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Tourism operators under their umbrella body, the Uganda Tourism Association (UTA), are calling on banks and policymakers to rethink how the tourism industry is financed, arguing that the current lending system is holding many businesses back. The tourism SMEs say there is a fundamental mismatch between how Ugandan banks lend money and how tourism businesses earn it, particularly because the sector depends heavily on seasonal and unpredictable cash flows. 

Speaking at a tourism sector SME financing forum, Issa Kato, UTA Vice President, identified four major barriers facing tourism SMEs: lack of conventional collateral such as land titles, loan products based on rigid monthly repayments that do not match the industry’s seasonal cash flows, high interest rates, and a persistent perception of tourism as a high-risk sector.

Kato said banks need to move towards cash-flow-based lending while accepting movable and intangible assets as collateral. He also called for credit guarantee mechanisms and blended-finance facilities tailored to the tourism industry’s business cycles. “We are also ready to engage government and policymakers on the efforts, on the reforms required to create a more enabling financial, fiscal, and regulatory environment,” Kato said.

He said improving access to finance would allow tourism SMEs to grow into larger businesses, create more jobs, invest in new destinations and generate more foreign exchange for the country. Amos Wekesa, CEO of Great Lakes Safaris, said repeated shocks have made banks increasingly cautious about lending to tourism businesses. He cited the COVID-19 travel restrictions, border insecurity, the 2024 attack in Queen Elizabeth National Park and this year’s Ebola scare as some of the disruptions that have affected the industry.

Wekesa said the Ebola scare alone caused occupancy at his lodges to drop from about 70 percent to roughly 10 percent within weeks. Despite these challenges, he argued that Uganda’s tourism numbers remain far below those of regional competitors such as Kenya and Tanzania, suggesting there is significant room for the sector to expand if businesses can access the capital they need.

The tourism sector contributes about US$3.9 billion to Uganda’s economy and supports nearly one million jobs. Industry players, however, believe these figures could rise significantly if the financing barriers facing tourism businesses are addressed. The call for improved financing comes as Uganda and the European Union explore expanding a US$15.5 million Sustainable Tourism Value Chain initiative aimed at improving access to finance for nature-based tourism SMEs, particularly women-led businesses.

EU Ambassador Jan Sadek echoed the call for financing structures that reflect the realities of tourism businesses, including their seasonal revenues and longer investment horizons. “SMEs are at the heart of Uganda’s tourism sector. And if the sector is to grow in a way that is competitive, inclusive, and sustainable, these enterprises need access to finance that allows them to invest, improve, innovate, and expand,” Sadek said.

UNDP representative Nwanne Vwede-Obahor also cited data from the World Travel and Tourism Council to underline the contribution of tourism to the economy. “Tourism contributed six percent of Uganda’s GDP in 2025, a 14.8 percent rise since 2019, and supported roughly 984,200 jobs,” she said. “More than half were held by women and over a quarter by young people aged 18 to 24,” she added.

Vwede-Obahor said financing tourism SMEs effectively means financing the tourism economy as a whole, given that SMEs account for an estimated 80 to 90 percent of the industry. Dr. Enoch Twinomugisha, Chief Economist at the Uganda Bankers Association, explained why lending to SMEs, including those in tourism, has remained limited. He said Uganda has about 324,000 formally registered enterprises, but only around 21.5 percent, or approximately 77,000 businesses, currently have access to credit.

Twinomugisha also noted that non-performing loans among SME borrowers are higher than the industry average, a factor that has contributed to the caution among lenders. However, he said commercial banks are pursuing a “10x growth strategy”, which targets an increase in Uganda’s credit-to-GDP ratio from about 13 percent to 49 percent by 2040.

He said banks are also in discussions with the Bank of Uganda on the recognition of loan guarantees and movable and intangible assets, including booking platforms and travel-tech intellectual property, as possible forms of collateral. Twinomugisha stressed that the push for reform should not end with the forum, proposing that stakeholders agree on concrete measures that can be implemented within 12 months.

Among the proposals are a matchmaking mechanism to connect tourism enterprises with financiers, a shared database documenting SME financing needs, jointly developed tourism loan products and measurable targets for capital actually disbursed rather than simply committed. UTA also pledged to help create a pipeline of “investment-ready” tourism enterprises by strengthening bookkeeping, governance and business-planning skills among its members.