KAMPALA – In the capital, Kampala, the story of Uganda’s economy in October could be read in small, telling scenes.
Taxi drivers grumbled a little less about fuel. A few market vendors shaved 50 or 100 shillings off the price of bread and eggs. Bankers quietly celebrated a stronger shilling. Exporters, especially in coffee and gold, had reason to smile. But in the shade of city arcades, small business owners still talked about one thing: loans that are too expensive to touch.
The latest Performance of the Economy report from the Ministry of Finance paints a picture of an economy that, in October, steadied itself on the big indicators; inflation, exports, exchange rate, while leaving some of the deeper structural problems stubbornly in place.
In short, the macro numbers improved. Life on the ground is still catching up.
Let’s unpack what worked, what faltered, and what it means for the average Ugandan—and for the country’s long-term economic trajectory.
A Stronger Shilling, and What’s Behind It
Perhaps the most noticeable headline from October was the shilling’s unexpected strength. After months of gentle fluctuations, Uganda’s currency appreciated by 1.3 percent, settling at an average of Shs 3,463.86 per US dollar, up from Shs 3,507.79 in September.
Why? A mix of factors, including a bump in foreign currency inflows from coffee exports, offshore investor interest, and diaspora remittances. The foreign exchange market, typically vulnerable to shocks, found temporary stability as dollar supply outpaced demand.
But this appreciation isn’t without risk. A stronger currency can hurt exporters in the long run, especially in sectors where price competitiveness matters. For now, though, it’s a welcome change.
Inflation Eases, But Not for Everyone
Annual headline inflation fell to 3.4 percent in October, down from 4 percent the previous month. Lower food prices played a big role; bread, eggs, cassava, passion fruits, oranges, and onions all saw notable price drops.
On the surface, this is good news for households already stretched thin. But dig a little deeper, and the story becomes more nuanced.
While food prices eased, inflationary pressures in other sectors remain. Core inflation, a measure that strips out volatile food and fuel prices, also dipped, but the decline was modest. For those relying on urban services, transportation, or imported goods, cost pressures haven’t disappeared.
Private Sector Credit
Uganda’s private sector appears to be regaining confidence. Outstanding credit to businesses and individuals rose by one percent between August and September, reaching Shs 24.3 trillion. It’s a modest rise, but a meaningful one.
Behind this growth is a pickup in economic activity, more goods being moved, more services delivered, and more entrepreneurs taking calculated risks.
“When you see credit demand rising in a tight interest rate environment, it’s often a sign of underlying confidence,” said a Kampala-based economist. “It suggests businesses are seeing opportunities worth investing in.”
Still, interest rates remain high. The average lending rate on Shilling loans hovered around 18.45 percent, making borrowing costly for many small, medium enterprises and individuals.
Exports Surge
Uganda’s merchandise exports in September 2025 soared to nearly USD 950 million, a staggering 36 percent increase compared to the same month a year ago. Gold, coffee, base metals, sugar, and fish led the charge.
Much of this growth came from price and volume increases in commodities, with coffee and gold alone making up a large slice of the export pie.
While this might sound like a win, experts caution against overreliance on a few volatile commodities.
“The export figures are impressive, but fragile,” a trade policy analyst said. “Global commodity prices can swing sharply, and without value addition, we remain vulnerable.”
Government Borrowing and Bond Auctions
In October, the government raised Shs 4.38 trillion through a mix of short-term Treasury Bills and long-term Bonds. Investors snapped up both, indicating sustained trust in government debt instruments.
Notably, yields on longer-term bonds (like the 10- and 20-year tenors) rose slightly, suggesting rising expectations around future inflation or fiscal risks.
The Central Bank, meanwhile, kept its key policy rate at 9.75 percent for the 13th straight month, signaling a wait-and-see approach as it tries to balance inflation control with economic stimulation.
A Country at an Economic Crossroads
October offered a snapshot of an economy in transition: growing, but cautiously. Inflation is under control, for now. Credit demand is recovering, but interest rates are still punishingly high. Exports are booming, but the base is narrow and exposed.
The big question is whether Uganda can use this moment to build more inclusive, diversified, and resilient growth.
There are signs of progress. But there are also warning lights blinking in the background: rising public debt, narrow export baskets, and a private sector still finding its footing.
For everyday Ugandans, the bottom line is simple: life may have gotten a bit cheaper in October, but the struggle to build and sustain livelihoods continues.
The real test will be whether policymakers can navigate the coming months with clarity, discipline, and vision. If they do, October 2025 may be remembered as more than just a good month, it could be a turning point.
