As Uganda prepares for the Financial Year 2026/27, one feature of the national budget stands out for its consistency: the theme. For the fourth consecutive year, the government has retained its focus on: ‘Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation and Market Access.’
The repetition of this theme has triggered debate among economists, policymakers, and citizens. Some question whether it reflects slow progress in implementation, while others see it as a deliberate long-term strategy aimed at steadily transforming Uganda into a modern, productive, and prosperous economy.
History of development planning
Uganda’s development journey has been characterised by several economic planning approaches since independence.
Between 1962 and 1971, the country pursued a mixed economy model that combined public and private sector participation. The 1970s saw the disruption of this approach through economic policies implemented during a period of political instability.
In the 1980s, Uganda adopted Structural Adjustment Programmes (SAPs) and later the Economic Recovery Programme (ERP) of 1987, both supported by international financial institutions, the International Monetary Fund and the World Bank. These reforms focused on liberalising the economy, privatising state enterprises and encouraging private-sector-led growth.
From 1997 to 2008, the Poverty Eradication Action Plan (PEAP) became Uganda’s overarching development framework. The PEAP was built on four key pillars: creating a framework for economic growth and transformation; ensuring good governance and security; increasing the ability of the poor to raise their incomes; and improving the quality of life of poor households.
The PEAP sought to reduce poverty while laying the foundation for Uganda’s transition into a middle-income country.
From poverty reduction to economic transformation
The government later replaced the PEAP with National Development Plans (NDPs), marking a shift from poverty reduction towards economic transformation.
National Development Plan I
The National Development Plan I (NDP I) from 2010/11-2014/15 aimed to accelerate socio-economic transformation and support Uganda’s Vision 2040.
Its objectives included increasing household incomes, expanding employment opportunities, improving infrastructure, strengthening education and health services, promoting science and technology, and enhancing governance and security.
National Development Plan II (2015/16-2019/20)
NDP II was guided by Uganda Vision 2040 and adopted the theme: ‘Strengthening Uganda’s Competitiveness for Sustainable Wealth Creation, Employment and Inclusive Growth.’
The focus shifted towards improving competitiveness and creating jobs through investment and productivity growth.
National Development Plan III (2020/21-2024/25)
The third plan emphasized: ‘Sustainable Industrialisation for Inclusive Growth, Employment and Wealth Creation.’ Industrialisation became the central strategy for driving economic growth and improving livelihoods.
The National Development Plan IV (NDP IV), covering the period 2025/26-2029/30, is the fourth in a series of six development plans designed to accelerate Uganda’s socio-economic transformation. It also marks the first of three five-year plans expected to drive the Ten-Fold Growth Strategy, which aims to double the size of the economy every five years.
The overarching goal of NDP IV is to achieve higher household incomes, full monetisation of the economy, and expanded employment opportunities as a foundation for sustainable socio-economic transformation. This will be pursued under the theme: ‘Sustainable Industrialisation for Inclusive Growth, Employment, and Wealth Creation.’
In this context, the government’s current monetisation agenda can be seen as a continuation of long-term policy efforts aimed at shifting Uganda from a predominantly subsistence-based economy to a modern, market-driven economy.
Understanding full monetisation
According to the Finance Ministry, full monetisation refers to the process of transitioning households from subsistence production and informal economic activities into the formal, cash-based economy.
The ministry’s principal communications officer, Mr Apollo Munghinda, says the government has maintained the same budget theme because the work remains unfinished.
‘Full monetisation of the economy is about graduating households from informal and subsistence levels into a formalised, cash-generating and commercial economy,’ he explains.
Government estimates indicate that approximately 67 percent of Ugandans participate in the money economy while 33 percent remain largely dependent on subsistence activities.
To accelerate the transition, the government has invested heavily in programmes such as the Parish Development Model (PDM), Emyooga, commercial agriculture initiatives and the capitalisation of the Uganda Development Bank.
Munghinda says these interventions form part of the broader tenfold growth strategy aimed at expanding Uganda’s economy to $500 billion by 2040.
Data from the 2024 National Population and Housing Census conducted by the Uganda Bureau of Statistics (UBOS) provides important insights into Uganda’s economic transformation journey.
Uganda’s population stood at 45.9 million people in May 2024, growing at an average annual rate of 2.9 percent.
The census found that half of Uganda’s population is below 18 years; 74 percent of persons aged 10 years and above are literate; 81.1 percent of households have access to improved water sources; 53.4 percent have access to electricity. The unemployment rate stands at 12.3 percent; 42.6 percent of youth aged 15-24 are not in employment, education or training.
Most significantly, the census revealed that 33.1 percent of households remain in the subsistence economy, while 66.9 percent participate in the money economy.
Are government programmes reaching enough people?
The census also raises questions about the reach of government wealth creation programmes. Among adults surveyed, only 0.4 percent reported benefiting from Emyooga; National Agricultural Advisory Services (NAADS) reached 0.9 percent; Operation Wealth Creation benefited 0.4 percent; Uganda Women Entrepreneurship Programme reached 0.5 percent of women.
