The public was again incited to debate on the ownership of Uganda National Airlines Company Ltd, the operator of Uganda Airlines, following parliamentary debate on the Auditor General’s report.
The reports in the media insinuated or led sections of the public to conclude that the Government of Uganda owned 0.01 percent of the company that became operational in 2019, with questions about who owned the rest.
The Auditor General’s report on 2025 noted that despite the Government investing 1.984 trillion shillings, only 200 million was recognised as share capital, with the balance recorded as “Share Application Funds and GoU Capitalisation, pending formal conversion”. The screaming headlines sent many Ugandans accusing the government of another corruption scandal, with some hinting that some officers must have got a shadow person who owns the company on their behalf.
Those appalled include Prof Charles Oweyagha Afunaduula, who republished a summary of the article questioning the position. Uganda Airlines is 100 percent owned by the Government of Uganda, with the shares split equally between two cabinet ministries: the Ministry of Finance, Planning and Economic Development, and the Ministry of Works and Transport.
While these facts, as presented by the Auditor General, about the company’s share capital of 200 million shillings and the government’s accumulated investment in the company at close to 2 trillion are not in dispute, it is about the ownership or shareholding being calculated by finding the share capital as a fraction of the total investment. Because the officially recorded share capital represents such a tiny fraction of the money the government has actually put into the airline, critics and media outlets use the “0.01 percent” figure to highlight a lack of formal financial documentation and delayed accountability.
Initial controversy
In the early registration documents submitted to Parliament in March 2019, the then government representatives admitted an error which “incorrectly” listed two government ministers in their individual names as shareholders. This created the initial confusion that suggested the government only held a tiny 0.01 percent fraction. The government immediately corrected the error in Parliament, presenting what it called the proper allotment documents, and clarified that the shares belong entirely to the state, through the two Ministries and not the Ministers.
If not corrected, the documents gave ownership to Minister Matia Kasaija of Finance and Monica Azuba of Works and Transport, according to Twebaze Bemanya, former Registrar General. The recent debate regarding a 0.01 percent figure stems from Auditor General reports pointing out an accounting discrepancy, where out of nearly 2 trillion shillings injected by the state, only a small baseline amount is formally logged as active share capital while the rest awaits formal conversion.
Questions then arise about what the importance of converting the government-invested funds into shareholding would mean, for as long as the company was operating. Would it affect the operations, revenues, and profitability? Right now, the airline’s official balance sheet shows a legal structure that is incomplete, with the government’s full weight not reflected as equity, and this poses legal and accountability mistakes. According to Accounting Standards, money meant for buying shares cannot stay as a “deposit” indefinitely.
The Auditor General flags this because it blurs financial clarity, making it harder to evaluate the airline’s true value, debt ratios, and asset health, according to a response from the Institute of Certified Public Accountants. Currently, the share capital of the company does not match its worth, which may affect the image of the company to investors or financiers when needed in the future. Experts say the timing of the conversion of funds into equity is important to project whether they will be profitable as public funds or not.
Prominent Ugandan economist Fred Muhumuza points out that while equity financing is a great tool for raising capital, the government often resorts to converting funds into equity only after an enterprise begins to fail. Converting the money into shares will require the Ministry of Finance and the Ministry of Works to pass resolutions to increase the authorized share capital of the company, which will also require updated legal filings with the Uganda Registration Services Bureau (URSB), and parliamentary oversight to properly adjust the company’s articles of association.
Before that is done, the amount of unconverted funds will only continue to grow until the legal paperwork is finally updated, because, according to Finance Minister Henry Musasizi, the government has committed more funding for aircraft and other needs. Uganda Airlines is only a unique case because of the huge amounts involved, but the government has also rescued companies like the Vision Group from a severe cash crunch, with an infusion of 25 billion shillings. Instead of a standard loan, this was structured as convertible preference shares.
Under this setup, the Ministry of Finance holds specialized shares that earn a dividend rate and are legally designed to be converted into ordinary shares later. The government has also been sinking billions into Uganda Development Bank to boost its capital base to 1.77 trillion shillings. While these funds often enter as temporary budgetary allocations or government credits before the bank’s annual general meetings, they are formally absorbed and converted into registered share capital to lower interest rates for local businesses.
Another case is the investment in NYTIL (Nyanza Textile Industries), aimed at reviving the textile industry, when Parliament approved a deal where the Government would convert its current credits to equity, and led a 35 percent direct ownership stake for the state-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
