Uganda's Industrial Drive Stalled: Auditor General Flags Poor Returns on Shs1.3 Trillion Investments

The Auditor General’s latest report paints a concerning picture of Uganda’s industrialization efforts, highlighting underperformance by the Uganda Development Corporation (UDC) and the Uganda Investment Authority (UIA).

Investments channeled through these agencies, amounting to approximately Shs1.3 trillion over the past decade, have generated meager financial returns. The report indicates that in the 2024/25 financial year, 22 UDC-backed enterprises yielded only Shs1.4 billion in income, a return of about 0.09 percent.

Further compounding the issue, eight entities that received Shs23 billion in direct loans from UDC have defaulted on their repayments. The audit also found that a majority of sampled active enterprises recorded net losses for consecutive years, with one entity remaining non-operational four years after receiving Shs3.1 billion in public funds.

The report suggests that UDC’s operational independence is hampered by government directives that earmark capital for specific projects, effectively tying up public funds in ventures that struggle to generate returns or repay loans.

Similar challenges plague the Uganda Investment Authority (UIA), which is tasked with developing industrial parks. Data shows that only 49 percent of companies allocated land within these parks are fully operational. The remaining 51 percent face delays due to inadequate essential infrastructure, including power, roads, and drainage.

Additionally, the UIA has fallen behind on establishing new industrial parks as per a presidential directive, and has failed to secure land titles for vast tracts of land, raising risks of encroachment.

The Kampala Industrial and Business Park in Namanve is also experiencing significant delays, with a major project funded by a €215 million credit facility only 59 percent complete by mid-2025, pushing its expected completion to March 2028.

The Auditor General emphasizes that these findings necessitate improved project planning, enhanced institutional autonomy, robust risk management, and timely infrastructure development to ensure public investments achieve their intended economic objectives.

Source: Nile Post