Tourism businesses need greater investment to meet the growing demand for Uganda’s tourism products and bring facilities and services to internationally acceptable standards, Uganda Tourism Board (UTB) chairperson Pearl Kakooza has said.
Kakooza said increased investment was needed across the tourism value chain, particularly in accommodation facilities, transport, product development, equipment, skills and marketing, as Uganda seeks to attract more visitors and strengthen its position as a tourism destination.
She made the remarks during a stakeholder forum held under the theme, “Unlocking Finance for Uganda’s Tourism MSMEs: Building Investment-Ready Enterprises through Partnerships and Innovation.”
The forum brought together tourism businesses, government agencies, financial institutions and development partners to discuss the financing challenges facing micro, small and medium enterprises (MSMEs) in the tourism sector.
Kakooza said tourism businesses must invest in constructing and renovating accommodation facilities to meet East African grading and standards, while also improving accessibility for persons with disabilities and senior travellers.
She said investment was equally needed to develop new tourism products and improve existing ones.
Kakooza pointed to emerging opportunities in cultural tourism, coffee tourism and other specialised tourism experiences, saying businesses need capital to acquire equipment, develop skills and market such products effectively.
However, she said access to finance remains a major constraint for many tourism entrepreneurs.
Drawing from her experience as both a tourism entrepreneur and UTB chairperson, Kakooza said businesses seeking financing are often confronted with extensive documentation and collateral requirements, including land titles, valuation reports, audited accounts, bank statements and tax documents.
She urged financial institutions to develop financing products that reflect the realities of tourism businesses rather than applying a uniform lending model.
“This is not a one-size-fits-all industry,” Kakooza said.
She said lenders should consider the viability and cash flow of tourism businesses alongside conventional collateral when assessing loan applications.
Kakooza also raised concern over the high cost of borrowing, saying expensive credit can leave tourism businesses spending a significant portion of their revenue servicing loans instead of investing in expansion and improving services.
For operators whose businesses involve foreign currency, she said exchange-rate fluctuations create additional pressure on operating costs and financial planning.
Uganda Tourism Association vice-president Issa Kato said the financing challenge is compounded by the seasonal nature of tourism.
He said tourism enterprises can record strong revenues during peak seasons but experience significantly lower cash flows when visitor numbers decline, yet many existing financial products require fixed monthly repayments.
“We cannot finance a seasonal business as though it were a salaried employee receiving the same income every month,” Kato said.
He called for longer-term financing, grace periods and repayment schedules that correspond with tourism seasons.
Kato also urged financial institutions to consider alternative forms of security, saying tourism businesses can have viable assets such as vehicles, equipment, bookings, contracts, receivables and trained staff but still fail to qualify for loans because they lack conventional collateral such as land titles.
He proposed greater use of cash-flow-based lending, movable assets and other alternative financing models, alongside credit guarantees and blended finance to reduce lending risks.
Head of the European Union Delegation to Uganda Jan Sadek said tourism MSMEs are at the heart of Uganda’s tourism economy and require more than visitors to become sustainable and competitive enterprises.
“Tourism is also about enterprise, jobs and livelihoods,” Sadek said.
He said the sector supports tour operators, guesthouses, community enterprises, young people and women entrepreneurs, adding that access to finance enables businesses to invest, improve services, innovate and expand.
Sadek said development partners can help reduce risks and strengthen tourism enterprises, but sustainable solutions require collaboration among financial institutions, tourism businesses, government and development agencies.
UNDP Resident Representative Nwana Vwede-Obahor said the financing challenge should not simply be viewed as a shortage of money but also as a mismatch between conventional lending models and the way tourism businesses operate.
She said tourism enterprises must improve their investment readiness by strengthening financial records, business plans, investment proposals and evidence of cash flows so that financial institutions can better understand and assess them.
At the same time, she said lenders need to deepen their understanding of tourism’s operating cycles and develop better ways of identifying and pricing risks within the sector.
Vwede-Obahor said addressing the financing gap therefore requires responsibility from both sides, with businesses improving their investment readiness while financial institutions develop financing models suited to the tourism sector.
