Although Uganda has made tremendous progress in education provision in the past decade, particularly with the introduction of universal primary education, it is confronted by a number of financing challenges relating especially to the demand for increased access at the secondary and tertiary levels. There are two aspects to the funding question: the insufficiency and the misallocation of resources. Both aspects have to be addressed in the interests of improved efficiency and equity. First, at a macrolevel, it is clear in the light of high social demand, that education is inadequately funded even though it is the major budget item. Second, within the education sector, secondary education is seriously underfunded. Third, there are serious inequities in the distribution of resources beyond the primary level. Inequities are exacerbated because the poor are forced to seek access in the fee-paying private sector. Fourth, there is increasing evidence that greater efficiency can be achieved in the utilisation of current funding especially in the secondary, technical and vocational, teacher education, and higher education subsectors as well as in the governance and management of primary education both at the centre and at the decentralised subnational government level. A range of innovative financing strategies is needed to address the many and diverse challenges in the various education subsectors.