KAMPALA
The Uganda Manufacturers Association (UMA) has issued a strong appeal to Parliament to take decisive action against the informal sector, describing it as a “dualistic monster” and a “ticking time bomb” that is undermining formal businesses and starving the country of much-needed revenue.
The call was made by UMA Board Chairperson Aga Sekalala Jr. while appearing before Parliament’s Finance Committee. 
Aga Sekalala Jr
Sekalala warned that the unchecked growth of informal businesses is pushing even compliant formal manufacturers toward informality, threatening the survival of the country’s industrial sector.
“This dualistic monster reinforces a compliant formal sector on life support, amid rampant untaxed activity threatening to drag even formal manufacturers into informality if unchecked,” Sekalala said. “Parliament must act decisively now. Formalisation is not an option but a lifeline to rescue revenue-starved growth and avert economic collapse.”
He noted that the informal sector currently accounts for 54.5% of Uganda’s GDP and employs over 70% of the workforce — approximately 9.8 million people — generating an estimated UGX 41.3 trillion annually. However, over 85% of informal businesses remain unregistered, contributing minimally to the tax base.
Sekalala pointed out that only about 700,000 out of 2.5 million economically active individuals are registered taxpayers, with just 12% linked to formal supply chains.
“UMA desires to see more taxpayers brought under the tax radar, with a reduction in informality which undermines legitimate business,” he added. “We should remain engaged to ensure that reforms needed to deliver the NDP IV growth trajectory are addressed.”
The UMA chairperson urged all eligible taxpayers to pay their fair share to support national development, emphasising that the current situation is unsustainable for formal manufacturers who bear the full burden of taxes, regulatory compliance, and high operating costs.
The appeal comes as Parliament continues discussions on the national budget for the Financial Year 2026/27 and strategies to expand the tax base under the National Development Plan IV.
This is the latest in a series of warnings from the private sector about the negative impact of widespread informality on Uganda’s industrialisation efforts and overall economic growth.
Torch Media Africa
