Economists are encouraging Uganda’s government to manage spending wisely to adapt to global economic shocks. Despite reasonable handling of COVID-19, concerns arise regarding ongoing high expenditures. Experts emphasize the importance of local investment and a comprehensive approach to governance and regional stability for future economic resilience.
In light of ongoing economic challenges, economists are urging the Ugandan government to adopt a sustainable financial strategy to manage its expenditures effectively. As Uganda faces economic repercussions from global issues such as the COVID-19 pandemic and the Ukraine conflict, there is an urgent need for fiscal discipline.
During the 2025 Stanbic Economic Insights Symposium, Dr. Fred Muhumuza highlighted that Uganda’s handling of the pandemic had been relatively successful; however, he criticized the government’s failure to apply lessons learned. He raised concerns about high governmental spending, particularly on non-essential assets like a large vehicle fleet, suggesting that reducing such expenditures could result in significant savings.
Dr. Muhumuza emphasized the importance of intentionality in economic strategies, stating that mere reliance on natural resources is insufficient for sustainability. He indicated that the U.S. aid, amounting to over $1.2 billion, is small relative to Uganda’s economy and called for better allocation of these funds to ensure meaningful impact.
Dr. Adam Mugume of the Bank of Uganda provided a tempered perspective regarding potential reductions in U.S. aid, emphasizing the necessity for Uganda to minimize its dependence on foreign assistance. Meanwhile, a Stanbic Bank economist presented a cautious midterm outlook for the Ugandan economy: while growth is anticipated due to coffee, gold exports, and agricultural production, risks exist, especially with fluctuating global prices.
Christopher Legilisho from Stanbic Bank pointed out that Uganda’s economic resilience hinges on agricultural performance and the oil and gas sector’s future. Despite promising investments and projected revenues, he cautioned that the economy faces uncertainties, including weather conditions that could affect agricultural yields.
The IMF’s Dr. Sebastien Walker stressed the importance of fostering local investors to build a robust economy, advocating for improved governance and infrastructure. He reiterated that anticipated oil revenues beginning in 2027 would not resolve all economic challenges, emphasizing the need for a long-term sustainable growth plan.
Francis Karuhanga of Stanbic Uganda Holdings Ltd echoed these sentiments, highlighting that while global geopolitics are vital, regional stability, particularly in countries like the DRC and South Sudan, directly affects Uganda’s economic environment.
Ultimately, the consensus among economists is clear: the Ugandan government must prioritize fiscal prudence and strategic planning to navigate the complexities of both local and global economic pressures.
The discussions reveal a critical need for Uganda to reassess its financial management strategies in response to global economic challenges. While the economy is poised for growth, reliance on external aid and fluctuating global markets present significant risks. Emphasizing local investment, reducing government expenditures, and improving governance appear essential for achieving sustainable economic stability. Moreover, situational awareness of regional geopolitics is paramount for fostering a conducive business environment.
Original Source: www.independent.co.ug
