Museveni calls for rethink on hotel taxes to propel tourism as an export industry
Beyond taxation, President Museveni also questioned the prevailing financing models for tourism businesses. He argued that the sector, as an export industry, should not be compelled to rely on high-interest commercial bank loans.
President Yoweri Museveni has strongly advocated for a fundamental shift in how Uganda’s tourism sector, particularly hotels, is taxed and financed, asserting that it is an “export industry” and should be treated as such. His remarks came during a high-level meeting with officials from the Uganda Tourism Association (UTA) at State House Entebbe on Tuesday.
The President expressed significant concern upon learning that hotels, which he described as the “backbone of tourism,” are currently subjected to domestic-style taxes. “Tourism is an export business because tourism is like the exports, it’s not an import, it’s an export,” President Museveni stated. He drew a parallel to Uganda’s dairy industry, remarking, “You are exporting a service, like we are exporting milk. Me, I am a man of milk as you know, so our milk is going out and other products. And we don’t tax exports. So, this taxing of hotels the way you are talking about is really not correct.”
He admitted his prior unawareness of these specific tax burdens on hotels, emphasizing his view that the sector’s primary function is as an export earner.
Beyond taxation, President Museveni also questioned the prevailing financing models for tourism businesses. He argued that the sector, as an export industry, should not be compelled to rely on high-interest commercial bank loans. Instead, he proposed that tourism enterprises access more affordable capital through the Uganda Development Bank (UDB), mirroring the approach taken with manufacturing factories.
“If factories don’t borrow from commercial banks, why do you want tourism businesses to borrow from commercial banks? How will they succeed? It’s not correct, you should be dealing with UDB,” he asserted, promising to address these as “policy issues.”
The meeting was initiated following a request from Ms. Yogi Biriggwa, President of the Uganda Tourism Association. Ms. Biriggwa outlined a comprehensive appeal for structured support, including a direct funding request of Shs 800 million annually for the next three years.
This funding, she explained, is crucial for strengthening the UTA Secretariat and implementing priority reforms aimed at enabling the association to act as a unified voice for the private sector in tourism, aligning with the National Development Plan IV and Uganda’s ambitious target of achieving USD 4 billion in annual tourism receipts by 2030. The President welcomed the proposal, promising “orders in writing” after reviewing the submitted document.
Ms. Biriggwa also presented a detailed snapshot of Uganda’s tourism industry, highlighting its robust recovery from the COVID-19 pandemic, attributing this success to deliberate efforts by the President, government, and the Ministry of Tourism, Wildlife and Antiquities. According to figures cited from the FY2025/26 Budget Speech, tourism earnings surged by 13.1% to reach $1.52 billion in the 12 months leading up to March 2025.
Tourist arrivals increased by 7.7% to 1.37 million, while domestic visits to national parks saw a significant 15.7% rise. Uganda now ranks 7th in Africa for MICE (Meetings, Incentives, Conferences, and Exhibitions) tourism, bolstered by investments such as the new Speke Resort Convention Centre.
Despite these positive trends, Ms. Biriggwa underscored persistent structural constraints, particularly the critical issue of access to affordable finance. She pointed out that commercial interest rates in Uganda hover between 20% and 25%, with even government-supported lenders like UDB and the Microfinance Support Centre offering rates of 12% to 16%, which remain “too high” for the sector.
UTA’s findings revealed that tourism receives a mere 3% of all private sector credit. In 2023, the sector received only Shs 16.84 billion, a meager 1.3% of Uganda Development Bank’s total Shs 610 billion disbursements. Compounding the challenge, the non-performing loan rate in the tourism sector stood at 12.1% as of May 2024, more than double the national average, indicating the strain of current financing conditions.
Regarding public funding, Ms. Biriggwa acknowledged a significant increase from Shs 289.6 billion in FY2024/25 to Shs 430 billion in FY2025/26, along with a substantial Shs 2.2 trillion earmarked for supportive infrastructure like roads, ICT, and security.
However, she argued that despite contributing approximately 5% to the national GDP, tourism still receives less than 1% of the total national budget. To align funding with the sector’s economic weight, UTA proposed increasing direct funding to at least 1% of the national budget, which would bolster destination marketing, product development, quality assurance, and skilling initiatives.
In response to calls for improved connectivity to high-value tourist destinations, President Museveni highlighted ongoing infrastructure development, especially in air transport. He mentioned projects like the airport in Kidepo, a collaboration with the government of Sharjah, and developments in Kihihi in the west.
He also noted the potential for developing airstrips at Kakuba (for Murchison Falls) and Mweya, along with plans to build international-standard infrastructure in Kasese, Arua, Kayonza, Kihihi, and Kidepo using domestic funds. “These tourists, they reach and need where they can land directly,” he said.
Concluding the meeting, President Museveni reiterated his commitment to thoroughly reviewing UTA’s recommendations and addressing the policy gaps identified. “I am going to take up all those because those are policy issues. Tourism is an export, and we should treat it that way,” he affirmed, signalling a potential paradigm shift in how Uganda supports its vital tourism sector.
The meeting was also attended by Hon. Martin Mugarra Bahinduka, the Minister of State for Tourism, Wildlife and Antiquities.
