The informal economy in Uganda plays a significant role in employment and household income across the country. According to the International Labour Organization (ILO), the majority of workers in Uganda operate in informal jobs, including street vendors, small-scale farmers, artisans and micro-entrepreneurs. While these activities provide income opportunities, many workers face challenges such as limited access to credit, training and legal protections. In response, the government and development partners have introduced initiatives designed to strengthen informal businesses and help individuals transition into more stable economic opportunities.

Parish Development Model

One policy initiative addressing the informal economy in Uganda is the Parish Development Model. Launched by the government of Uganda in 2022, the program aims to help subsistence households participate more actively in the country’s money economy.

The Parish Development Model focuses on delivering financial services, agricultural support and business development resources at the parish level. Through local savings groups and small business financing, the initiative encourages entrepreneurship among low-income households. By supporting small-scale economic activity within communities, the program aims to improve income stability and reduce rural poverty.

SENTE

Another initiative addressing the informal economy in Uganda is the Supporting Jua-Kali Enterprises to Transition into the Formal Economy (SENTE) Program. The SENTE Program provides tools, equipment and training to informal business groups such as mechanics, metalworkers and carpenters.

These programs focus on helping workers increase productivity and expand their operations. Access to improved equipment allows artisans to produce goods more efficiently and improve product quality. In turn, these changes help small enterprises increase income and create employment opportunities within their communities.

Affordable Empowerment Credit Program

Financial inclusion initiatives also play a role in supporting informal workers. The Affordable Empowerment Credit Program offers low-interest loans designed to help individuals start or expand small businesses.

Access to credit remains a barrier for many informal entrepreneurs who lack traditional banking relationships. Programs that provide affordable financing allow small business owners to purchase materials, invest in equipment and grow their enterprises. These financial tools can reduce economic vulnerability while encouraging long-term economic participation.

Skilling Uganda Program

Workforce training initiatives also contribute to strengthening the informal economy in Uganda. The Skilling Uganda Program focuses on vocational education and technical skills development for young people and unemployed workers.

Through training in trades such as construction, mechanics and tailoring, the program helps individuals gain practical skills that can support income generation. Many graduates use these skills to establish small businesses or secure employment in local industries. By expanding access to technical education, Skilling Uganda supports workforce development and economic mobility.

Looking Ahead 

Programs supporting the informal economy in Uganda demonstrate how policy initiatives can help strengthen small businesses and improve economic stability. Government initiatives such as the Parish Development Model, SENTE Program, Affordable Empowerment Credit Program and Skilling Uganda Program provide financial resources, training and equipment that support workers seeking to expand their economic opportunities.

As these initiatives continue to develop, they highlight the importance of supporting informal workers as part of broader poverty reduction strategies. Strengthening the informal economy in Uganda can help expand employment opportunities, increase household incomes and support long-term economic development across communities.

– Jason Hill

Jason is based in Fullerton, CA, USA and focuses on Business and Good News for The Borgen Project.

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