Uganda’s economy posted an impressive 6.3% real GDP growth for the financial year ending June 30, 2025, signaling a resilient rebound from global economic turbulence, according to the Bank of Uganda’s latest Integrated Annual Report.
The growth, up from 6.1% the previous year, was driven by robust performance across agriculture, industry, and services—supported by sound monetary policy and stable inflation.
Bank of Uganda Governor Michael Atingi-Ego attributed the solid performance to “prudent monetary policy, effective coordination between monetary and fiscal authorities, and a relatively stable exchange rate,” which helped maintain inflation at 3.5%.
Agriculture Leads the Recovery
Agriculture remained the backbone of Uganda’s economy, expanding by 6.6% compared to 5.6% the previous year. The Agricultural Credit Facility (ACF), administered by the central bank, disbursed UGX 253 billion to 3,224 projects, supporting farmers with affordable financing for mechanization and post-harvest handling.
“We’ve empowered farmers and agribusinesses with affordable financing for mechanization and post-harvest handling,” Atingi-Ego noted, crediting the ACF for stimulating rural productivity and food security.
Industry and SMEs Power Growth
The industrial sector grew 7.0%, up from 5.5%, buoyed by light manufacturing and agro-processing. The Small Business Recovery Fund (SBRF) injected UGX 59 billion into 2,994 small and medium enterprises (SMEs) struggling to recover from COVID-19 impacts.
“These aren’t handouts; they’re catalysts for post-pandemic rebound,” Atingi-Ego said in an October 4 post on X, emphasizing that the fund’s flexible lending model—offering up to UGX 20 million without collateral—expanded financial inclusion. Notably, 64% of the beneficiaries were women and youth.
Inflation and Exchange Rate Stability
Despite rising domestic demand, headline inflation edged up slightly to 3.5% from 3.2%, largely driven by higher service costs. The Uganda shilling appreciated by 2.7% against the U.S. dollar, averaging UGX 3,678, which helped cushion imported inflation pressures.
Gross official reserves rose to USD 4.3 billion, equivalent to 3.9 months of import cover, offering a solid safeguard against external shocks.
“We’ve fortified external buffers with a Strategic Asset Allocation framework, even diversifying into gold,” Atingi-Ego told CNBC Africa in a September 28 interview, underscoring Uganda’s readiness for upcoming oil revenues.
Fiscal Discipline and Growth Outlook
Fiscal-monetary coordination remained a central pillar of Uganda’s economic management. Domestic borrowing increased to UGX 12.1 trillion, pushing Treasury bill yields to 14.8% for 364-day papers. Despite this, investor confidence stayed firm, while private sector credit grew by 8.8%.
BoU projects GDP growth between 6.0% and 6.5% for FY 2025/26, with an acceleration to 8% over the next five years, driven by oil investments and the country’s tenfold growth strategy. However, Atingi-Ego cautioned against complacency, citing risks from global economic tightening, commodity price fluctuations, and adverse weather patterns.
“As we near our 60th anniversary, we remain steadfast in maintaining price stability and sound finance for socio-economic transformation,” the Governor said.
Uganda’s economy, buoyed by strategic reforms and strong sectoral performance, continues to defy global headwinds—offering renewed optimism for sustained recovery and inclusive growth.
