Employers with five or more workers will soon be required to pay one per cent of their total gross monthly payroll into a new Skills Development Fund established to finance technical and vocational education and training (TVET) in Uganda.
The fund was established under the Technical and Vocational Education and Training (TVET) Act, 2025, as a dedicated source of financing for priority skills development programmes across the country. It will be an additional employer cost, separate from existing statutory obligations such as Pay As You Earn (PAYE) and National Social Security Fund (NSSF) contributions.
Moses Kasakya, the Executive Director of the Technical and Vocational Education and Training Council, said the fund will be administered by the Council. Speaking on the sidelines of a press briefing at the Media Centre on Wednesday, Kasakya said the Ministry of Education and Sports is finalising regulations that will guide the operation of the fund, including the collection and remittance of the levy.
“It is expensive to fund TVET, and to ease this burden, the Act created a Skills Development Fund to which the beneficiaries of TVET will contribute,” Kasakya said. He said the levy will only take effect after the necessary clearances have been obtained from the relevant government bodies. The regulations will also specify the categories of employers covered by the levy.
Under the TVET Act, the levy is set at one per cent of the total gross monthly emoluments paid by an employer to all employees. The amount covers wages, salaries, leave pay, sick pay, payment instead of notice, commissions, bonuses, gratuities and other contractual allowances. The levy will be paid entirely by employers and will not be deducted from workers’ salaries.
The Act requires the Minister of Education, in consultation with the Minister of Finance, to prescribe the procedures for collecting and remitting the money. Those procedures are expected to be included in the regulations currently being prepared.
The fund will also receive income from TVET institutions and other training providers. Under the Act, these institutions will be required to remit 10 per cent of proceeds earned from products developed by students during their training.
Kasakya said many TVET institutions are already producing goods in areas such as agriculture, manufacturing and other practical fields, making the provision a potentially important source of revenue for the fund.
Under Section 112 of the Act, the Skills Development Fund will finance trainees enrolled in approved priority TVET programmes, support the TVET loan scheme, invest part of its resources with the approval of the Minister and support incubation programmes for innovations within the TVET system.
The levy is part of a broader effort to create a more sustainable financing model for skills development and reduce the sector’s dependence on government budget allocations and donor support. It is also intended to strengthen the link between TVET training and the skills demanded by the industry.
The proposal for a TVET levy was among the recommendations of the Amanya-Mushega Education Policy Review Commission. Under Recommendation 276, the commission called on government to operationalise a TVET levy so that beneficiaries of vocational training would share the cost of financing the sector.
“Operationalise the TVET levy to ensure that all beneficiaries of TVET training share the costs entailed in TVET training,” the commission said. The commission argued that a dedicated levy would help reduce pressure on the national budget, including the cost of financing student loan schemes.
Reviews by UNESCO and the International Labour Organisation show that payroll-based training levies operate in about 75 countries worldwide. Such levies generally range between 0.5 and 2 per cent of payroll, with some countries providing exemptions or lower requirements for smaller businesses.
In Kenya, employers pay an Industrial Training Levy administered by the National Industrial Training Authority under the Industrial Training Act. The levy is currently charged at a flat rate of 50 Kenyan shillings per employee per month rather than as a percentage of payroll.
Tanzania has one of the higher rates in the region. Mainland employers with 10 or more employees pay a levy of 3.5 per cent of total gross monthly emoluments under the Vocational Education and Training Act. The levy is collected by the Tanzania Revenue Authority. In Zanzibar, reports indicate that a 4 per cent levy applies to employers with four or more employees.
The Amanya-Mushega commission’s comparative review found that Tanzania collected an average of about Shs314 billion a year through the skills development levy between 2010 and 2017, illustrating the potential revenue such schemes can generate.
South Africa provides another close comparison. Employers with an annual payroll above R500,000 pay a one per cent Skills Development Levy on total remuneration. The money is collected by the South African Revenue Service and channelled largely through Sector Education and Training Authorities and the National Skills Fund to support workplace training, apprenticeships and other skills programmes.
Employers that meet the requirements can also receive grants from part of the levy. Other African countries have adopted similar arrangements. Mauritius charges a 1.5 per cent payroll levy, while Malawi and Morocco apply rates of one per cent and 1.6 per cent respectively. Namibia, Zambia and Zimbabwe also operate levy-funded skills development systems. Uganda’s one per cent levy therefore places the country broadly within the range of payroll-based skills financing models already operating in Africa and elsewhere-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
