Govt calls for strategic shift in Uganda’s service sector to meet transformation strategy

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The Government has urged policymakers, development partners and the private sector to reposition the service sector as a central driver of economic transformation, warning that continued reliance on informal, low-productivity activities threatens the country’s long-term growth and employment targets.

Speaking during a Pre-APEX meeting in Kampala on Tuesday, September 30, 2025, Haji Yunus Kakande, the permanent secretary in the Office of the President and chairperson of the APEX Platform Technical Leadership Committee, said while the service sector now contributes nearly half of Uganda’s GDP, its growth has not been matched by corresponding improvements in job quality, productivity, or inclusiveness.

“This is the contradiction we must confront: Robust sectoral growth without transformation in jobs, productivity and equity,” Kakande said. 

“If services remain dominated by low-wage, informal activities, we risk an economy where GDP expands, but household incomes and livelihoods stagnate.”

The meeting, which precedes the formal APEX Forum chaired by President Yoweri Museveni, brought together ministers, Members of Parliament, permanent secretaries, heads of agencies and development partners to discuss a 15-year performance review of Uganda’s service sector (2010–2025).

Kakande said the findings in the draft report reveal that the service sector is the largest employer of Uganda’s urban population, encompassing areas such as ICT, transport, education, tourism, finance and the creative industries.

However, despite this expansion, too many Ugandans, especially the youth, remain trapped in informal, low-value work such as the bodaboda industry, which is now the country’s second-largest employer.

“The bodaboda industry illustrates both the scale and the limitations of informal sector employment. It absorbs labour but offers limited income security or productivity,” he noted.

The study presented during the meeting identified several key constraints to service sector transformation:

-Limited job absorption capacity and over-reliance on informal enterprises.

-Persistent skills mismatches, leaving many young Ugandans unprepared for modern service roles.

-Under-leveraging of high-value services such as fintech, logistics, and the creative economy.

-Uneven regional development, with benefits skewed towards urban areas.

-Low investment in technology and innovation.

-Institutional and regulatory inefficiencies.

Kakande stressed that these gaps demand urgent policy and structural reforms if the country is to achieve its 10-Fold Growth Strategy, a government plan to grow Uganda’s GDP from $50 billion to $500 billion within a generation.

“The Government of Uganda is clear on the way forward,” he said. 

“We must deliberately move beyond low-productivity activities and invest in high-value sub-sectors that can generate wealth, create decent jobs, and drive global competitiveness.”

He called for stronger collaboration among APEX Core Institutions—such as the National Planning Authority (NPA), Ministry of Finance, Office of the Prime Minister, Ministry of Public Service, Uganda Bureau of Statistics (UBOS), and others—urging them to turn the study's evidence into “bold policy shifts and institutional reforms.”

The Pre-APEX discussions are expected to feed into a final report to be presented to President Museveni and the Cabinet for adoption and integration into national planning and budgeting frameworks.

“Let this not be just another policy dialogue,” Kakande concluded.

“Let it be a turning point that enables the service sector to become a strategic engine of transformation for Uganda.”