KAMPALA — Uganda Air Cargo Corporation is sinking deeper into crisis following a damning assessment by the Auditor General, which exposes a failed partnership, rising debt, and deteriorating performance at the state-owned airline.
The audit report for the 2024/2025 financial year paints a grim picture of an entity struggling to stay afloat, weighed down by an underperforming joint venture with Dubai-based Alpha MBM DWC-LLC and unmet obligations on both sides.
Despite high expectations, the joint venture agreement signed to revive the airline has largely stalled. One year later, the Auditor General found that neither the government nor its foreign partner had honoured key commitments, effectively paralysing the corporation’s recovery strategy.
Alpha MBM, which was expected to inject capital and technical capacity into the airline, had by the end of the review period failed to deliver on core obligations such as fleet expansion, securing financing, opening new credit lines, and rolling out marketing strategies to grow the business. Plans to modernise operations through technology investments and staff training also remained unimplemented.
Government, on its part, had not provided critical infrastructure and operational support, including aircraft, land, hangar facilities, and logistics for crew. It had also not granted route rights or facilitated access to the corporation’s air services licence—key enablers for commercial operations.
The Auditor General warns that this mutual failure has left the airline grounded in uncertainty, with its turnaround plan effectively in limbo.
Financial indicators show a company under strain. Outstanding receivables surged to UGX 33.96 billion by June 2025, a sharp 63 percent increase from the previous year, raising concerns over revenue collection and cash flow management.
At the same time, trade payables climbed to UGX 9.26 billion, reflecting a 54 percent rise and signalling mounting obligations the corporation is struggling to settle.
Revenue performance also fell short. Although the corporation projected UGX 18.63 billion in operating income, it realised only UGX 12.42 billion, pointing to weak business activity and missed targets.
Perhaps most alarming is the continued deterioration in asset performance. The return on assets plunged from negative 6 percent in 2023/2024 to negative 22 percent in 2024/2025, largely due to idle and grounded aircraft—expensive assets that are generating no value.
The Auditor General’s findings raise broader questions about the due diligence, structure, and oversight of the joint venture arrangement, which was expected to breathe new life into the national carrier but now appears to have compounded its challenges.
With debts rising, assets lying idle, and a key strategic partnership failing to deliver, Uganda Air Cargo’s future remains uncertain unless urgent corrective action is taken.
The report calls for immediate intervention to enforce accountability on both the government and Alpha MBM, warning that without decisive action, the corporation risks further decline.
