Bank of Uganda (BoU), which monitors the country’s inflation and keeps a close eye on the foreign exchange market, is well positioned to manage the shocks resulting from the current global economic uncertainty and regional instability.
Speaking during the 5th Stanbic Uganda Economic Insights Symposium on Tuesday, Dr. Adam Mugume, the Director of Research at BoU said, “As the Central Bank, we are aware of these prevailing conditions on our economic highway like the debt burden, climate change, the election time and the wars in our neighbouring countries. We are on top of the game so that our small car doesn’t fall in the potholes along the way.”
Under the theme, ‘Globalization Reshaped—Riding the Waves of Economic Shifts’, the symposium brought together leading economists and policymakers to critically examine how Uganda’s economy can navigate this challenging period and still maintain growth.
Mugume highlighted the critical need for Uganda to adapt its economic strategies in line with the evolving international environment including implementing agile monetary policies capable of responding to global uncertainties. He said as long as the current situation does get more volatile, the central bank is confident of providing a stable macroeconomic environment.
In his opening remarks, Francis Karuhanga, the Chief Executive of Stanbic Uganda Holdings Limited (SUHL), reminded the gathering of the key takeaways from the previous edition and emphasized the importance of these discussions in shaping appropriate economic policies.
He said, “A lot has happened since we last met. Last year we were under the theme of ‘Global crossroads, reimagining business’, we explored a lot of things and we saw that much has already happened. One of these was geopolitics, for example the war in Ukraine persisted longer than all of us would imagine. The changes at the White House, the Middle East mix and wars in South Sudan and in the Democratic Republic of Congo; all these have a direct impact on the companies and businesses we lead. We also talked about Climate Change and Artificial Intelligence, and surprisingly whatever we discussed we saw it happen in 2024. So we are back here once again to give a critical lens to these other things that have not happened. Not just because they pose a risk, but because we are also looking into the opportunities that come along with them.”
The symposium comes at a time when Uganda has been earmarked by the African Development Bank as one of the countries in Africa projected to see a Gross Domestic Product (GDP) growth rate of above six percent, almost double the estimated average rate for the whole continent.
Christopher Legilisho, Stanbic Bank Senior Economist said regardless of the global shocks, Uganda is still a strong economy with the primary driver of this growth being investments in the oil and the agricultural sector.
“Coupled with a surge in exports of refined gold and higher earnings from coffee, Uganda’s economy has appeared to have largely recovered from the negative impact of the Covid-19 pandemic. However, there are already peeping negative impacts from the withdrawal of aid from development partners. The government may need to borrow more or increase taxes just to cover for the deficit from the withdrawal of US aid. And if there is anything that they could do to support that particular sector, the non-governmental sector, I think that would really help those who have been impacted by the shock of job losses,” he said.
In his remarks Sébastien Walker, the IMF Country Representative for Uganda, discussed how Uganda could capitalize on international partnerships and economic diplomacy. He reassured participants that while challenges exist, numerous opportunities to innovate and attract investment remain, particularly as the country positions itself within the global economy.
Dr. Fred Muhumuza, an economic researcher and lecturer, spoke on the necessity of a multi-faceted approach to development. He stressed the importance of collaboration among government agencies, the private sector, and civil society in creating a supportive environment for sustainable growth amid changing global dynamics, reinforcing the idea that joint efforts are vital for addressing economic challenges.
“Our tax to GDP ratio is approximately 13% and has a lot of room to grow, but there are important things that need to be done to enable Uganda’s sustainable development. Our current monetary policy is really working against tax mobilization and growth. And it’s a debate to the economists out there, at what point should I stabilize the economy. There is very little aggregate demand in the economy because we want to solve the inflation issue, this is not just a Bank of Uganda issue but a fiscal policy issue,” he said.
Muhumuza likened the economy to the human body. Regardless of the fact the brain is not the biggest body organ, but it needs sufficient blood supply for the rest of the body parts to function properly.
He said, “Ugandans need to see enough money in the economy, and the question is this: is all the money locked in the central bank? This is honestly not true! But we currently have over UGX9 trillion locked in the judiciary as bail money; this money is not benefiting Ugandans because there is no return on investment being realized. The government needs to scale down the fiscal deficit caused by treasury bids and bonds, where we end up in a deficit trying to refinance them.”
Mumba Kenneth Kalifungwa, the Stanbic Bank Uganda Chief Executive hailed the guests and panelists for providing valuable insights, and expressed optimism on the future outlook of Uganda’s economy.
“I am hopeful that together we have the opportunity to, not only continue building on the solid foundation of excellence that Stanbic has been known for, but to reinforce our purpose of driving Uganda’s growth. This is not just a statement. It’s a promise, it is a commitment that inspires everything we do in driving sustainable economic growth for our communities, and our customers,” he said.
He added that with the shifting signs of international trade, emerging technologies and evolving market dynamics, there is a need to work hand in hand. “To ensure that we capture every opportunity that comes our way. Our commitment to you, not just as a bank, but a strategic partner for your growth, stands unwavering.”
