Uganda’s commitment to education as a driver of human capital development remains unquestionable. However, the numbers tell a different story, a story of a sector whose financing is stagnating while national priorities continue to expand, a story of crowded classrooms, a story of underpaid and demotivated teachers, a story that needs to be flipped for the mentioned commitment to result into tangible benefits.
Over the last five years, Uganda’s budget grew by an impressive 59 percent from Shs45.5 trillion in Financial Year (FY) 2020/2021 to Shs72.4 trillion in FY2025/2026. In contrast, the education budget increased by only 36 percent, from Shs3.7 trillion to Shs5.04 trillion.
This slower growth means, relative to the overall budget, education’s share continues to shrink even as the number of learners and the demand for better learning outcomes surge, which can be attributed to challenges in revenue mobilisation or poor prioritisation.
Domestic resources are the most reliable source of financing for education due to its predictability. Uganda’s domestic revenue has grown steadily, from Shs25.2 trillion in FY2022/2023 to a projected Shs37.2 trillion in FY2025/2026. One would think that this growth in both revenue and budget would match the growth in social sector financing but that is not the case.
Much of this growth in revenue is being swallowed by debt repayments with interest payments alone nearly doubling from Shs5.9 trillion in FY2022/2023 to Shs11.3 trillion in FY2025/2026 and public debt stock reaching Shs116.2 trillion in October 2025 up from Shs94.7 trillion in 2024 showing a 26 percent increase, a trend that is concerning.
Every shilling spent on debt interest is a shilling less for classrooms, teachers, and other education programmes. Uganda’s education sector remains reliant on external financing. Between FY2022/2023 and FY2023/2024, Shs456 billion (about 7.5 percent of the sector’s Shs6,075 billion financing) came from donors.
Over the past five years OECD-DAC countries provided roughly $821.4 million (Shs2.85 trillion), and Uganda is currently implementing donor-funded education projects worth about $345 million (Shs1.19 trillion). While these projects are critical, they also highlight a dependence that makes key reforms donor-driven and vulnerable to funding shocks, which create major education service delivery gaps.
To overcome, education financing challenges, Uganda needs to strengthen domestic resource mobilisation through a combination of tax policy reforms, administrative efficiency, and improved transparency.
The tax base must be broadened to bring new taxpayers. With a tax-to-GDP ratio below 14 percent, which is far below the Sub-Saharan African average of 18 percent, and 72 percent of businesses, 78 percent of the labour force, and over half of GDP in the informal sector, a significant share of the economy remains untaxed while overburdening the existing taxpayers.
By only reducing tax exemptions and redirecting the recovered revenue to education, the sectors financing could be substantially boosted.
In FY2022/2023 alone, the country lost Shs2.97 trillion in potential revenue through tax exemptions, according to the Tax Expenditure Report of 2024. This was equivalent to 71.2 percent of the Shs4.17 trillion allocated to education in that year. Yet there is no proof of economic benefits from these exemptions.
There is also a need to improve tax administration. Simplifying processes for small taxpayers and earmarking a portion of ‘sin taxes’ for education can boost revenues. With greater transparency, effective financial management, and citizen oversight, Uganda can build a resilient financing system that guarantees every child access to quality education.