The Secretary in the Office of the President, Mr Yunus Kakande, has stated that low wages and widespread informal activities pose significant obstacles to the growth of the service sector.
Speaking at the pre-Apex dialogue on service sector performance analysis in Kampala on Friday, Kakande noted that despite the sector’s significant contribution to Uganda’s GDP, its growth has not been matched by corresponding improvements in quality, productivity, and inclusiveness.
“This is the contradiction we must confront, robust sectoral growth without transformation in jobs, productivity, and equity,” he said. He added, “If services remain dominated by low-wage, informal activities, we risk an economy where GDP expands, but household incomes and livelihoods stagnate.”
Kakande highlighted that the service sector is the largest employer, yet many people, especially youth, remain trapped in informal, low-value work, such as the boda boda industry.
“The Boda Boda industry illustrates both the scale and the limitations of informal sector employment; it absorbs labor but offers limited income security and productivity,” he said.
Minister of State for Economic Monitoring, Beatrice Akello, underscored the importance of strengthening public service delivery at the grassroots level, specifically highlighting understaffing inefficiencies.
“We have candidly recognized, service-led growth has not always delivered the broad-based transformation that Ugandans expect. Growth has often outpaced structural change. Productivity exists in pockets, but serious gaps remain,” she said.
Akello added, “The most urgent of these is the human resource gap, particularly in critical areas such as primary health care. While the productivity of health services is evident, staffing shortages continue to undermine delivery. If left unaddressed, these gaps not only weaken our health outcomes but also have ripple effects on the entire economy, including trade and other service subsectors.”
Uganda’s service sector has experienced significant growth over the past 15 years, now contributing nearly 50 per cent to the country’s GDP. The sector employs millions of Ugandans across diverse industries, including ICT, finance, trade, tourism, education, healthcare, transportation, logistics, and the creative arts.
Kakande reaffirmed the government’s commitment to implementing urgent policy and structural reforms to revamp.
“Government is clear on the way forward; we are deliberating to move beyond low-productivity activities and invest in high-value subsectors that can generate wealth, create decent jobs, and drive global competitiveness.”