Uganda’s Bold Shs72.3 Trillion Budget Sets Oil-Driven Path Amid EAC’s Diverse Fiscal Strategies

By David Mwanje

Uganda unveiled a Shs72.3 trillion (USD 20 billion) national budget for the Financial Year 2025/26, earlier this month positioning itself as a trailblazer in the East African Community (EAC) with a distinct focus on agro-industrialization and oil infrastructure. Presented by Finance Minister Matia Kasaija at Kololo Ceremonial Grounds, the budget stands out among Kenya, Tanzania, and Rwanda’s fiscal plans, which collectively drive the EAC’s USD 287 billion GDP.

While Kenya emphasizes fiscal discipline, Tanzania boosts rural infrastructure, and Rwanda prioritizes connectivity, Uganda’s oil-centric strategy and ambitious deficit mark a unique path toward a USD 500 billion economy by 2040.

Unlike Kenya’s KSh 3.6 trillion budget, which avoids new taxes to stabilize its 3.8% GDP deficit, Uganda embraces a 5.7% deficit to fund transformative projects like the East African Crude Oil Pipeline (EACOP) and agro-industrial parks. Tanzania’s TSh 57 trillion plan, up 13%, leans on rural roads and election readiness, while Rwanda’s FRW 7.03 trillion budget, with a 21% increase, targets Bugesera airport and social services. Uganda’s approach, however, hinges on leveraging oil revenues and concessional borrowing, setting it apart in a region grappling with fiscal constraints.

“Uganda’s economy has taken off,” Kasaija declared, crediting President Yoweri Museveni’s leadership for a resilient economy projected to grow 7% in FY2025/26. “The budget for next financial year is focused on people and wealth creation through commercial agriculture, industrialization, and digital transformation,” he added, highlighting Shs1.86 trillion for agro-industrialization and Shs414 billion for the Uganda Development Bank to support local enterprises.

The Parish Development Model (PDM), allocated Shs1.059 trillion, aims to monetize rural economies, with over 2.6 million Ugandans already benefiting from digitized initiatives like WENDI and ZAIDI apps.

President Museveni, unveiling the budget, emphasized its historical significance. “The size of Uganda’s economy is now USD 61 billion by exchange rate and USD 174 billion by purchasing power parity. Since 1986, when GDP was USD 3.9 billion, it has grown over 20 times,” he said, underscoring a shift to lower middle-income status. Museveni stressed accountability, warning against mismanagement: “Uganda’s transformation cannot be undermined by negligence.”

While Kenya tightens tax compliance without new levies and Rwanda funds 58% of its budget domestically, Uganda’s strategy relies on digital tax reforms, like replacing Tax Identification Numbers with National Identification Numbers, to boost Shs37.2 trillion in domestic revenue 60% of the budget. Tanzania’s 70% domestic funding aligns closely, but its focus on rural infrastructure contrasts with Uganda’s oil and agro-industrial bets.

The EAC’s USD 113 million Secretariat budget, equally funded by member states, exposes regional tensions, with Uganda and Kenya pushing for contributions tied to economic capacity. Analysts have advocated for shared fiscal targets, like deficits below 6% and tax to GDP ratios above 25%, to foster integration.

Uganda’s bold fiscal gamble, banking on oil and concessional loans, contrasts with Kenya’s caution, Tanzania’s rural focus, and Rwanda’s balanced growth, highlighting a region united in ambition but divergent in execution.

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