The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Uganda’s economic growth has strengthened markedly in recent years, rising from below 3 per cent in 2020 to an estimated 7 per cent today, supported by some of the strongest macroeconomic indicators on the continent.
While these gains have drawn both praise and scepticism, particularly around per capita income figures and middle-income status claims, the country’s macroeconomic stability is increasingly hard to ignore.
Uganda has maintained one of the lowest inflation rates globally, averaging about 3 per cent in recent years, alongside a remarkably stable exchange rate. The Uganda Shilling, currently trading between 3,550 and 3,590 to the US dollar, has appreciated steadily and was named the strongest currency in the region over the past year, ranking among the best-performing in Africa.
These developments have propelled Uganda to third place in the 2025 Absa Africa Financial Markets Index, up from fourth in 2024. The index, compiled by Absa Bank with support from the United Nations Economic Commission for Africa (UNECA), assesses 28 countries on market depth, access to foreign exchange, macroeconomic stability, and regulatory effectiveness.
UNECA Undersecretary Claver Gatete singled out Uganda and Nigeria as standout performers at a time when many economies are grappling with foreign exchange pressures. However, he cautioned that sustaining this momentum will require continued commitment to transparency, policy certainty, and the expansion of domestic institutional investment.
According to the index, only 10 of the assessed countries improved their overall scores in 2025, showing both persistent challenges and measured progress across Africa, particularly in foreign exchange reforms, product diversification, and climate-related financial initiatives.
Absa’s Head of Global Markets, Anthony Kirui, pointed out improvements in foreign exchange market credibility in Uganda and Nigeria, the adoption of netting legislation, and the introduction of innovative financial instruments as key drivers of performance.
Such innovations, including sovereign sukuk, asset-backed securities, and green and infrastructure bonds, are increasingly seen as critical tools for mobilising long-term capital to support infrastructure development, climate action, and inclusive growth.
Sovereign Sukuk is a type of Islamic bond issued by a government to raise funds for projects or activities that comply with Sharia law, where investors buy a share of the asset and receive returns based on its performance.
Uganda scored 66 out of 100 in the 2025 index, trailing only South Africa (86) and Mauritius (76). Its strongest showing was in the macroeconomic environment category, where it scored 87 points, buoyed by low inflation and improved non-performing loan ratios.
The country also performed well on market transparency, scoring 76 points, reflecting government efforts to upgrade central securities depositories and enhance settlement efficiency and liquidity.
In legal standards, Uganda ranked fifth with 85 points, underpinned by ongoing reforms across banking, insurance, capital markets, and related sectors. These regulatory improvements are helping to strengthen market confidence, enhance oversight, and promote sustainability.
Commenting on the results, the Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi, attributed Uganda’s performance to deliberate policy choices and sustained reforms. He noted that achieving strong growth in an election year underscored the effectiveness of prudent macroeconomic management, citing a stable currency, exports valued at USD 13.4 billion, and rising foreign investment inflows.
Ggoobi emphasised that the next phase of growth must focus on deepening and broadening capital markets. Priorities include expanding access to long-term debt and equity financing, attracting venture capital to support innovation, and reducing collateral constraints for growing firms. He also revealed that the government is exploring the establishment of an SME-focused stock exchange to support businesses that do not yet meet main-board listing requirements.
Bank of Uganda Governor Michael Atingi-Ego noted that the key challenge facing the financial sector is no longer regulatory sophistication, but capital mobilisation and market depth. He highlighted the central bank’s 2022–2027 strategic targets, including achieving a financial inclusion rate of 75 per cent and continued progress in financial market development, with some benchmarks already surpassed.
Absa Bank Uganda Managing Director David Wandera attributed Uganda’s progress to regulatory and policy reforms that have strengthened transparency and investor protection. He pointed to capital markets reforms introduced in 2025, covering collective investment schemes, securities offerings, licensing, approvals, and corporate governance, as critical to unlocking domestic capital and attracting long-term international investment.
Wandera added that Bank of Uganda, led reforms now require monthly submission and publication of Environmental, Social and Governance (ESG) performance data, including sectoral lending and outcomes, further strengthening accountability and confidence in Uganda’s financial system.
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