Kampala, April 14, 2026 Uganda’s manufacturing sector is facing mounting pressure that could slow economic growth and threaten jobs if urgent action is not taken, the Uganda Manufacturers Association (UMA) has warned.

Appearing before the Parliamentary Committee on Finance, Planning and Economic Development, UMA raised concern over rising production costs, policy uncertainties, and structural weaknesses that are increasingly weighing down the sector.

“We are reaching a breaking point if decisive measures are not taken,” UMA leaders told the Committee, warning that current conditions are becoming unsustainable for many manufacturers.

Manufacturing remains one of Uganda’s key economic pillars, contributing up to 16.5 percent of Gross Domestic Product (GDP), employing more than 1.3 million people directly, and generating exports worth approximately USD 2.9 billion. However, industry players say these gains are now under threat.

A major concern is the impact of global developments, particularly tensions in the Middle East, which have driven up fuel prices and disrupted supply chains. The resulting increase in transport and production costs is being felt across sectors such as steel, textiles, and pharmaceuticals.

For some businesses, the effects are already visible. Manufacturers report slowing production lines, shrinking profit margins, and growing uncertainty about future operations as input costs continue to rise.

At the same time, UMA pointed to domestic challenges that are limiting industrial growth. Chief among these is the size of Uganda’s informal sector, which accounts for more than half of the economy but contributes little in taxes. The Association warned that this imbalance places a heavy burden on compliant businesses while reducing government revenue needed to support development.

Other constraints highlighted include the high cost of borrowing, expensive and sometimes unreliable electricity, gaps in transport infrastructure, and limited access to diversified export markets. Frequent changes in tax policy and complex compliance systems were also cited as key concerns for investors.

Particular attention was drawn to proposed tax measures, including withholding tax on capital, which manufacturers say could discourage much-needed investment in a capital-constrained environment.

“Tax policy should support industrial growth, not make it harder for factories to survive,” UMA emphasized.

To address these challenges, the Association called for a set of targeted interventions. These include measures to stabilize production costs, expand the tax base through formalization of businesses, streamline tax systems, and invest more heavily in infrastructure and energy.

UMA stressed that strengthening manufacturing is essential for job creation, export growth, and the country’s broader development agenda under the National Development Plan IV, which aims to significantly expand the size of Uganda’s economy.

As Parliament considers the proposals in the context of the 2026/27 National Budget, industry leaders say the decisions taken now will be critical.