Economists stress the importance of Uganda learning from previous economic shocks, like the COVID-19 pandemic and the Ukraine war, highlighting the need for fiscal discipline and better allocation of foreign aid. Key points from the 2025 Stanbic Economic Insights Symposium emphasize strategic investments, reduced government spending, and an acknowledgment of regional geopolitical factors affecting Uganda’s economic stability.
Economists urge the Ugandan government to learn from past economic shocks, emphasizing the need for fiscal discipline to survive ongoing global and local economic turbulence. This advice follows significant reductions in aid from nations like the U.S., particularly under President Trump’s fiscal measures, impacting Uganda’s economy amid the election cycle which typically sees increased government spending and inflation concerns.
At the 2025 Stanbic Economic Insights Symposium, Dr. Fred Muhumuza, an economic researcher, noted that while Uganda managed the COVID-19 crisis and remains resilient against the Ukraine conflict and global inflation, it has failed to adopt critical lessons. He cited Ireland’s strategic focus post-recession in sectors like medicine and criticized Uganda’s sustained high spending on non-essential government fleets, suggesting potential savings of 1 trillion Shillings if spending was curbed.
Muhumuza stressed that Uganda’s reliance on optimism tied to natural resources must shift to proactive planning for economic shocks. The U.S. previously contributed over 1.2 billion dollars to Uganda, with significant portions directed towards government programs. However, he emphasized the importance of strategic allocation over mere funding amounts to bolster economic resilience.
Dr. Adam Mugume from the Bank of Uganda offered a tempered view on the potential impacts of reduced U.S. aid, suggesting that while dependency on foreign funding needs to lessen, immediate effects would be manageable. In a mixed economic outlook, experts highlighted that Uganda’s growth is contingent on stable export performance in coffee and gold, alongside healthy agricultural yields, though global market fluctuations remain a significant risk.
Christopher Legilisho from Stanbic Bank cautioned that factors like fluctuating global prices for coffee—exacerbated by production drops in Brazil—and unpredictable weather can hinder agricultural outcomes. Meanwhile, the oil and gas sector promises potential growth, pending adequate investments in necessary infrastructure such as refining and transportation pipelines, with the upcoming electoral period posing additional economic uncertainties.
Dr. Mugume mentioned that lessons from Uganda’s hyperinflation post-2011 elections have led to better economic management by the Bank and government. IMF representative Dr. Sebastien Walker echoed the importance of nurturing local investors and enhancing governance to improve Uganda’s investment climate and sustain long-term economic development.
Karuhanga from Stanbic Uganda Holdings Ltd highlighted that Uganda should also consider regional geopolitics, noting ongoing instability in neighboring countries like the DRC and South Sudan can affect local business growth and stability.
In summary, Uganda faces numerous economic challenges and opportunities requiring strategic fiscal management and a focus on local investments to decrease dependency on foreign aid. Experts advocate for lessons learned from past crises to inform future actions, with emphasis on improving governance and infrastructure to support sustainable economic growth amidst both local and global uncertainties.
Original Source: www.independent.co.ug
