Toward Universal Health Coverage: Uganda’s Plan to Mobilize Domestic Health Funding

A groundbreaking study released in 2025, led by Uganda’s Ministry of Health in partnership with the World Bank Group, the Global Financing Facility, and supported by the ThinkWell Institute, lays out a strategic roadmap for expanding fiscal space for health. The report responds to the country’s ongoing struggle with underfunded health systems, growing population pressures, and the dual burden of disease, both communicable and non-communicable. Despite some progress in healthcare outcomes, Uganda continues to face high out-of-pocket expenditures and a heavy reliance on external donor support. With a population nearing 46 million and projected to exceed 70 million by 2040, the demand for quality, accessible healthcare is rising sharply. The study identifies five strategic pathways to enhance fiscal space: macroeconomic stability, budget reprioritization, sector-specific domestic resource mobilization, reduced reliance on external aid, and improved efficiency in resource use. These are essential pillars in Uganda’s march toward achieving universal health coverage.

Macroeconomic Momentum Offers an Opening

Uganda’s economic trajectory is promising. Real GDP is projected to grow at an average annual rate of 7.6% from 2025 to 2029. If this growth is coupled with tax reforms and better revenue collection, the government could increase its tax-to-GDP ratio from the current 12.5% to at least 16%, in line with regional benchmarks. The government’s general revenue as a share of GDP could also rise to 18%. Such improvements would create the fiscal space needed to boost health spending without compromising fiscal stability. Government expenditure per capita is expected to climb, supported by reduced debt levels, a trend that provides a fiscal cushion for sectors like health. However, Uganda must ensure that this growth translates into direct investments in healthcare. The study notes that health spending has historically shown low responsiveness to economic expansion, with an elasticity of only 0.76 compared to the low-income country average of 1.0. To correct this, the government will need deliberate policy commitments to prioritize health within the national budget.

Reprioritizing Budgets: A Strategic Political Choice

At present, Uganda allocates just 8% of its national budget to health, well below the Abuja Declaration’s 15% benchmark. The study recommends three reprioritization scenarios: raising this share to 10%, 12%, or 15%. The most ambitious scenario could yield an additional US$1.468 billion annually by 2029/30, equivalent to US$26.3 per capita. This would substantially reduce the gap toward Uganda’s health financing targets. However, the report emphasizes that reprioritization must be backed by strong evidence-based advocacy and political will. Policymakers need to see clear links between increased health spending and measurable human capital development. The study calls for health budget targets aligned with national priorities and urges Uganda’s Ministry of Health to proactively engage Parliament and the Ministry of Finance to secure increased allocations. It also highlights the need to protect the health budget during economic downturns through ring-fencing mechanisms.

Health Taxes and Insurance: Tapping Domestic Potential

The report explores innovative domestic revenue sources, particularly health taxes and insurance contributions. A 20% increase in excise taxes on tobacco, alcohol, and sugary drinks could generate US$156.6 million annually by 2029/30. This measure could also reduce consumption of harmful products, with a projected 5% drop in beer demand and 3% for soft drinks and cigarettes. Though conservative compared to the global recommendation of a 50% hike, this policy still holds substantial promise for both public health and revenue mobilization. Another proposal involves levying a 5% charge on third-party motor vehicle insurance premiums, potentially raising US$1.3 million per year. These funds could be directed toward a dedicated Motor Vehicle Accident Fund to support emergency and rehabilitative care, a crucial need, given that road accidents contribute to nearly 45% of hospital admissions in Uganda. The study also revisits Uganda’s stalled National Health Insurance (NHI) scheme, which, although approved by Parliament in 2021, was later withdrawn due to stakeholder disagreements. While health insurance holds long-term promise for strategic purchasing and financial protection, the report advises that Uganda first conduct feasibility studies and actuarial evaluations before implementation.

Efficiency and Accountability: Saving What’s Already Available

Improved efficiency could be Uganda’s most immediate opportunity for progress. The report warns that without urgent reforms, up to US$660 million per year, or US$11.8 per capita, could be lost to inefficiencies such as health worker absenteeism, corruption, and underutilization of funds. Only 85% of government health allocations and 68% of on-budget donor funds were spent in 2022/23, with procurement delays being a major culprit. The report calls for tighter governance, performance monitoring, and digital tracking of drug supply and staff deployment. Development assistance for health is also under scrutiny. As U.S. aid shrinks and Uganda edges toward lower-middle-income status, external financing will inevitably decline. Currently, over 42% of Uganda’s health spending comes from donors, with the U.S. contributing a majority. The study urges development partners to transition toward on-budget support and proposes a virtual pooling mechanism for better coordination. The government is encouraged to adopt the Lusaka Agenda and develop a comprehensive transition plan from DAH to domestically funded systems.

A Turning Point for Uganda’s Health Future

Ultimately, the report concludes that while macroeconomic growth provides a critical window, Uganda’s health financing reform depends on strategic reprioritization, innovation, and accountability. With coordinated effort and political commitment, Uganda can increase health expenditure from US$44 to US$73.1 per capita by 2029/30, exceeding its moderate health financing goal. However, this future hinges on whether reforms are implemented boldly and swiftly. The roadmap is clear, but the next steps require deliberate action and steadfast leadership. Uganda’s path to universal health coverage may be complex, but with domestic solutions and a shared vision, it is within reach.