The Independent Uganda: You get the Truth we Pay the Price
KAMPALA, UGANDA | THE INDEPENDENT | Economists have called on the government to learn to leave within its means and manage spending if the country is to survive the constant global and local economic shocks.
This comes as the country, like many around the world are reeling from the shock by US President Donald Trump’s sweeping fiscal programs that have seen the world’s largest donor cut aid to countries and multinational humanitarian organisations.
For Uganda, this comes at a time the country is entering the last stage of the election cycle that is usually associated with high government spending and fears of budget cuts and high inflation.
Speaking at the 2025 Stanbic Economic Insights Symposium, Dr Fred Muhumuza, an economic and policy researcher, said Uganda maneuvered the COVID19 era fairly well and has not been highly affected by the Russian war on Ukraine, the global inflation and climate shocks, but that it has not learnt lessons.
Giving the example of the Irish Republic that, after the great recession, decided to concentrate on critical sectors like medicine, Muhumuza questioned what Uganda has done to prepare for future shocks.
He specifically criticized government continued high spending, like the large government vehicle fleet, which he said, could save the government 1 Trillion Shillings if only essential offices were given cars.
Muhumuza said that instead, for the government it is business as usual, adding that in Uganda, optimism is often anchored on nature, but that country must be intentional and learn to ride the waves.
The US has been giving Uganda in excess of 1.2 Billion Dollars, with 700 million dollars going to support the government programmes and the rest to non-governmental organisations. But Muhumuza said that while that is a small part of the economy, where the money is allocated is what matters most.
Speaking on the theme: Globalization Reshaped — Riding the waves of economic shifts, Muhumuza said that until the country talks seriously about reducing government expenditure, there is no going so far.
Dr Adam Mugume, the Executive Director, Research at the Bank of Uganda downplayed the likely effects of the US withholding aid to Uganda, saying they would not be severe, buts says there is need for the to reduce dependency on foreign aid.
Prior, Stanbic Bank Economist, gave a mixed outlook of the Ugandan economy in the midterm, saying the country was on a good growth trajectory, through risks remained.
The country’s growth, they said would continue to rely of strong coffee and gold exports as well as agricultural output. However, Christopher Legilisho, an Economists at the Stanbic Bank Goup, said all these factors were not a given, as global prices could fall any time.
He said, for example, the coffee boom in Uganda has been aided by the drop in supplies by major exporters, particularly Brazil.
There is also a likelihood of weather not being good enough for a good agriculture harvest. On the oil and gas industry, the report noted that the expected revenues and the current investments were good for the economy, but that production also depended on the availability of funds to invest in the remaining infrastructure like the refinery and the East African Crude oil pipeline.
These, coupled with the electioneering period could not guarantee the continued growth rates.
However, Dr Mugume said the government had learnt lessons from the 2011 elections where the post-election period was hit by hyperinflation, adding that since then, the Bank and the government have managed to control the economy.
Dr Sebastien Walker, IMF Country Representative also agreed on the need to grow the local investors, who are the taxpayers, so as to grow a sustainable economy in general.
While commending Uganda’s focus on the infrastructure, he said that helping businesses thrive involved improving governance by curbing corruption, improving infrastructure and human capital in the country.
However, he warned that the oil and gas revenues, expected starting 2027, would not solve all the country’s economic needs, adding that there will come a time when the revenues would stop flowing.
Francis Karuhanga, the Chief Executive, Stanbic Uganda Holdings Ltd said the country should not only focus on the global geopolitics alone as critical to Uganda’s economy, but also the regional situation too.
“In the region, we have had our own share of geopolitics in the DRC (Democratic Republic of Congo), the situation in South Sudan continues to simmer, and all these have a significant influence on the stability and growth of businesses,” Karuhanga said.
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