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Many analysts agree that the Ugandan economy in 2024 exhibited remarkable resilience, navigating a landscape fraught with global uncertainties and regional challenges. At the centre of this performance was Dr Michael Atingi-Ego, Deputy Governor of the Bank of Uganda (BoU). In his end-of-year reflections, Dr. Atingi-Ego highlighted the pivotal actions underpinning this economic stability, crediting a mix of strategic monetary policies and innovative reforms. Here are ten standout actions he led to stabilise the economy:
1. Stabilizing Inflation
Uganda maintained one of Africa’s lowest and most stable inflation rates in 2024. The BoU raised the Central Bank Rate (CBR) from 9.5% at the start of the year to 10.25% in April, addressing inflationary pressures caused by external shocks and exchange rate volatility. With inflation under control by November, the CBR was cautiously reduced to 9.75%.
“Our actions were calibrated to ensure price stability while fostering economic recovery,” Dr. Atingi-Ego noted in his reflections. “Keeping inflation within acceptable limits remains a cornerstone of our monetary policy.”
Key figures:
- Annual headline inflation: 2.9% (as of November 2024), the lowest in ten months.
- Core inflation: Stabilized at 3.8%, well below the BoU’s 5% target.
This targeted approach ensured price stability, supported by strong food crop production and prudent fiscal coordination, earning Uganda second place in inflation management across Africa after Mauritius.
2. Strengthening the Exchange Rate
The Uganda shilling demonstrated exceptional resilience, depreciating by only 32.9% against the U.S. dollar over the past decade—the lowest depreciation rate among African peers. Measures included raising the CBR to attract foreign investors, who boosted demand for the shilling by investing in government bonds.
“A stable currency is essential for investor confidence,” said Dr. Atingi-Ego. “Our interventions were designed to enhance foreign exchange inflows while safeguarding the purchasing power of Ugandans.”
Key outcomes:
- Exchange rate stability: As of November 2024, the shilling depreciated by only 0.3% monthly, trading at UGX 3,677.55 per dollar.
- The currency’s stability was supported by a steady inflow of foreign currency from coffee exports, remittances, and foreign direct investments.
3. Modernizing Financial Systems
To enhance liquidity and efficiency in Uganda’s financial markets, the BoU adopted the Global Master Repurchase Agreement, simplifying interbank lending. Collaborating with partners like Frontclear, the BoU implemented technical improvements to ease banks’ access to financing.
“Innovation in our financial systems is key to building a resilient economy,” Dr. Atingi-Ego remarked. “Modern tools and frameworks empower banks to serve the economy more effectively.”
Key facts:
- Real-Time Gross Settlement Systems processed UGX 808.7 trillion in transactions by June 2024.
- The Electronic Funds Transfer system facilitated UGX 59.4 trillion in seamless transactions during the same period.
These initiatives bolstered market confidence and improved the reliability of financial systems.
4. Managing Financial Sector Risks
In 2024, Uganda exited the Financial Action Task Force (FATF) “grey list” for countries needing improved financial oversight, signalling a robust framework against money laundering and terrorism financing. The BoU’s oversight ensured the orderly exit of undercapitalised financial institutions, protecting depositors and reinforcing confidence in the banking system.
“This milestone underscores Uganda’s commitment to financial integrity and security,” Dr Atingi-Ego stated. “It’s a clear signal to global markets that Uganda is a safe and reliable investment destination.”
5. Bolstering Financial Sector Stability
Ugandan banks maintained high liquidity and improved loan quality:
– Liquidity reserves: Banks held reserves covering 350% of potential short-term needs, far exceeding the minimum requirement of 100%.
– Non-performing loans: Reduced from 5.4% in 2023 to 4.9% by September 2024, reflecting better credit management.
“A robust banking sector is critical to economic resilience,” said Dr. Atingi-Ego. “Our focus has been creating a secure, liquid, and accessible financial system.”
Additionally, the BoU increased the capital requirements for banks and financial institutions to UGX 150 billion and UGX 25 billion, respectively, strengthening the sector’s safety net.
6. Promoting Financial Inclusion
The BoU’s initiatives in digital transformation and mobile money expansion dramatically improved financial inclusion in Uganda:
– Mobile money accounts: Grew to 30.9 million active accounts by June 2024.
– Mobile transactions: Increased by 32% year-on-year, reaching UGX 253 trillion by mid-2024.
“We believe that financial inclusion is a driver of socio-economic transformation,” emphasised Dr Atingi-Ego. “Through digital innovations, we are bringing financial services closer to underserved populations.”
As a result, access to banking services rose from 58% of adults in 2022 to 65% in 2024, significantly narrowing the financial inclusion gap.
7. Strengthening the Agricultural Sector
By September 2024, the Agricultural Credit Facility (ACF) had disbursed UGX 1.01 trillion to over 5,000 beneficiaries. The Small Business Recovery Fund (SBRF) also supported micro-enterprises, disbursing UGX 39.71 billion to 543 businesses.
Highlights:
– Loans for smallholders: 73% of ACF loans targeted micro, small, and medium enterprises (MSMEs).
– Gender inclusion: Over 944 women-led projects benefitted, empowering marginalised groups.
“Agriculture remains the backbone of Uganda’s economy,” remarked Dr. Atingi-Ego. “Our financing initiatives are designed to enhance productivity and improve livelihoods.”
8. Leveraging Gold for Reserve Diversification
The BoU announced plans to buy gold from artisanal and medium-scale miners to diversify foreign reserves. This strategy aimed to reduce Uganda’s reliance on the U.S. dollar, strengthening the country’s position in global financial markets.
“Gold represents a strategic reserve asset for Uganda,” explained Dr. Atingi-Ego. “This initiative ensures we remain resilient to external economic shocks.”
9. Advancing Sustainability
Atingi-Ego prioritised Environmental, Social, and Governance (ESG) integration within Uganda’s financial sector. The ESG Framework for Banking launched in 2024 encouraged sustainable lending practices, green finance, and climate risk management.
Key impact:
– Promoted green energy projects and climate-resilient agriculture.
– Aligned Uganda’s banking sector with international best practices.
“Sustainability is not just a goal; it is a necessity,” noted Dr. Atingi-Ego. “Our ESG framework ensures that Uganda’s financial institutions contribute positively to society and the environment.”
10. Elevating Uganda in Africa’s Financial Markets
Uganda ranked fourth in the 2024 Absa Africa Financial Markets Index, outperforming larger economies like Kenya and Tanzania. This achievement highlighted Uganda’s robust economic fundamentals, including:
– Improved financial market accessibility.
– Regulatory reforms that enhanced investor confidence.
“This ranking reflects our unwavering commitment to excellence and reform,” said Dr. Atingi-Ego. “Uganda is poised to be a leader in Africa’s financial landscape.”
Looking Forward
Dr Michael Atingi-Ego expressed optimism for Uganda’s economy, emphasising stability, inclusivity, and resilience. Building on the 2024 successes, such as curbing inflation, maintaining currency stability, and driving financial inclusion, he remains confident that strategic reforms, sustainability initiatives, and a robust banking system will position Uganda for sustainable growth and global competitiveness in 2025.