For years, the relationship between Kampala’s thousands of small businesses and the city authority has largely been defined by the demand for a trading licence, fee, or tax.
But Kampala Capital City Authority (KCCA) is confronting a problem with that model.
A business that closes shortly after obtaining its licence does not remain a taxpayer. It does not employ more people, generate additional commercial activity, or provide the dependable revenue the city needs to finance services.
And keeping small businesses alive remains a considerable challenge.
SMEs have a median survival period of about 4.85 years, with approximately 46.9 percent exiting within their first five years.
It is this link between business survival and government revenue that KCCA is seeking to address through a strategy that increasingly views traders not merely as sources of taxes and fees, but as partners in economic development.
The intervention has started with 1,250 entrepreneurs undergoing an intensive five-day Business and Enterprise Start-up Tool training programme conducted by Enterprise Uganda at the National Business Development Services Centre of Excellence.
KCCA executive director Sharifah Buzeki says Kampala’s position as Uganda’s principal economic hub means the survival of businesses operating within the capital extends beyond individual entrepreneurs.
The taxpayer who disappears
For KCCA, the problem can sometimes be observed through something as basic as a trading licence.
A business opens, registers and obtains its licence. But when city officials return one or two years later, they sometimes discover that the enterprise has disappeared.
For the entrepreneur, that represents lost capital, income and potentially employment. For KCCA, it represents a taxpayer who has disappeared from the revenue base.
KCCA director of revenue collection Robert Nowere says they want their relationship with businesses to extend beyond demanding taxes and fees.
‘We are looking at you as partners in various respects,’ he says.
During the 2024/25 financial year, KCCA collected Shs127.6b against a target of Shs120b, supported by automation, administrative efficiencies, property revaluation, improved compliance and stronger enforcement.
But enforcement can only go so far if businesses themselves do not survive.
KCCA, therefore, wants to increase the number of sustainable enterprises capable of contributing revenue over longer periods.
Building sustainable businesses
Buzeki, however, challenges entrepreneurs to move beyond immediate survival and create enterprises capable of operating across generations.
Whether capital comes from salaries, loans, grants or government programmes such as the PDM and Emyooga, she says entrepreneurs should focus on multiplying it and building sustainable businesses.
Participants were trained in record-keeping, alternative sources of capital, managing partnerships and family enterprises, customer relationships and loan management.
Enterprise Uganda director general Charles Ocici says the objective should be businesses that remain operational long enough to grow, employ people and contribute consistently to economic activity.
‘A larger pool of sustainable businesses means more jobs … and, importantly, a wider and more reliable revenue base,’ he says.
However, survival comes with compliance, with Ocici saying that entrepreneurs must formalise and meet their tax obligations, and must not treat tax evasion or avoidance as a strategy for reducing business costs.
KCCA has also established a revenue public-awareness unit to help businesses strengthen financial management, formalisation, record-keeping and tax compliance.
The approach represents a longer-term revenue bet. Instead of concentrating exclusively on how much government can collect from a business today, KCCA is increasingly asking what must be done to ensure the same enterprise is still operating and paying taxes, years from now.
Thus, keeping businesses alive is no longer simply an entrepreneur’s problem; it is increasingly becoming a revenue strategy.