Manufacturers in Uganda are sounding the alarm on the crippling effects of illicit trade and informality, which are undermining the sector’s growth and costing the economy an estimated Shs 2.5 trillion annually.
Speaking at the 3rd Annual Pre-Budget Breakfast Dialogue 2026, Aga Sekalala Jr, Chairperson of the Uganda Manufacturers Association, highlighted the devastating impact of these practices on local industries.
“Sectors including alcohol, beverages, iron and steel, toilet paper, confectionaries, and oils are facing existential threats from informality and illicit trade,” Sekalala said.
He emphasized that formal manufacturers are struggling to compete with informal operators who evade taxes, standards, and compliance, creating an uneven playing field.
The regulatory environment is also a major concern, with uncoordinated processes inflating compliance costs for SMEs, averaging 12% of turnover, according to the World Bank 2025 report.
“This imposes administrative burdens. Manufacturers endure delays and expenses in certifications, rules-of-origin documentation, and sanitary clearances, often stalling production and regional/international market entry,” he said.
Uganda’s formal manufacturing sector contributes about 16% of the country’s GDP and nearly 30% of national tax revenue. However, illicit trade and informality are hindering its growth.
Sekalala called for targeted interventions to enhance trade facilitation, standards compliance, border efficiency, and export competitiveness in the FY 2026/27 National Budget.
State Minister for Trade, David Bahati, emphasized the sector’s importance to Uganda’s economic transformation agenda, aiming to expand the economy from $50 billion to $500 billion by 2040. He highlighted government interventions, including industrial infrastructure development, trade facilitation, and standards enforcement.
Ezra Muhumuza, UMA CEO, noted that the forum is examining key issues, including taxation concerns, certification delays, and procurement reforms to support local manufacturers. The need for a consistent power supply and streamlined regulatory environment was also highlighted.