BusyMarkets Kampala #011: Inflation loosens its grip of Uganda’s economy

“Currently trading at 3735/3745 but we are highly likely to appreciate 3725/3735 by the next edition of the business insight”. That right there, was our prediction statement from the last business insight edition which has come to materialize. The prevailing market ranges for the UGX/ USD is 3722/3732. The currency should be able to hold steady here for the near future unless Bank of Uganda makes major interventions especially monetary.

Inflation in Uganda continues to drop

The annual headline inflation for the 12 months ended April 2023 dropped slightly to 8.0% down from 9.0% in March 2023. This 1% drop was driven mainly by a decrease in core inflation which fell to 6.8% from 7.6% in March 2023. The other components of the inflation Index, namely Food Crops/Related Items and Energy Fuel and Utilities also reduced.

Despite the reductions in recent months, inflation is still above the central bank’s target of 5%. In other news, Bank of England is poised to raise rates again to tackle stubborn inflation. We will be monitoring this and taking note of the trickle-down economics since several affluent British citizens own significant stake in some of the biggest banks in Uganda.

Stocks to watch


UMEME Uganda is currently at a market price of UGX 440.0000. UMEME is more volatile than 90% of UG stocks over the past 4 months, typically moving +/- 5% a week. The recently declared Dividend of UGX 63.9 per share in the recently released financials FY 2022 has rallied the demand for the stock further hence the market price.

This provides a firm buying support level for the long-term investor. Having govt confirm the buy-out clause which is drawing nearer by the day, has provided justification for aggressive demand of the stock with leverage and a massive capital gain and dividend pay-out as well.

Equity Group

Kenya’s Equity Group Holdings said on Tuesday its first-quarter 2023 pretax profit jumped 10% to 16.9 billion Kenyan shillings ($124m), as its loan book rose. Equity, which also operates in Uganda, Tanzania, Rwanda, Burundi, South Sudan and DRC, said net loans rose by over a fifth to 756.3 billion shillings from 623.6 billion shillings in the year earlier period.

Stanbic Uganda Holdings Ltd Hybrid AGM, comprising of a physical meeting at the Victoria Hall, Serena Hotel, Kampala and via electronic means on 02nd June 2023 at 11:00 AM EAT.

Money Markets

Interest rates on treasury bills and bonds are largely unchanged. So, take time off to look at what the biggest players in Uganda’s banking sector are averagely offering for fixed deposits.

Fixed Deposit 91 Days 182 Days 364 Days
UGX 9.00% 9.70% 10%
USD 3.50% 3.85% 4.20%

Fixed deposit interest rates usually mirror Treasury bill rates. The reason why fixed deposit rates are usually a few basis points less is because withholding tax on proceeds from Fixed deposits is 15% whereas on T. Bills proceeds is 20%. The returns are literally equivalent.

Treasury Bill 91 Days 182 Days 364 Days
UGX 10.00% 10.20% 12.10%


Stanbic Bank is interesting investors to this secondary market investment. I would recommend. 194 days to Maturity of 23/November/2023. Interest: 10% Returns

Investment Value 100,054,112
Face Value 105,400,000
Interest Before Tax 5,345,888
Interest After Tax 4,276,710

There is a 5 year and 20-year treasury bond auction this week. Prevailing interest rates are 15% and 17% respectively. We are likely to see an upgrade in interest rates for the 5-year bond to the region of 16% per annum due to government’s appetite for not “so long” and not “so short” tenure debt. However, 20-year bond should be able to hold still at 17.0%. We will be assessing how well I did in the next edition of the business insight.

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