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Rising Youth Unemployment, Informal Work Worry Parliament
Parliament has launched a sharp critique of Uganda’s economic performance, warning that headline growth figures and declining poverty levels are being overshadowed by rising unemployment, mounting domestic debt, and government borrowing that is crowding the private sector out of expensive credit markets.
The concerns were raised by Remigio Achia, Vice Chairperson of Parliament’s Budget Committee, during the January 29, 2026, plenary sitting, as MPs scrutinised the 2026/27 National Budget Framework Paper (NBFP).
The Ministry of Finance had projected that Uganda’s economy would expand to UGX 254.2 trillion (about USD 66.18 billion) by the end of FY2025/26. Government figures also show that poverty declined from 21.4% in FY2016/17 to 16.9% in FY2023/24, while households engaged in subsistence production fell from nearly 69% in 2010 to about 33% in FY2023/24.
However, Achia said these gains mask deep structural weaknesses that threaten sustainable growth.
“External debt indicators show that liquidity pressures from external debt service remain within established thresholds. In contrast, all domestic debt indicators are projected to exceed the Public Debt Management Framework (PDMF) 2023 thresholds, signalling rising debt service costs that could crowd out funding for service delivery,” Achia told Parliament.
The warning comes against the backdrop of rising domestic arrears. According to the Auditor General’s December 2025 report, domestic arrears stood at UGX 8.4 trillion by the end of FY2024/25, down from UGX 13.8 trillion in FY2023/24. While UGX 1.4 trillion was allocated in FY2025/26 to clear arrears, the NBFP for FY2026/27 proposes reducing allocations to just UGX 200 billion.
“Persistent domestic arrears strain private sector cash flows, undermine confidence in government contracts, weaken job creation, and erode budget credibility,” Achia said, noting that the Domestic Arrears Strategy and the PDMF 2023 recommend annual funding of at least UGX 450 billion.
Parliament also faulted Uganda’s economic transformation agenda, observing that growth remains concentrated in low-productivity, climate-vulnerable agriculture and informal employment. Agriculture still accounts for nearly 40% of employment, while the informal sector, dominated by retail kiosks, boda boda transport, and petty trade, absorbs about 85% of workers. More than 70% of Uganda’s population remains rural.
Youth unemployment stands at 16.5%, with 41.1% of young people not engaged in employment, education, or training.
Private sector credit rose to UGX 23.9 trillion in June 2025, up from UGX 21.9 trillion a year earlier. Yet the Budget Committee noted that persistently high lending rates, averaging 18.6%, continue to limit access to credit, particularly compared with Kenya (15%), Tanzania (17%), and Rwanda (17%). Achia attributed the high rates partly to heavy government borrowing from the domestic market.
Despite rising export earnings, Parliament noted that Uganda remains overly reliant on primary commodities such as coffee, fish, and minerals. High-value manufactured goods, including processed foods, machinery, and electronics, account for only 24.6% of manufactured exports. “This low share highlights the need for greater investment in industrialisation and value addition to enhance export competitiveness and drive sustainable growth,” Achia said.
In a minority report, Ibrahim Ssemujju Nganda (Kira Municipality) warned that the government’s plan to borrow more than UGX 18.5 trillion domestically in FY2026/27 risks a debt crisis. “By over-borrowing from commercial banks, the NRM government is crowding out the private sector,” Ssemujju said, noting that the private sector employs more than 85% of Ugandans.
He highlighted concerns about job quality: 78% of Uganda’s labour force is in vulnerable employment characterised by low pay and insecurity, and only one in four firms survives beyond five years. “Young people need jobs, and you cannot respond to this demand with violence and prison,” he said, referring to arrests during the electoral period.
Minister of State for Finance Henry Musasizi rejected claims that Uganda’s debt trajectory is unsustainable. “It is true that public debt is projected to go beyond the 50% target, but our numbers show that debt obligations remain manageable now and in the long term. Uganda has not failed to meet any debt obligation when it falls due,” he said.
The preliminary resource envelope for FY2026/27 is projected at UGX 69.399 trillion, down from UGX 72.376 trillion in FY2025/26, a contraction of about UGX 2.98 trillion. The drop reflects reduced external borrowing for budget and projects, though domestic revenues are projected to rise to UGX 40.09 trillion from UGX 37.23 trillion.
Following its scrutiny, the Budget Committee called on the Ministry of Finance to mobilise an additional UGX 3.21 trillion to finance unfunded priorities across Ministries, Departments, and Agencies.
