nformality in Uganda accounted for 55 percent of the country’s economy.  This 4 percent increase in informality partly explains the persistent low tax-to-GDP ratio registered over the years. Additionally, the share of informal employment in total employment increased from 90.7 percent in FY 2016/17 to 92 percent in FY2020/21 (NLFS, 2021).

This policy brief presents the key drivers of informality in Uganda among informal businesses, household activities,

and workers. The findings show that informality is driven by perceptions of formalisation costs, regulatory enforcement

gaps in land and labour, unfavourable business environment and perceived benefits from staying informal.  

Addressing informality therefore requires a progressive, incentive-based approach that involves more awareness campaigns informing businesses about costs, processes and benefits of formalisation and increasing budget allocation to key regulators of land and labour.

For more insights, please visit: https://eprcug.org/publication/what-are-the-key-drivers-of-ugandas-persistent-informal-sector