The construction industry is one of Uganda’s key economic drivers, yet many contractors still struggle with access to affordable financing. From delayed government payments to high commercial loan rates, firms are often forced into cash flow crises that stall projects and weaken competitiveness.
At Smeaton Constructions, we understand the challenges local contractors face and the opportunities that financing reform could unlock. Here’s an in-depth look at the reforms shaping Uganda’s construction finance landscape and what they mean for the future.
The Current Funding Crisis
Uganda’s government currently owes contractors an estimated UGX 1.351 trillion, a debt that has paralyzed many firms and reduced trust in the sector. Without timely payments, contractors struggle to pay workers, import materials, and deliver projects on schedule.
Foreign competitors also hold an advantage because they can access loans at much lower interest rates compared to Ugandan firms. This imbalance continues to erode the growth potential of local companies.
👉 Read more on government arrears here.
Government Financing Reforms Underway
Recognizing these challenges, Uganda is beginning to introduce reforms:
- Bid Eligibility Rule: Contractors must now complete 75% of ongoing projects before applying for new ones, ensuring efficiency and reducing backlog.
- Expanded Contractor Financing: The Shadow Minister has urged that Uganda Development Bank’s contractor funding should increase from UGX 150 billion to UGX 500 billion, with reduced interest rates as low as 5%.
👉 Read the full proposal here.
In addition, Uganda’s FY 2025/26 budget allocated UGX 6.92 trillion for integrated infrastructure, with financing strategies including concessional loans, PPPs, Sukuk bonds, and diaspora bonds.
👉 Explore the Uganda 2025/26 Budget Brief.
Financial Institutions Supporting Contractors
- Uganda Development Bank (UDB) offers working capital, trade finance, and guarantees for local contractors.
- Uganda Road Fund (URF) provides a dedicated revenue stream for road maintenance projects.
These initiatives, combined with stronger procurement systems, could help stabilize cash flow and reduce reliance on costly commercial loans.
How Smeaton Constructions Can Adapt & Thrive
At Smeaton Constructions, we are committed to:
- Leveraging financing schemes like UDB to sustain quality delivery.
- Partnering with institutions such as the Private Sector Foundation Uganda to advocate for contractor-friendly reforms.
- Investing in technology, transparency, and sustainability to remain a trusted leader in Uganda’s construction sector.
For a deeper look at our work in modular construction and sustainable housing, explore our blog section.
Conclusion
Financing reform is more than a policy change it’s the lifeline contractors need to deliver faster, safer, and more affordable projects across Uganda. With reforms underway and institutions stepping in, the future of Uganda’s construction industry is poised for stronger, more resilient growth.
At Smeaton Constructions, we believe that with the right financing support, Ugandan contractors can compete on a global stage and deliver infrastructure that transforms communities.
📞 Contact Smeaton Constructions
Ready to build with us or discuss financing opportunities? Reach out today:
- Website: smeatonconstructions.com
- Email: smeatonconstructions.ac@gmail.com
- Phone: +256 758 821 603
- Location: Kampala, Uganda
Smeaton Constructions – Building Trust, Delivering Excellence.