The economy is riding a wave of resilience, bolstered by the strength of diaspora workers.
Data from Bank of Uganda indicates that in the 12 months to 2025, remittance inflows surged to $1.6b, up from $1.4b the previous year, a 14 percent increase, underscoring the growing role of migrant earnings in stabilising the country’s external position and supporting household welfare.
The central bank attributed the rise to increased inflows from Ugandans working abroad, especially in North America, the Middle East, and Europe.
Together with export receipts from gold and coffee, remittances were instrumental in shifting Uganda’s balance of payments from a $995m deficit in the 2023/24 financial year to a 1b surplus in the year ended June 2025.
To capitalize on the foreign currency supply, the Bank of Uganda stepped up foreign exchange purchases through the interbank market, increasing its international reserves to $4.3b, equivalent to 3.9 months of import cover, a strong buffer against external shocks.
The performance came despite a turbulent international landscape marked by rising protectionism, geopolitical tensions, and tightening global credit markets.
The shilling remained one of Africa’s most stable currencies, appreciating by 2.7 percent against the dollar, supported in part by sustained remittance inflows and portfolio investments.
Bank of Uganda noted that the inflows ‘comfortably met corporate demand,’ allowing the exchange rate to hold firm at Shs3,678 per dollar, compared to Shs3,777 the previous year.
The performance reflects both the confidence of Ugandans abroad in the domestic economy and the central bank’s disciplined monetary policy.
Beyond traditional money transfer channels, payment system operators recorded a 49 percent rise in transaction values, from Shs38.5 trillion to Shs57.5 trillion, driven by expanded digital infrastructure and mobile-based platforms facilitating inbound remittances and transfers.
The continued modernization of Uganda’s financial systems, including real-time gross settlement reforms and regional payment linkages under Comesa and EAC, is expected to further reduce transaction costs and improve efficiency in cross-border remittance flows.
While remittances serve as a macroeconomic stabilizer, their micro-level impact is equally powerful.
The inflows directly improve household consumption, education, and small business investment, particularly in rural and peri-urban communities.
The central bank emphasized that this financial lifeline ‘enhances Uganda’s resilience to global shocks and strengthens the financial account,’ positioning the country for stronger and more inclusive growth.
With diaspora communities expanding and digital money transfer systems deepening, Uganda’s remittance potential is expected to continue rising.
For policymakers, the challenge remains how to channel these inflows into productive investment while maintaining the balance between consumption and growth.