Although 23.5 percent of households in the subsistence economy reported benefiting from the Parish Development Model, the overall figures suggest that many Uganda to benefit from government interventions aimed at commercialising livelihoons have yet to directly benefit from government interventions aimed at commercialising livelihoods.
Why the same budget theme?
Dr Brian Sserunjogi, a research fellow in the Macroeconomics Department at the Economic Policy Research Centre (EPRC), argues that the consistency reflects strategic focus rather than policy stagnation.
According to him, the National Development Plan framework shifted government thinking from poverty reduction to rapid economic growth through infrastructure development and productive investment.
‘Government wants to bring more Ugandans into productive economic activity where they can earn income, save, invest and contribute to economic growth,’ he says.
Research suggests that several Ugandans can spend extended periods without participating in cash transactions, highlighting the challenge the government seeks to address.
The Parish Development Model has become the flagship vehicle for achieving this objective, with Shs3.2 trillion already invested.
Dr Sserunjogi believes the government is concentrating on four strategic sectors: Agro-industrialisation; Minerals; Tourism; Oil and gas and Science, Technology and Innovation. These sectors are expected to create jobs, boost exports and stimulate economic growth.
Economists argue that successful monetisation could have far-reaching effects on Uganda’s development.
Greater participation in the cash economy could increase household incomes; expand savings and investment; improve access to education and healthcare; reduce poverty, and expand government tax revenues.
A broader tax base would enable the government to finance more development projects while reducing dependence on borrowing.
Challenges
Despite the potential benefits, experts caution that monetisation alone will not automatically transform the economy.
Dr Sserunjogi argues that implementation remains the greatest challenge. ‘Business as usual will not be sufficient,’ he warns.
He says Uganda must address structural bottlenecks, including: high transport costs; expensive electricity; weak agricultural extension services; corruption and inefficiencies in public institutions.
He also warns that distributing money without improving productivity could undermine the objectives of programmes such as PDM.
‘If money is simply distributed without addressing productivity and accountability challenges, beneficiaries may consume the funds and return to their previous circumstances,’ he says.
Monetisation is a process, not an event
Dr John Mutenyo, a senior lecturer at Makerere University’s College of Business and Management Sciences (CoBAMS), agrees that monetisation is achievable but emphasizes that it cannot happen overnight.
‘Full monetisation cannot happen immediately. It is a gradual process, not an instant one,’ he explains.
According to Dr Mutenyo, no country in the world is entirely monetised. Even advanced economies maintain small subsistence sectors.
He argues that Uganda must pursue a combination of fiscal, monetary and structural policies rather than relying solely on one programme.
‘Reducing the subsistence sector is important because it expands economic participation in the formal market system and broadens the tax base,’ he says.
He points to efforts to formalise street vending and informal businesses as examples of practical steps towards monetisation.
Many of these operators were conducting business but were not visible to fiscal authorities and could not easily be taxed. By moving them into formal markets, the government can identify, regulate, and tax them,’ he said.
He noted that many informal operators earn incomes while benefiting from public services such as roads, security, and infrastructure without contributing directly to tax revenue.
‘Bringing them into the money economy allows the government to benefit through taxation. That is partly what reducing the subsistence sector means,’ he explained.
Road to a $500 billion economy
President Yoweri Museveni has repeatedly emphasized that household participation in wealth creation programmes remains central to Uganda’s economic future.
As Uganda enters its fourth consecutive year under the same budget theme, the message from policymakers is unmistakable: economic transformation is a long-term project requiring patience, consistency and sustained investment.
Whether full monetisation becomes the catalyst for Uganda’s economic breakthrough will depend not on the vision itself, but on the effectiveness of its implementation.
Since the Government adopted the vision of achieving full monetisation of the economy, national budgets have expanded, with increasing emphasis on programmes aimed at transforming household incomes. Among these interventions, the Parish Development Model (PDM) has emerged as the flagship strategy for fighting poverty, creating wealth, and integrating millions of Ugandans into the money economy.
Over the last three financial years, the government has allocated and released money to support PDM implementation across the country. While many beneficiaries have reported improvements in household incomes and livelihoods, concerns remain about the low recovery rate of funds, misuse of resources, and diversion of money from its intended purpose.
Speaking during the State of the Nation Address at Kololo Ceremonial Grounds on June 4, President Yoweri Museveni reaffirmed the government’s commitment to the programme, declaring that all households with land should access low-interest capital through PDM within the next five years.
‘There is already Shs557 million in the parish. It has reached 3.7 million households,’ the President noted, emphasizing that the government would continue providing Shs100 million annually per rural parish and Shs300 million per urban ward, in addition to facilitation funds for local leaders.
The President also raised concerns regarding the utilisation of funds previously allocated under Emyooga, another wealth-creation initiative that has received approximately Shs760 billion. Questions remain over how many associations have benefited and what measurable impact the funds have created at the grassroots level.