New e-accounting system targets Uganda’s informal business sector

KAMPALA - Uganda has launched a new digital accounting tool aimed at helping millions of small informal businesses keep proper financial records, access formal financing and gradually transition into fully compliant enterprises.

The platform, unveiled on May 21 by the Permanent Secretary and Secretary to the Treasury, Dr Ramathan Ggoobi, is part of a broader government strategy to formalise Uganda’s vast informal sector and strengthen revenue collection.

The tool was developed by the United Nations Conference on Trade and Development, commonly known as UNCTAD, under a technical support programme called Informality Management for Compliance and Revenue Mobilisation, or IMCORE.

Officials say the system is designed to simplify bookkeeping and financial reporting for small businesses that often operate without structured accounting systems.

The platform allows business owners to digitally track income, expenses and cash flow, records that are often required when applying for loans, filing taxes or assessing business performance.

For many small enterprises in Uganda, especially those operating informally, poor record-keeping has long remained a major obstacle to growth.

“Without proper records, businesses cannot assess performance, financial institutions cannot trust them, and tax compliance remains inconsistent,” Dr. Ggoobi said during the launch.

He described the tool as “a single window solution for both legal and fiscal formalization,” suggesting it could eventually help businesses integrate more easily into Uganda’s formal economy.

The launch reflects the growing pressure on governments across Africa to bring more informal businesses into regulated economic systems without overburdening small entrepreneurs already struggling with limited capital and unpredictable incomes.

Uganda’s informal sector is enormous. According to figures shared by the Ministry of Finance, the country has more than 1.8 million micro, small and medium enterprises, many of them operated by women, young people and refugees.

Together, they contribute 54.5% of Uganda’s Gross Domestic Product and account for 92% of employment.

Gross Domestic Product, or GDP, measures the total value of goods and services produced within a country and is commonly used to assess the size and performance of an economy.

Despite the sector’s importance, many informal businesses remain excluded from mainstream banking and government support systems because they lack proper documentation and financial records.

That exclusion often creates a cycle where businesses struggle to access loans, expand operations or qualify for investment opportunities.

The government believes better bookkeeping could help break that cycle.

Dr Ggoobi said strengthening financial management among small businesses is critical to Uganda’s long-term economic ambitions, including the government’s Ten-Fold Growth Strategy, an economic plan aimed at significantly expanding the size of Uganda’s economy over time.

The accounting platform was piloted among 30 small informal enterprises in Kampala before its public launch. According to the ministry, more than 490 small and medium enterprises have already tested the system, while 241 businesses have officially registered and created accounts on the platform.

Elena Botvina, an economic affairs officer in UN Trade and Development (UNCTAD) Division on Investment and Enterprise, said the system was designed to remain simple, affordable and accessible for small business operators.

“She said the tool is easily accessible & convenient & also cost-effective for business records keeping and reporting,” the ministry stated in its X post.

According to Botvina, the platform can also help businesses improve cash management, monitor expenses and increase revenues by giving owners a clearer picture of their financial performance.

The initiative comes at a time when Uganda is increasingly embracing digital systems across government services, taxation and financial management.

However, challenges remain as many small businesses still operate with limited internet access, low digital literacy and fears about taxation once they formally register. For some entrepreneurs, formalisation is viewed less as an opportunity and more as exposure to new regulatory costs.

Whether the platform succeeds may therefore depend not only on the technology itself, but also on whether business owners trust the system enough to adopt it.

Still, officials argue the tool could become an important bridge between survival-level entrepreneurship and sustainable business growth.

For millions of Ugandans operating small businesses, the shift from handwritten notebooks to digital accounting may appear modest.

However, for policymakers trying to expand financial inclusion and economic formalisation, it represents something much larger: an attempt to bring one of the country’s most economically important sectors into the centre of Uganda’s digital economy.