BusyMarkets Kampala #001: The financial outlook of Uganda in 2023

African factory workers

Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Financial investments are subject to market risks, and readers should do their own research and consult with a professional advisor before making any investment decisions. Furthermore, the views, information, or opinions expressed herein are solely those of the author in their personal capacity; they do not necessarily reflect the views of the author’s employer or BusyContinent.

The Ugandan Shilling further strengthened against the dollar due to increased inflows from offshores and charity firms. There was limited demand for the dollar hence weakening the dollar. The USD/UGX exchange rate is likely to hold steady this week in ranges 3722/3732.

Labour export paying off?

That’s an 80 shilling depreciation when compared to last week when it averaged ranges of 3640/3650. Uganda being one of the African countries that exports both skilled and semi-skilled labour force out to the Middle East countries like UAE, Oman and Qatar, end of year foreign direct payments effected in dollars means enough is in circulation for the Ugandan economy. This in turn strengthened the local currency last week however was short lived.

However, I believe the USD will continue with it bullish tendencies at this week, due to serious demand from traders in their quest to kick off the business year while they settle payments overseas. It’s going top business as usual in downtown Kampala soon or sooner.

Looming global recession bad for Uganda

The new year began with fears that some developed economies could slip into recession which could impact developing nations like Uganda. This is due to linkages with development partners, what affects developed nations has an impact on developing countries. It is something to monitor keenly. Also something that caught my attention is how Russia will respond to the oil price caps imposed by the G7 nations in the quest to reduce her revenues.

Russian foreign minister Sergey Lavrov (Left) and Ugandan President Yowerei Museveni

If Russia cuts supply to territories imposing price caps like UK, USA, Australia, Japan, its better news to nations like Uganda that are neutral and weren’t quick to take sides when the conflict started. Cheaper oil will be on the market hence faster recovery of the economy.

The equities market slump continues, Umeme to exit

The equities market continues to slump due to effects of COVID and the Russia – Ukraine conflict. End of year share prices of most Ugandan listed companies showed a downward trend in December except Equity Group Ltd and Jubilee Holdings Ltd. Both companies have had a good year which could slightly because of taking good business strategies.

Uganda’s main electricity distribution company, UMEME will be exiting Uganda and closing books at the Uganda Stock Exchange in 2025 when their contract will be coming to an end. Investors are torn between scarping the market of any available to UMEME shares and wait for the big government pay out to all shareholders in 2025 or sell as early as they can because of their mistrust on the political figures and worse still stability in the long run.

Sell now if you can at least secure you initial investment unless you just bought the equities. Increased vandalism in remote areas could also come up as a reason why the PLC may not meet the revenue target thus affecting favorable dividend announcement at the AGM.

Ugandan government battles inflation

Matia Kasaija, Uganda’s Finance Minister

In the bid to curb inflation the Ugandan government dished out very appealing interest rates few months ago. With the target of mopping out excess liquidity seemingly met, interest rates are slowly but surely going to continue on the down ward spiral. I would advise investors to be part take in this government paper as soon as they can, because a few weeks from now their won’t be business sense when one invests in government securities.

The good seasons for agriculture at the back end of the drought will also imply a deflation on consumer goods. Curbed inflation countered with good produce for both food and cash crops implies a recovery and less appetite for credit (public debt) by government.

Below is the indicative interest rates for government paper as of 2.01.2023.

Period to Invest in Indicative interest rate per annum
91DAYT-BILL 11.00%
182 DAYT-BILL 11.00%
1YEART-BILL 13.50%
2YEARBOND 14.00%
3YEARBOND 13.50%
5YEARBOND 16.20%
10YEARBOND 16.00%
15YEARBOND 16.00%
20YEARBOND 17.00%


Seth Nuwagaba is an investment banker at one of the biggest banks in East Africa.