With barely three months before Ugandans cast their votes, the election season is officially underway, sending the Central Bank into overdrive as it looks to hedge against shocks emanating from excessive spending ahead of the forthcoming election early next year.
Already, those seeking elective offices are outdoing not just each other but also themselves in an attempt to guarantee an electoral victory by hook or crook.
In the coming weeks and months, the ante will be raised as campaigning politicians continue to do whatever they can to attract voters’ attention, often through excessive spending, among other frivolous and outlandish measures, leaving the economy susceptible to inflation.
After the 2011 General Election, believed to be the most expensive in terms of excessive spending, Uganda’s economy was struggling with a 30 percent rise in inflation — the highest in two decades, resulting in an apology by the then Bank of Uganda Governor, the late Emmanuel Tumusiime-Mutebile.
Although he did not specify how much exactly found its way into the electioneering, he was certain that the substantial government spending in 2011 was injected into campaigns, accounting for the aftermath inflation that took a toll on the economy, influencing interest rates while disrupting trade dynamics.
While exact totals for the 2011 election are not publicly consolidated, various studies and reports highlight that pre-election public spending surged significantly that year especially through activities like district creation, vote-buying, and accelerated social projects.
According to Alliance for Finance Monitoring (ACFIM) estimates, political parties and candidates channeled Shs4 trillion (about $1.08 billion) into campaign activities, nearly double the estimated Shs2.4 trillion spent in 2016.
Going by the estimates of 2021’s campaign spending of nearly Shs4 trillion ($1.08 billion) over roughly 15 months and rising political activity, the total election-related spending in this cycle could exceed those numbers, potentially reaching Shs5 trillion, or higher depending on whether the campaigns will engage another gear from now on and how resources will be deployed.
Electoral fever in recent political campaigns tends to pitch months, if not years, before the election. In several cases, two to three years before the election, those looking to run for elective positions begin to cement themselves in the electioneering season early.
This is manifested by careless spending by aspiring political players. At the same time, for the government it increases spending to boost popularity, paving the way for inflation and reduced consumer spending, slowing economic growth. This can be done by creating a flagship programme embedded in the national budget.
This is rooted in the estimates of 2021’s campaign spending of nearly Shs4 trillion ($1.08 billion) over roughly 15 months and rising political activity already.
Experience shows that the economy will pick up the bill incurred by political actors during the election season, with the economic managers left to battle inflation, policy uncertainty, causing economic slowdowns and market volatility.
Regulation
The director of research and policy at Bank of Uganda, Dr Adam Mugume, notes that the election year is no stranger to declarations and policies aiming to boost the performance of the economy. This can be achieved by increasing government spending, cutting taxes, or both, which increases consumption and encourages economic activities.
‘Elections are associated with expansionary fiscal policies or change in the composition of government expenditures to gain voters’ support, a phenomenon known as the political budget cycle in the literature.
‘However, Uganda has matured to go through these cycles with minimal distortions to the economy.
He notes: ‘Bank of Uganda monetary policy framework incorporates these kinds of shocks in terms of scenario analysis and takes appropriate actions much early, 12months before. Fiscal transparency in Uganda also limits the extent of the election cycle on the economy.
‘The aftermath of elections is hard to predict. This is what affects private sector investments as investors sit on the fence – wait and see approach.’
Anticipation
According to Dr Mugume, BoU has a robust monetary policy framework that allows judgment to be incorporated into the economic analysis before taking appropriate actions.
‘Where events are appropriately anticipated, they shouldn’t cause an inflation spiral. What complicates policy actions is when several events occur at the same time like a combination of a poor harvest, oil price shock and other global events, and election. The outcome of such a combination is very difficult to address using the only one available instrument of monetary policy,’ Dr Mugume says.
He is optimistic about the investment climate saying: ‘Uganda’s macroeconomic outlook in FY2025/26 remains solid with inflation of around 5 percent, economic growth of about 7 percent and exchange rate that is projected to remain stable. Consequently, workers’ remittances are projected to remain solid at about $1.5 billion and Foreign Direct Investment at about $3 billion.’
Risks of excessive expenditure
In a fiscal context where total government spending for 2025/26 is projected at around Shs72.4 trillion, such large election-related figures not budgeted as part of development priorities pose real risks to macroeconomic stability, debt servicing capacity, and funding for vital sectors.
Going by ACFIM estimates, Mr Julius Mukunda, an economist with over 15 years of experience managing economic governance, budget transparency and accountability programmes in Uganda, argues that the upcoming 2026 elections could again see very high spending, possibly on par with or above 2021 levels, particularly if early campaign dynamics intensify.
The trouble, according to Mr Mukunda who is also the executive director of CSBAG is, going by the 2021 ACFM figures as a benchmark, Shs4 trillion spent in election campaigns, around 8.6 percent of the national budget which was about Shs45.5 trillion in FY 2020/21, it can infer several economic risks, including inflationary pressure, sudden, large expenditures inject liquidity into the economy pushing up prices, especially of local goods and services.
A rising debt burden will be on the cards. The Auditor General report highlights challenges in Uganda’s public debt management, with the total public debt reaching Shs116 trillion as of June 2025.
This, he says, will be in addition to crowding out development spending. Allocating funds on a one-off election-related basis diverts resources from infrastructure, education, and healthcare delivery.
The other repercussion is weakened fiscal discipline and investor confidence. He says: ‘Repeated election-related overspending signals weak fiscal discipline, which can prompt credit rating downgrades and raise the cost of borrowing.
‘Both domestic and foreign investors may postpone or scale down investment decisions until after the elections, preferring to wait for a clearer post-election fiscal and political environment. This hesitation can slow economic activity and job creation in the short term.
Just like Dr Sarah Bireete, the founding partner and executive director for Centre for Constitutional Governance (CCG), a constitutional watchdog, who believes that commercialisation of politics in Uganda has reached excessive levels.
Mr Mukunda recommends that Parliament and the Finance Ministry should enforce legal caps on supplementary appropriations during election years.