By Naome Namusoke/ KMA Updates
Kampala- Uganda’s business community has raised concerns about the rising cost and increasing complexity of business registration and taxation. While more Ugandan enterprises are now entering the formal sector, traders argue that the real burden lies beyond registration in the multiple taxes, licenses and compliance layers that continue to choke small businesses.
These concerns were raised during a policy dialogue organized by the Economic Policy Research Centre (EPRC) in partnership with the Ministry of Finance under the theme “Beyond Registration – Does Regulation Drive Uganda’s Informal Sector?”
Uganda’s informal sector remains the backbone of the economy, employing the majority of the population. However, experts estimate that over 60% of informal businesses remain unregistered, limiting their access to credit, structured markets, financial services, social protection and government development programs.
Despite steady improvements in business registration numbers, many entrepreneurs say the journey after registration is where the real struggle begins.
At the dialogue, Issa Sekitto, Acting Chairperson of KACITA, voiced growing frustration from small traders, especially those operating in downtown Kampala. He said the number of regulatory requirements, forms and licenses keeps increasing, along with taxes that are now affecting business survival.
“Small traders are overwhelmed by the number of licenses, taxes and forms. Many are being pushed out of business instead of being supported to grow.”
Sekitto also noted that while government wants businesses to formalize, the environment must enable operations rather than push traders further into the shadows.
In response, Ministry of Finance Commissioner Joseph Ennyimu acknowledged the challenges but said government is already acting to make the business climate more supportive.
He noted that the country’s National Enterprise Development Strategy recognizes that reducing the cost of doing business is key to increasing productivity and encouraging formalization.
“We need a regulatory system that is responsive to the realities of small businesses. We are reviewing licenses, eliminating non-essential fees, and supporting self-regulation to reduce bureaucracy.”
Enyimu highlighted ongoing government reforms, including the shift to online registration which has led to a 19% increase in new company registrations, integration with national identification systems to improve tracking of enterprises and workers, the rollout of PDM and other productivity programs to help household businesses scale up, and improved farmer registration that has brought more than 70% of active farmers into traceable systems.
Enyimu said the government will also intensify enforcement for businesses that deliberately avoid the system. This includes firms evading taxes, smuggling goods or ignoring payroll obligations.
However, he emphasized that the goal is not punishment, but facilitating a fair and transparent business environment where compliance pays off.
Despite progress, significant gaps remain as the Ministry of Finance reports that only about 10% of businesses keep complete financial and operational records, a situation that limits taxation, hinders certification and licensing, weakens business planning and sustainability, and ultimately affects long-term competitiveness.
Stakeholders at the dialogue recommended several interventions, including:
- Simplified business compliance processes
- Reduced duplication in licensing
- Greater public sensitization
- Stronger capacity-building for small enterprises
Sarah Ssewanyana the Executive Director from the Economic Policy Research Centre stressed that while URSB plays a major role, government must go beyond registration and address the bottlenecks that hinder progression into the formal economy.
State Minister for Economic Monitoring, Beatrice Akello, urged government to enhance awareness and ensure that communities clearly understand the value and requirements of formal business operations.
As Uganda works toward a more structured and productive economy, the balance between enforcement and business growth remains delicate.
Traders insist that regulation should support expansion, protect small businesses and grow the tax base, rather than push entrepreneurs further into informality.
What remains clear is that while Uganda has improved access to registration, the next step is ensuring that formalization is not a burden but a pathway to prosperity for the country’s millions of small enterprises.