President Yoweri Kaguta Museveni has called for a review of hotel taxation policies and financing models for the tourism sector, saying the industry should be treated as an export and not burdened with domestic-style taxes.
Speaking during a high-level meeting with the Uganda Tourism Association (UTA) at State House Entebbe on July 29, 2025, the President said hotels are the backbone of tourism, they should not be taxed like local businesses.
“Tourism is an export business,” Museveni stated. “We don’t tax exports, and this taxing of hotels the way you are talking about is really not correct.”
The President’s remarks came after learning that hotels are taxed similarly to domestic consumer businesses, a policy he admitted was misaligned with Uganda’s long-term tourism growth ambitions.
He emphasized that tourism services, like manufactured goods or milk exports, earn foreign exchange and should be incentivized rather than penalized.
Museveni also voiced concern over the sector’s dependence on expensive commercial loans, arguing that tourism businesses should access concessional financing through Uganda Development Bank (UDB), just like factories and other export-focused ventures.
“If factories don’t borrow from commercial banks, why do you want tourism businesses to borrow from commercial banks?” he questioned. “How will they succeed?”
The meeting followed a formal appeal from UTA President Yogi Biriggwa, who urged the government to offer structured and targeted support to the private sector players in tourism.
UTA requested annual funding of Shs 800 million over the next three years to strengthen its Secretariat and accelerate priority reforms.
“This funding will enable UTA to play its rightful role as the coordinating and unifying voice of the private sector in tourism,” Biriggwa said, citing Uganda’s ambition to earn USD 4 billion annually from tourism by 2030, as outlined in the National Development Plan IV.
President Museveni welcomed the proposal, promising to read through UTA’s recommendations and issue written directives.
The tourism industry is rebounding strongly from the COVID-19 shock, with earnings growing by 13.1% to $1.52 billion in the 12 months to March 2025. Tourist arrivals rose to 1.37 million, while domestic visits to national parks jumped by 15.7%.
Despite the positive performance, UTA warned that structural barriers remain, particularly access to affordable credit.
Biriggwa revealed that tourism received only 3% of all private sector credit and just Shs 16.84 billion, representing 1.3% of UDB’s total disbursements in 2023.
Tourism businesses face commercial interest rates between 20% and 25%, while even concessional lenders like UDB charge between 12% and 16%.
With a non-performing loan rate of 12.1% in the tourism sector, more than double the national average, the association stressed the need for tailored financial products and lower rates to spur investment.
On the public spending front, tourism sector funding rose from Shs 289.6 billion in FY2024/25 to Shs 430 billion in FY2025/26, with an additional Shs 2.2 trillion earmarked for enabling infrastructure such as roads, security, and ICT.
However, UTA argued that the sector, which contributes around 5% to GDP, still receives less than 1% of the national budget.
They proposed raising the sector’s share to at least 1% to support destination marketing, product development, skilling, and quality assurance.
Responding to concerns about access and connectivity to high-value tourist sites, President Museveni said infrastructure development is underway, including efforts to upgrade airstrips in key tourism regions.
“We are working with the government of Sharjah to build an airport in Kidepo. In Kihihi, in the west, and also Murchison Falls, Kakuba airstrip can be developed,” he said.
“Even Mweya has an airstrip. These tourists need to land directly, with our own money, we shall develop that infrastructure, Kasese, Arua, Kayonza, Kihihi, and Kidepo,” he continued.
As the meeting concluded, President Museveni committed to reviewing the broader policy issues raised by UTA and pledged to align tourism policies with Uganda’s export-led development strategy. “Tourism is an export, and we should treat it that way,” he said.
