Uganda’s economy is on course for its fastest growth in decades, with the government projecting a dramatic expansion driven largely by the commencement of commercial oil production later this year.
Presenting the National Budget for the Financial Year 2026/27 at Kololo Ceremonial Grounds on Thursday, the Minister of Finance, Planning and Economic Development, Mr Henry Musasizi, said economic growth is expected to accelerate to 10.2 percent in FY 2026/27, marking Uganda’s first return to double-digit growth since the economic reforms of the 1990s.
‘Most importantly, a larger economy will create more jobs, raise household incomes, expand business opportunities, and generate the resources required to invest in quality education, healthcare, infrastructure, security, and other public services that improve the lives of Ugandans,’ Mr Musasizi said.
The minister said the projected growth reflects the success of the government’s long-term strategy of investing in security, infrastructure, wealth creation and productive sectors of the economy.
Strong Economic Fundamentals
Despite ongoing geopolitical tensions, global trade disruptions and economic uncertainty worldwide, Uganda’s economic outlook remains robust, according to the government.
‘The economy is stable. Growth is accelerating. Inflation is low. The exchange rate is stable. Exports are rising. Investment is increasing. And confidence in Uganda’s future remains strong,’ Mr Musasizi told Parliament and guests.
Uganda’s economy is estimated to have grown by 6.4 percent in FY 2025/26, slightly higher than the 6.3 percent recorded the previous year. By the end of June 2026, the economy is projected to reach Shs250.4 trillion ($69.3 billion), while GDP measured in purchasing power parity terms is estimated at $197.1 billion.
The GDP per capita is projected to rise to $1,420, equivalent to approximately Shs5.1 million per person.
Inflation Remains Under Control
The government reported that inflation remains low and stable, averaging 3.8 percent in FY 2025/26, compared to 3.5 percent in the previous financial year.
According to the minister, the stability has been supported by effective coordination between fiscal and monetary policies, stable food prices and improved fuel supply management.
‘Low inflation protects household incomes, supports business planning and strengthens investor confidence. Government remains committed to maintaining price stability as a cornerstone of sustained economic growth,’ he said.
Investor Confidence Growing
The government also highlighted growing confidence among investors, citizens and international visitors.
Foreign Direct Investment (FDI) remained strong at $3.2 billion in the 12 months ending March 2026, reflecting sustained investor confidence in Uganda’s economy.
Of particular significance, Mr Musasizi noted growing interest in Uganda’s small and medium-sized enterprises (SMEs). Start-ups based in Kampala attracted approximately $30 million in investment in 2025, a sharp increase from $4 million the previous year.
‘This surge signals growing confidence in Uganda’s innovation ecosystem and affirms our emergence as a destination for entrepreneurship, technology and investment,’ he said.
Remittances from Ugandans working abroad also increased significantly, rising from $1.9 billion to $2.8 billion over the same period, providing a major source of foreign exchange, investment capital and household income.
Tourism Fully Recovers
Uganda’s tourism sector has fully recovered from the effects of the Covid-19 pandemic, according to the budget statement.
Tourism earnings rose to $1.86 billion in 2025, surpassing the $1.4 billion recorded before the pandemic in 2018/19. The sector had fallen to a low of $562 million in 2020 during global travel restrictions.
The government said the recovery demonstrates growing international confidence in Uganda as a destination for business, investment and leisure travel.
To sustain the momentum, the government plans to increase investments in tourism infrastructure, security and economic diplomacy through Uganda’s missions abroad.
Stable Shilling and Rising Reserves
The Uganda shilling remains one of Africa’s best-performing freely floating currencies, supported by prudent macroeconomic management and strong foreign exchange inflows.
Foreign exchange reserves increased to $6 billion in the year ending March 2026, up from $3.6 billion a year earlier.
Mr Musasizi said the government’s decision to import petroleum products directly through the Uganda National Oil Company (UNOC) had strengthened supply stability and reduced pressure on the foreign exchange market. ‘We expect the exchange rate to remain broadly stable despite ongoing global uncertainties,’ he said.
Exports Reach Record Levels
Uganda’s export sector continued its impressive performance, with export earnings reaching $18.04 billion in the 12 months to March 2026, compared to $5.93 billion four years earlier.
Major exports included gold, coffee, cocoa, fish products, steel products, sugar and manufactured goods. Coffee exports alone generated $2.46 billion, up from $1.84 billion the previous year.
The Middle East remained Uganda’s largest export destination, accounting for $6.3 billion in exports, followed by Africa ($4.1 billion), the European Union ($2.5 billion) and Asia ($2.0 billion).
The minister attributed the performance to government policies promoting industrialisation, value addition, export growth and market access.
‘Exports are the engine of Uganda’s transformation. They generate foreign exchange, create jobs, support enterprise growth and strengthen economic resilience,’ he said.
The strong export performance, combined with remittances and investment inflows, helped Uganda record a Balance of Payments surplus of $2.47 billion, the highest level in 15 years.
Employment Trends Improve
The government said Uganda’s economy continues to undergo structural transformation, with more people moving into higher-productivity sectors.
The services sector now accounts for 50.5 percent of total employment, while agriculture’s share has fallen to 37.1 percent. Industry contributes approximately 12.4 percent of total employment.
Formal private-sector employment increased dramatically from 672,300 workers in FY 2016/17 to more than 2.3 million workers in FY 2024/25, representing a 245 percent increase.
In addition, Uganda recorded 503,738 public sector jobs and more than 10.5 million informal sector jobs as of April 2026.
Mr Musasizi said the growth demonstrates that the economy is not only expanding but also creating productive employment opportunities for Ugandans.
Revenue Collections Strengthen
Government revenue collection continued to improve, with domestic revenue projected at Shs35.7 trillion in FY 2025/26, compared to Shs32.3 trillion collected the previous year.
Domestic revenues financed approximately 80.9 percent of the government’s discretionary budget, a development the minister described as a major step toward fiscal self-reliance.
‘Increasing domestic revenue is not merely a fiscal objective. It is a sovereignty objective,’ he said.
Shs84.4 Trillion Budget for FY 2026/27
The government unveiled a total resource envelope of Shs84.39 trillion for FY 2026/27. The funding will come from:
Domestic revenues: Shs45.96 trillion
Domestic borrowing: Shs11.97 trillion
Domestic debt refinancing: Shs13.97 trillion
External borrowing for budget support: Shs1.22 trillion
External project financing: Shs11.27 trillion
Key expenditure allocations include:
Wages and salaries: Shs9.71 trillion
Non-wage recurrent expenditure: Shs33.28 trillion
Development expenditure: Shs22.05 trillion
Domestic debt refinancing: Shs13.97 trillion
Debt amortisation: Shs4.18 trillion
Repayment to Bank of Uganda: Shs547 billion
Domestic arrears: Shs317 billion
Local government expenditure from own revenue: Shs339.8 billion
With oil production expected to commence later this year and key economic indicators showing sustained improvement, the government believes Uganda is entering a new phase of accelerated growth that could transform the country’s economic landscape and improve livelihoods across the nation.