In Uganda’s post-election calm, attention is quickly returning to the economy, and with good reason. Across the country, farmers are scaling production, factories are positioning for expansion, and investors are recalculating risk with greater certainty. In Hoima, where oil wells sit alongside farms, this shift is especially visible. The 2026 elections have cleared a path for economic execution, and three engines are now moving in tandem: commercial oil production, agricultural transformation, and industrial growth. Together, they are reshaping Uganda’s growth model, from consumption-led expansion to one anchored in production, value addition, and long-term resilience.
As political campaign fervor recedes and fiscal planning for the 2026/27 financial year takes centre stage, Uganda’s macroeconomic framework leans into an ambitious future. The National Budget Framework Paper (NBFP) unveiled in December 2025 positions commercial agriculture, industrialization, and oil production as the pillars of economic transformation, a departure from cyclical election-year caution to forward-looking fiscal strategy.
Uganda’s oil prospects, centered on the Albertine Graben and supported by major projects such as Tilenga, Kingfisher, and the East African Crude Oil Pipeline (EACOP), have dominated economic forecasts for years. With commercial production expected to begin in 2026, oil is envisaged as a structural growth catalyst capable of nudging the economy into double-digit expansion, potentially around 10.4 percent in FY 2026/27, a notable increase from the 6.3 percent growth recorded in FY 2024/25.
Projected oil revenues are substantial. Once production stabilizes, Uganda could generate between US$1 billion and US$2.5 billion annually, according to budget frameworks and fiscal projections. These inflows do more than lift GDP figures; they can strengthen foreign exchange reserves, reduce volatility, and enhance investor confidence, especially in sectors like manufacturing, where stable energy costs are a critical input.
However, oil’s fiscal benefits come with caveats. Highly volatile global crude prices underscore the need for effective stabilization funds to smooth revenues across cycles. Transparent governance, robust regulatory frameworks, and clear investment rules are crucial to guard against rent-seeking and ensure that oil wealth supports broad-based development rather than narrow elite capture. Economists also caution against Dutch Disease, where commodity booms inadvertently undermine the competitiveness of other sectors, unless strategic diversification is maintained.
Agriculture remains the backbone of Uganda’s economy, employing more than 68 percent of the workforce and contributing roughly 26 percent of GDP. For millions like the Hoima farmer, agriculture isn’t just livelihood, it’s a lifeline. But turning subsistence farming into a robust economic engine requires foundational transformation: from productivity gains to integration into value chains.
The government’s strategic priorities emphasize agro-industrialization, irrigation development, modern inputs, market access, and value addition. These interventions aim to lift productivity, encourage higher yields, and link smallholder producers to processing industries. Infusing agriculture with technology and logistics improvements positions it as a key contributor to export earnings and GDP growth.
A stronger agricultural sector also expands the tax base. As more producers enter formalized markets and agro-processors scale up, domestic tax collections improve without excessive tax rate hikes, facilitating stronger fiscal revenue mobilization. For example, Uganda’s domestic revenue target is projected to rise to around UGX 40 trillion in FY 2026/27, up from UGX 37.2 trillion previously.
Yet gaps remain. In FY 2022/23, agriculture, which generated Shs 43.9 trillion, received only Shs 1.455 trillion in direct budget allocations, falling short of National Development Plan targets. Scaling up investment in extension services, research, and rural infrastructure will be critical to deepen productivity gains and reduce dependence on imports.
Industrialization is arguably the glue that binds oil and agriculture into a sustainable growth trajectory. It adds value, transforming raw outputs into higher-value products while creating stable employment. Processing raw agricultural output into consumer goods, textiles, or refined food products not only expands export markets but also strengthens domestic industrial capacity.
Uganda’s industrial sector has demonstrated resilience and growth. As of 2024/25, industry contributed roughly 24.5 percent of GDP and grew at about 7 percent, signaling rising productive capacity. However, industrialization still faces structural bottlenecks in energy reliability, infrastructure, skills, and financing.
Special economic zones and industrial parks play a pivotal role in alleviating these constraints. By clustering enterprises, companies share infrastructure, reduce transaction costs, and enhance competitiveness. With improved energy supplies, partly funded through oil revenues, and better logistics networks, Uganda is positioning itself to attract foreign direct investment (FDI) and foster domestic champions, especially in agro-processing, light manufacturing, and export-oriented production.
Moreover, industrialization dovetails with agricultural value addition. Robust agro-processing links rural production centers to urban markets, creating jobs across the spectrum, from farmgate to factory floor and generating exportable products that earn foreign exchange.
The effectiveness of these three engines – oil, agriculture, and industrialization, hinges on a sound fiscal architecture. Uganda’s recent budgets highlight ambitious targets accompanied by structural challenges.
Tax to GDP Ratio. To finance growth priorities without excessive reliance on borrowing, expanding the tax-to-GDP ratio is critical. Uganda’s revenue efforts are poised to lift domestic tax collections to roughly UGX 40 trillion in FY 2026/27, a meaningful step toward broader fiscal sustainability, even as ongoing reforms aim to widen the tax base and enhance compliance.
Debt Burden. Public debt remains elevated. According to recent fiscal data, Uganda’s total public debt sits above 50 percent of GDP, with interest payments consuming a significant share of revenue. This dynamic underscores the importance of prudent borrowing, especially in environments where interest payments can crowd out critical investment spending in infrastructure, health, and education.
In a proactive response, the Ministry of Finance has proposed trimming domestic debt issuance by over 20 percent in FY 2026/27, aiming to reduce crowding out of private credit and ease pressure on fiscal balances. Effective debt management, prioritizing concessional loans and project-linked financing, will help preserve fiscal space and maintain macroeconomic resilience.
Expenditure Pressures. The advent of a new Cabinet, Parliament, and expanded administrative structures brings recurrent cost pressures. These structural commitments are less flexible and demand corresponding gains in revenue and productivity. Balancing growth-enabling expenditure, such as on infrastructure, technology, and human capital, with these fixed costs will test budgetary discipline.
To harness the potential of oil, agriculture, and industrialization effectively, both policymakers and the private sector must adopt strategic positioning:
- Targeted Tax Reforms. Instead of broad rate hikes, targeted incentives for value-added sectors, alongside digital compliance systems, can broaden the base without stifling investment.
- Debt Sustainability. Emphasize concessional borrowing tied to high-return infrastructure projects to mitigate risk and preserve fiscal space.
- Public-Private Collaboration. Strengthen partnerships in infrastructure, skills development, technology adoption, and financing to unlock complementarities.
- Human Capital Investment. Industrialization demands a skilled workforce. Vocational training, STEM education, and digital literacy are essential to unlock productivity gains.
Uganda is at a decisive point in its economic journey, and the choices made now will determine whether opportunity translates into lasting impact. Oil, agriculture, and industrialization have the potential to drive strong growth and meaningful job creation, but only if they are anchored in disciplined fiscal management, realistic revenue mobilization, and deliberate private-sector participation. Growth will not be measured by ambition alone, but by execution, how well taxes are collected without suffocating enterprise, how prudently debt is managed, and how public spending is directed toward productive, growth-enhancing priorities.
For business leaders, investors, and policymakers, the message is practical and urgent: read the numbers carefully, understand the structure behind the growth story, and make decisions that favour long-term value over short-term gains. The post-election economy offers momentum and renewed confidence, but momentum must be guided. When strategy meets discipline, Uganda can turn this moment into measurable progress, lifting households in Hoima, strengthening factories, and building markets that work for the entire nation.
The writer is a chartered Accountant and a chartered Tax Advisor.
