Browsing: @ministry of Finance

As thousands of university graduates turn to boda-boda riding to make ends meet, Uganda faces a stark employment crisis. Finance Minister Matia Kasaija’s revelation that nearly half of the country’s one million boda-boda riders are graduates highlights the urgent need for sustainable job creation, education reform, and targeted economic policies. This phenomenon raises critical questions about the effectiveness of Uganda’s current economic strategies and the future of its young workforce.

Uganda’s external sector in 2024 shows strong performance with coffee exports surging by 82%, foreign direct investment hitting record highs, and remittances returning to pre-COVID levels. Inflation remains controlled, and the Ugandan shilling maintains stability against the US dollar. However, challenges in debt management persist as the government navigates domestic financing needs. With oil production on the horizon, Uganda’s economic outlook appears promising, but careful fiscal management remains essential.

Despite the availability of Shs 200 billion under the Small Business Recovery Fund (SBRF) to aid struggling enterprises post-COVID-19, small businesses in Uganda have been slow to take up the loans. As of September 2023, only Shs 16 billion had been disbursed, representing just 8% of the fund. Key barriers include short repayment periods, stringent collateral requirements, and low awareness about the fund.

Business conditions in Uganda declined sharply in the first quarter of 2024, driven by rising inflation, increasing costs, and Uganda’s suspension from the African Growth and Opportunity Act (AGOA). The Uganda Business Climate Index dropped 11 points, signaling a challenging outlook for key sectors such as agriculture, manufacturing, and services.

Uganda has seen significant improvements in economic and social development, with per capita income reaching USD 1,146 in FY2023/24, surpassing the lower-middle-income threshold. Poverty has declined to 20.3%, and life expectancy has risen to 64 years. As outlined in the 2025/2026 budget strategy, key advancements in education, healthcare, and agriculture reflect a more equitable distribution of wealth and improved well-being. However, challenges in agro-processing capacity and social protection coverage remain.

In July 2024, Uganda’s Shilling appreciated against the US Dollar, bucking the regional trend of currency depreciation across the East African Community. Meanwhile, Uganda’s fiscal performance outpaced projections, with revenue surpluses and restrained spending resulting in lower borrowing needs. As Tanzania, Kenya, Rwanda, and Burundi faced currency pressures, Uganda’s disciplined approach highlights a shift in regional fiscal dynamics.

In June 2024, Uganda’s private sector borrowing surged despite increasing business collapses, with lending institutions extending Shs 1,360.87 billion. The trade sector led the way, securing the largest share of loans, followed by household and real estate credit, indicating sustained demand for financial support amid challenging economic conditions.

Uganda’s export earnings fell to USD 718.60 million in June 2024, a 23.6% decline from the previous month, largely driven by a sharp drop in mineral exports. However, coffee exports surged by 27.5%, reaching USD 162.36 million, supported by higher volumes and international prices. Asia and the EAC emerged as the biggest destinations for Uganda’s trade, while imports decreased by 6.5% during the same period.

In July 2024, Uganda’s government securities market witnessed significant movements, with bond yields showing mixed trends and treasury bill rates generally declining. The 15-year bond yield dropped to 15.80%, while private sector credit grew by 1.3%, indicating a dynamic financial landscape.

The Ministry of Finance’s latest report reveals a slight increase in the cost of living, with annual headline inflation rising to 4.0% in July 2024. The uptick is driven by higher prices in core sectors such as transport, accommodation, and food crops, despite a decline in energy costs. This signals a mixed economic landscape as Uganda navigates fluctuating market conditions.