Uganda’s Robust Economic Growth in FY 2025
The World Bank’s 26th economic outlook report highlights Uganda’s robust economy, showing continued broad-based growth in Financial Year 2025 (FY25). Despite global challenges, Uganda’s economy remained strong, driven by resilient performance in agriculture, tourism, industry, and services. Inflation stayed below the central bank’s target, supported by prudent monetary policy and a stable shilling.
The report also shows an improved external position, with increased export receipts from coffee and gold, boosting foreign exchange reserves and providing a cushion against global uncertainties. However, fiscal pressures continue, with a widening deficit and higher debt-servicing costs. The World Bank stresses the need for fiscal consolidation and recommends rebalancing spending toward education, health, and infrastructure.
Oil and Services Sector Outlook
The report paints a positive medium-term outlook, with growth expected to accelerate as oil production begins. The World Bank forecasts oil production to start in FY27, with significant revenues expected by FY28. However, risks to the overall outlook remain, including fiscal slippage, delays in the oil sector’s development, global trade uncertainty, and climate shocks. Experts urge Uganda to transition workers from low-productivity agricultural jobs to higher-productivity industry and services jobs to sustain growth.
To harness its demographic dividend, Uganda must invest in human capital and infrastructure, creating better jobs and advancing its economic transformation. Agro-industrialisation remains key to this strategy, with potential for job creation, export earnings, and value addition. However, the sector faces challenges such as weak primary production and limited access to services like irrigation, roads, and energy.
Addressing Climate Resilience in Agriculture
Qimiao Fan, World Bank’s division director for Somalia, Rwanda, Uganda, and Kenya, stressed the need for policy improvements and investments in agriculture. To support agricultural value chains, Uganda must invest in modern inputs, such as seeds, breeds, and irrigation. He also pointed to the importance of integrating climate resilience into Uganda’s agricultural development. Climate change threatens productivity and growth, making it imperative to build resilience into agricultural practices.
The World Bank supports Uganda’s transition to climate-resilient agro-industrialisation through initiatives like Agri-Connect. This transition is critical for sustainable growth, poverty reduction, and creating more and better jobs.
Bank of Uganda’s Financial Sector Report
According to the Bank of Uganda (BoU) report, Uganda’s financial sector remained sound in FY 2024/25. Non-performing loans (NPLs) decreased to 3.68% by June 2025, down from 4.13% in March 2025. This reflects stronger economic activity, allowing businesses and households to better service their debt. The BoU report shows that lending rates increased in FY 2024/25, averaging 18.16%, compared to 17.89% in the previous year, driven by higher credit demand, especially in trade and personal loans.
Despite the increase, lending rates eased slightly in the second half of FY 2024/25, reflecting the impact of the Central Bank’s monetary policy easing. This was a result of successive reductions in the Central Bank Rate (CBR), which helped stabilize borrowing costs.
Foreign Exchange Reserves and Shilling Strength
BoU Governor Michael Atingi-Ego reported that Uganda’s shilling strengthened by an average of 1% per month in FY 2025/26. From June to October 2025, the shilling appreciated by 3.9%. This positive trend was driven by strong foreign exchange inflows from coffee exports, remittances, tourism, and foreign direct investment in the oil sector. These inflows allowed the central bank to accumulate reserves, which reached $4.98 billion (Shs17 trillion) by September 2025. This level of reserves covers 3.7 months of imports, a significant improvement from the previous year.
External Sector Performance
Uganda’s trade deficit narrowed by 3.6% in FY 2024/25, improving to $4.67 billion (Shs16 trillion) from $4.85 billion (Shs16.6 trillion) in FY2023/24. This improvement was driven by increased exports, which grew by $3.16 billion (Shs10.8 trillion), offsetting a rise in imports. As a result, Uganda saw a positive shift in its external sector, contributing to the overall strength of Uganda’s robust economy.
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Uganda’s Economic Performance
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Uganda’s robust economy continues to show resilience in key areas such as exports, foreign investment, and currency stability. However, challenges such as fiscal pressures, climate risks, and the need for infrastructure development remain. To sustain growth, Uganda must continue investing in human capital, innovation, and climate resilience.
