Addressing the House this week, Henry Musasizi, the Finance minister, admitted to the fact that the Ugandan economy is under pressure.
‘Our concern is not only the depreciation of the Shilling, but also its speed and impact on prices, businesses and household welfare,’ he said.
With the central bank having drawn on a range of monetary policy tools in an attempt to return to a semblance of normality, lawmakers like Karim Masaba were keen to find out if borrowers are facing an existential threat.
How, asked the Industrial Division, Mbale City, lawmaker, will borrowers with floating-rate loans be shielded from effects of a 225 basis points rate hike? Above all, how will the anaemic economy be revived? Does the blood bank include a review of taxes, particularly the excise duty on fuel? The price of a litre of diesel has already breached the Shs7,000 mark. That of petrol is also well and truly on its way.
‘Uganda remains committed to a market-determined exchange rate. This allows the economy to adjust to changes in external conditions,’ Mr Musasizi reassured, adding, ‘Our objective is to preserve price and financial stability and support orderly market adjustment. We are not committing public resources to defending a particular exchange rate.’
For Ugandans struggling to put food on the plate, this rings hollow. Dr Paddy Mugambe, a senior consultant in finance at Uganda Management Institute (UMI), emphasises this to them.
‘Growth may be concentrated in capital-intensive sectors such as oil and gas, construction, mining, gold exports and large public infrastructure, benefiting those who own productive assets more than wage earners and subsistence farmers,’ Dr Mugambe says.
‘Consequently, the key concern is not simply whether the economy is growing, but how broadly the benefits of that growth are distributed across regions, urban and rural areas, and income groups,’ he adds.
Proposals
Dr Mugambe thus proposes several measures that could help make economic growth more inclusive. First, infrastructure that supports production has to be developed. Second, intentionally escape the raw-commodity trap that increases ‘the trade deficit as high-value imports are matched with low-value exports.’ Agro-processing can prove to be handy here. Third, restore fiscal discipline, with Dr Mugambe pointing to borrowed funds that remain unutilised even as government continues to incur interest payments.
Ms Sarah Bireete, the executive director of the Centre for Constitutional Governance, says low agricultural productivity, expensive credit, high business costs, weak public services, corruption and inequality are preventing economic growth from translating into higher household incomes and improved living standards.
‘The government should transform agriculture through irrigation, storage, agro-processing and improved access to markets, while supporting manufacturing, small and medium enterprises (SMEs) and the creative and digital economy,’ she says.
‘The cost of doing business should be dramatically reduced. The government needs to address the high and unreliable costs of electricity, transport, finance, taxation and regulatory compliance. While the government has expanded infrastructure, more needs to be done to tackle high operating costs, multiple taxes, bureaucracy and expensive credit,’ she adds.
Dr Enock Nyorekwa Twinoburyo, a lecturer of Economics at Makerere University, reckons Uganda’s economic growth is not generating enough jobs or broad-based improvements in household welfare. ‘Uganda continues to face persistent unemployment and poverty, while the middle class remains relatively small. This is reflected in recent statistics from the National Social Security Fund, which show that only about 823,000 accounts were active, underscoring the limited reach of formal employment and social security coverage.’
Dr Twinoburyo says the situation is also reflected in the banking sector, where more than 29 million deposit accounts had balances of less than Shs1 million as of December 2025, accounting for less than two percent of total deposits. He says this is a telling indicator of the limited financial capacity of a large section of the population.
The latest Purchasing Manger’s Index captures just how grim the status quo is. The index fell from 55 in August to 53 in September. Despite all this, Mr Musasizi insists that ‘fundamentals are robust’ and hitting the panic button is self-defeating. Dr Twinoburyo nevertheless advises the government to look beyond its robust fundamentals and institute structural reforms, particularly in the way public resources are allocated to sectors capable of generating more inclusive growth.
Mr Timothy Chemonges, the executive director of the Centre for Policy Analysis, says the central problem is that Uganda is growing, but productivity and incomes are not growing fast enough for the majority of citizens. He says GDP grew by 6.4 percent in the 2025/2026, but unemployment remains 12.2 percent, youth unemployment is 17.9 percent, and only 44.7 percent of the working-age population is employed.
‘I would target electricity, transport, credit, taxation, licensing and regulatory delays. Uganda cannot expect small businesses to create jobs when the formal cost of operating is high and access to affordable capital remains difficult,’ he offers.
On the ground, the robust fundamentals that Mr Musasizi purrs over are not quite tangible for Ms Juliet Nyaketcho, a teacher, who questions whether ‘businesses can access affordable capital and young people can find productive employment’.
Mr David Isabirye, a businessman, notes that while Uganda has fertile land, favourable weather and millions of people engaged in farming, many farmers remain poor because they have ‘little control over [the] price [of their produce]’.