Uganda’s Insurance Sector Struggles as USAID Cuts Lead to Job Losses

• Mar 24, 2025

Uganda’s insurance industry is experiencing a rise in claims as job losses mount due to USAID funding cuts and government agency mergers.

Job Cuts Increase Insurance Claims

The freeze on USAID aid has affected key insurance policies, including workman’s compensation, group personal accident, and medical insurance, according to Peter Makhanu, Managing Director of Liberty General Insurance. Many non-governmental organizations (NGOs) have not renewed their insurance policies due to the suspension of USAID activities.

Around 12,240 jobs under USAID-funded projects have already been lost or are at risk as the U.S. government shifts its priorities under the “America First” policy. As a result, banks and Savings and Credit Cooperative Organizations (SACCOs) are receiving more insurance claims from clients who had insured their loans but are now unemployed, according to UAP Old Mutual.

Government Mergers Add to the Crisis

Beyond the aid cuts, Uganda’s government has also contributed to job losses through a rationalization program that merged or dissolved several agencies. In December, President Yoweri Museveni signed nine bills into law, restructuring government institutions and eliminating organizations such as the Uganda National Roads Authority and the Uganda Coffee Development Authority.

While some employees were transferred to parent ministries, others were laid off, further increasing compensation claims.

Insurance Sector Faces Financial Pressure

Insurance companies in Uganda are required to maintain minimum capital reserves, including:

6 billion shillings for non-life insurance

4.5 billion shillings for life insurance

1 billion shillings for Health Maintenance Organizations (HMO)

Despite the growing pressure, Jonan Kisakye, CEO of the Uganda Insurers Association, remains optimistic, stating that the industry has survived major challenges before, including the COVID-19 pandemic.

In the last half of 2024, insurance companies in Uganda paid out 820 billion shillings in claims, marking a 199.4 billion shilling increase compared to the previous period.

Future Uncertainty for Small Insurers

According to senior economist Fred Muhumuza, smaller insurance firms could face liquidity problems, especially as banks try to mitigate losses from unemployed borrowers. The full impact of these job cuts is still being assessed, but some insurance companies are already struggling.

“Some companies that were previously insured are now unable to renew their policies due to funding losses,” Makhanu said.

Additionally, with many affected organizations operating in the health sector, the industry expects a rise in medical insurance claims, further straining insurers.