By Rising Nation Correspondent
October 14, 2025 | Kampala, Uganda
Uganda’s economy continues to demonstrate resilience and sustained expansion amid global financial uncertainties and geopolitical instability. According to the Ministry of Finance, Planning and Economic Development, real GDP grew by 6.3% in FY2024/25, up from 6.1% the previous year, signaling steady economic recovery supported by strong domestic demand, government initiatives, and a stable macroeconomic environment.
Steady Economic Growth Amid Global Challenges
The nominal size of Uganda’s economy rose to UGX 227.88 trillion in FY2024/25, up from UGX 203.71 trillion a year earlier. Growth was primarily driven by continued government investment through flagship programs such as the Parish Development Model (PDM), favorable weather conditions, and a stable policy environment that boosted production and private sector activity.
The services sector maintained its lead as the largest contributor to GDP at 42.1%, followed by agriculture at 26.1%, and industry at 24.3%. Looking ahead, government projections indicate real GDP growth of 7% in FY2025/26 and above 7% in the medium term, anchored on agro-industrialization, innovation, and infrastructure expansion.
Economic indicators also paint an optimistic picture. The Composite Index of Economic Activity (CIEA) stood at 179.4 in August 2025, while the Purchasing Managers’ Index (PMI) was 54.0 in September, reflecting expansion in private sector activity. The Business Tendency Index (BTI) improved to 59.2, signaling growing business confidence across all sectors.
Inflation and Exchange Rate Stability
Inflation remained contained within the target range, averaging 3.8% in Q1 FY2025/26. However, headline inflation rose slightly to 4.0% in September 2025, mainly due to higher food prices following seasonal factors. Core inflation is expected to stay within the 5% policy target, supported by stable exchange rate conditions, prudent monetary management, and sufficient domestic food supply.
The Ugandan Shilling continued to strengthen against the US dollar, appreciating to an average of UGX 3,497/USD in September 2025, from UGX 3,573/USD in August. The appreciation was attributed to increased foreign exchange inflows, including remittances, coffee export receipts, and offshore investments.
External Sector Performance
Uganda’s external sector recorded notable improvements. Exports rose by 55.4%, reaching USD 3.475 billion in Q4 FY2024/25, largely driven by coffee exports and improved international prices. Imports also grew by 38.5% to USD 3.975 billion, reflecting heightened domestic investment and consumption demand.
Consequently, the trade deficit narrowed by 21.1% to USD 499.53 million in Q4 FY2024/25 from USD 632.74 million the previous year. Remittances from Ugandans abroad reached USD 1.57 billion in FY2024/25, up from USD 1.40 billion, underscoring the growing role of the diaspora in sustaining foreign exchange inflows and household incomes.
Second Quarter Budget Releases: FY 2025/26
The approved budget for FY2025/26 amounts to UGX 72.38 trillion. By the end of the second quarter, government had released UGX 38.61 trillion, representing 53.4% of the total approved budget. Of this, UGX 20.18 trillion was released in Q1 and UGX 18.43 trillion in Q2.
Key Allocations Include
- Debt & Treasury Operations: UGX 7.07 trillion
- Wages and Salaries: UGX 2.13 trillion
- Pensions and Gratuities: UGX 339 billion
- Parliament: UGX 223.64 billion
- Judiciary: UGX 64.06 billion
Driving the Tenfold Growth Strategy (ATMS)
To sustain Uganda’s long-term growth vision, government prioritized strategic sectors under the ATMS framework; Agro-industrialization, Tourism, Mineral-based Industrial Development, and Science, Technology & Innovation.
Agro-industrialization: UGX 320 billion for agricultural research, operations, and capital development
Tourism Development: UGX 53.65 billion for branding, marketing, and hospitality standards.
Mineral-based Industrial Development: UGX 16.64 billion through the Petroleum Authority of Uganda.
Science, Technology & Innovation: UGX 124.25 billion through the Ministry of ICT and NITA-U to drive digital transformation and innovation.
Key Enablers: Security, Infrastructure, and Human Capital
Infrastructure development continues to be a top priority. The Ministry of Works and Transport received UGX 1.7 trillion, while the Ministry of Energy and Mineral Development got UGX 361.55 billion to support power generation and rural electrification. Kampala Capital City Authority received UGX 145.68 billion, and the Greater Kampala Metropolitan Area Project was allocated UGX 292 billion.
Under Human Capital Development, government released:
Local Governments received UGX 390.78 billion, with over UGX 252 billion directed toward capital development projects.
Supporting Local Economic Transformation
Government released UGX 554 billion to the Parish Development Model (PDM), ensuring 50% of its approved budget is disbursed to drive community-level wealth creation and monetization of the subsistence economy.
Additionally, UGX 187 billion was released to clear domestic arrears, while key revenue-generating agencies including URA, URSB, and National Citizenship & Immigration Control received enhanced allocations to strengthen revenue mobilization.
Commitment to Efficiency and Accountability
Uganda’s FY2025/26 budget reaffirms government’s commitment to the Tenfold Growth Strategy, emphasizing efficiency, accountability, and inclusive development. With sustained investment in infrastructure, human capital, and productive sectors, Uganda remains firmly on its path toward middle-income status.
Patrick Ocailap
