enterprises (SMEs) to survive,” he said.
The Cost of Compliance
At the center of the standoff is EFRIS, URA’s digital tax collection system, which requires businesses to issue electronic invoices and receipts for every transaction. While the system is designed to improve tax transparency and reduce revenue leakages, many small traders argue that compliance has significantly increased operational costs.
Traders argue that the EFRIS rollout has disproportionately affected SMEs, which make up the majority of Kampala’s business community. Many operate on low margins, and the added compliance costs combined with increasing rental fees and utility charges have left them in financial distress.
Traders Demand Policy Reforms
Beyond EFRIS, Kampala traders are also calling on the government to review trade policies they believe are undermining local enterprises.
Among their concerns is the licensing of foreign nationals to operate in low-income sectors, such as retail and small-scale trade. According to KACITA, this has intensified competition, making it harder for local traders to survive in an already challenging business environment.
“Our government should be protecting local businesses, not pricing us out of the market, we need policies that encourage Ugandan entrepreneurs to grow rather than pushing them out of business,” said Sekitto.
Government’s Balancing Act
The government, however, insists that EFRIS and other tax reforms are necessary to boost domestic revenue and reduce reliance on external borrowing. Uganda Revenue Authority has repeatedly argued that the system increases efficiency, enhances transparency, and helps level the playing field for compliant businesses.
Prime Minister Nabbanja has since urged traders to remain patient as discussions continue. “The government is committed to engaging with all stakeholders to find a balanced solution,” she said.
The Bigger Picture
The events of this week underscore a deeper struggle between government revenue mobilization and business sustainability in Kampala.With Uganda’s tax-to-GDP ratio still below the regional average, the government is under pressure to collect more revenue.
However, businesses argue that without careful reforms, these policies could discourage investment, stifle entrepreneurship, and push many SMEs out of the formal economy.
As traders prepare to reconvene with Prime Minister Nabbanja for a rescheduled meeting, business owners remain hopeful that the government will reconsider policies that they believe are crippling the heart of Kampala’s commerce.
For many SMEs, the fight is not just about EFRIS or tax rates it is about survival in an increasingly competitive and expensive business environment.