More than 1,000 city traders face the risk of losing their businesses and jail term for failing to pay trade licences, the city executive director, Jennifer Musisi warns.

Musisi said the Kampala Capital City Authority (KCCA) would prosecute at least 100 defaulters weekly starting this week.

During a press briefing this week, she said: "We have been issuing notices to defaulters, reminding them to pay licence fees, but many have not complied. Starting Thursday this week, our court will prosecute all defaulters."

"Under the Trade Licensing Act, those who default on payment of trade licences face a fine of up to sh20m," Musisi explained.

She said the law requires proprietors of businesses to pay licence fees at the beginning of every year, but thousands of traders have not paid their licence fees.

Among businesses that have defaulted are private institutions, recreational centres restaurants and shopping centres.

Musisi decried the rate of non-compliance by traders, saying it was hurting KCCA's revenue collection to facilitate service delivery in the city.

KCCA targets to generate at least sh14b from trade licences alone by the end of the financial year 2012/2013.

Effective January 2012, the Government reduced licence fees by 25%, in which wholesalers were charged sh498,000, down from sh665,000, while licences for pharmacies reduced from sh800,000 to sh600,000.

Musisi also warned of tougher action against those who fail to pay the licence fees, including revoking their licences.

Several traders at Centenary Park in the city centre are among those affected by the new measures, after KCCA refused to renew their licences.

KCCA's deputy director for legal affairs, Charles Ouma defended the move, saying many of them were operating there illegally.

"The law does not recognise people who operate in places gazetted as open public spaces. In the same way, we do not licence bars that operate in residential areas," he said.

Last year, KCCA removed a rail fence on the Centenary Park gardens and plans to restore the public park to public use are underway.