Uganda’s economy continues to gain momentum, with the industrial sector emerging as a central driver of growth. As a key contributor to the nation’s GDP, the industrial sector has become a government priority, with efforts focused on fostering industrialization to lower production costs and enhance the competitiveness of Ugandan products in both domestic and export markets.
Among the primary costs affecting industrialization is the price of electricity—a concern that manufacturers have consistently and openly voiced. Reducing electricity tariffs for end-users has been a key aspiration of the NRM government, aimed at enabling industrialization as a vehicle for social and economic transformation.
His Excellency the President has reaffirmed his commitment to supporting industrialization by directing the reduction of electricity tariffs for manufacturing to 5 cents USD (UGX 185) per unit. These measures underscore Uganda’s strategic efforts to support its industrial sector and build a robust, diversified economy.
This vision was recently reinforced by the Electricity Regulatory Authority (ERA), which announced significant reductions in electricity tariffs for the first quarter of 2025 during a media briefing earlier this month.
ERA has progressively reduced electricity tariffs across all consumer categories while implementing targeted incentives to foster economic growth and enhance societal well-being. The industrial tariff reductions, in particular, are designed to improve the competitiveness of Ugandan-made goods within the East African region and beyond and support the nation’s broader socioeconomic transformation goals.
Under the revised tariff structure, Medium Manufacturing Consumers (Code 20.1) will pay UGX 417.8 per unit, reflecting a 6.7% decrease from the previous quarter, while Large Manufacturing Consumers (Code 30.1) will pay UGX 351.5 per unit, a 7.2% reduction. Extra Large Manufacturing Consumers will pay UGX 299.1, reflecting a 6.5% decrease. Additionally, large and extra-large industries benefit from an off-peak tariff ranging between UGX 235.9 and UGX 211.1 per unit. Although the target of 5 cents USD (UGX 185) has not yet been achieved, the ongoing efforts in that direction are evident.
A notable reform in the tariff structure is the recategorization of industrial tariffs, distinguishing between manufacturing and service-based consumers. Medium Service-based Consumers (Code 20.2) will pay UGX 434.5 per unit, while Large Service-based Consumers (Code 30.2) will pay UGX 367.1 per unit. This differentiation reflects the government’s commitment to prioritizing manufacturing—a critical driver of economic growth, job creation, export competitiveness, and foreign exchange earnings.
Overall, the new tariffs represent a weighted average reduction of 5.2% compared to Q4 2024 rates, translating into significant consumer savings of UGX 155 billion.
Complementing the tariff reductions is the declining block tariff structure for Large and Extra-Large Industrial Customers, an incentive encouraging increased electricity consumption. This enables manufacturers to scale up production while reducing per-unit costs. Notably, Uganda now boasts the most competitive off-peak industrial tariffs in the region, a significant achievement for the country’s industrial aspirations.
These reductions and reforms position Uganda as a competitive manufacturing hub within the region. Lower electricity costs will reduce production expenses, enabling Ugandan manufacturers to compete more effectively with regional counterparts. This, in turn, is expected to attract greater investment into the industrial sector, fostering innovation, technological advancement, and capacity expansion.
The impact of these changes will extend beyond the manufacturing sector. Increased industrial activity will stimulate demand for raw materials and services, creating opportunities for small and medium enterprises (SMEs) and strengthening local supply chains. Furthermore, job creation within the manufacturing sector will contribute to poverty reduction and improved livelihoods for Ugandans.
ERA’s forward-thinking measures underscore the critical role affordable and reliable electricity plays in industrial development and national competitiveness. As Uganda advances toward the ambitious goals outlined in Vision 2040, the manufacturing sector is poised to become a cornerstone of the country’s transformation. These tariff adjustments represent a significant step toward realizing a more industrialized and prosperous Uganda, with benefits rippling across all sectors of the economy.
By J. Julius Wandera
Director Corporate & Consumer Affairs