KAMPALA, Uganda — The Ugandan government’s proposed 69.4 trillion shilling budget for the 2026-2027 fiscal year signals a major shift in national priorities, with massive funding increases for infrastructure and the extractives industry coming at the expense of health and education.
According to the National Budget Framework Paper, the government is narrowing its resource envelope from 72.4 trillion shillings in the current year to 69.4 trillion shillings. Within this tighter budget, the administration is prioritizing sectors deemed essential for its tenfold growth strategy and the transition to commercial oil production.
Funding Surge for Oil and Transport
The sustainable extractives industry is the largest beneficiary of the new proposal. Funding for the sector is projected to nearly double, rising to 1.7 trillion shillings. This increase is intended to accelerate the completion of the East African Crude Oil Pipeline and various mineral quantification projects across the country.
Infrastructure also remains a protected priority. The integrated transport budget is set to rise by 6% to 6.8 trillion shillings, with a focus on rehabilitating the Meter Gauge Railway and road networks critical for trade and industrial movement.
Sharp Cuts to Human Capital and Housing
To accommodate these investments, the government has proposed significant reductions in social service spending. Human capital development, which encompasses both the health and education sectors, is slated for a 14.2% cut. The allocation will drop from 11.5 trillion shillings in the 2025-2026 period to 9.9 trillion shillings in the upcoming fiscal year.
Furthermore, the budget for sustainable urbanization and housing will be cut by half, plunging from 1.5 trillion shillings to roughly 650 billion shillings. This reduction will likely scale back infrastructure projects in secondary cities.
Economic Outlook and Fiscal Discipline
Finance ministry officials, led by Permanent Secretary Dr. Ramathan Ggoobi, argue that these targeted investments are necessary to support a 10.4% GDP growth rate by the end of the fiscal year. The government believes focusing on value addition in minerals and oil will ultimately provide the revenue needed to fund social services in the future.
However, analysts from the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) warn that while oil revenues present a transformative opportunity, the government must ensure transparent management and social equity.
Economist Stephen Kaboyo noted that despite the promising growth, the government faces persistent fiscal pressures and high debt levels. He emphasized the need for fiscal discipline to ensure that the “win” for infrastructure does not come at too high a cost for the average citizen.
Parliament is expected to complete its review and approval of the framework paper by the end of January.
