Monetary Policy Insights: Gearing Up for 2025 in Uganda
As 2024 winds down, Uganda stands on the cusp of transformative opportunities amid its complex socio-economic landscape. The Bank of Uganda (BoU) Monetary Policy Statement for December 2024 offers a clear direction for stakeholders to navigate the new year. It is time to simplify the insights for the ordinary Ugandan and encourage all economic players to align their strategies for success. Let us break it down, stakeholder by stakeholder, while adding a Certified Public Accountant’s (CPA’s) lens to the implications of these policies.
Steadying the Ship in a Volatile Election Year
2025 is an electioneering year in Uganda [elections take place in 2026], historically marked by volatility, aggressive policing, and economic uncertainty. Yet, the BoU’s decision to maintain the Central Bank Rate (CBR) at 9.75% sends a strong signal of economic stability. With inflation projected to remain low (3.7% in FY2024/25), businesses can expect relative price stability—a rare boon during election cycles. However, the focus must remain on strategic positioning to mitigate potential disruptions.
Implications for Various Stakeholders
Service Providers
Low inflation and stable borrowing costs create opportunities for service businesses to expand. With several banks restructuring and introducing new leadership, service providers in technology, logistics, and consulting should position themselves to tap into opportunities in financial services modernisation.
Traders
For traders, particularly importers of durable goods, a stable shilling is good news. However, with the Uganda Revenue Authority (URA) aggressively pursuing tax compliance, traders must tighten their books and adopt robust tax management strategies. Recent rulings by the Tax Appeals Tribunal underline the importance of adherence to tax laws.
Producer Cooperatives and Farmers
Coffee and other agricultural cooperatives stand to benefit from favourable weather conditions supporting crop production. Additionally, global demand for sustainably sourced products aligns well with Uganda’s burgeoning emphasis on Environmental, Social, and Governance (ESG) standards. Farmers should explore certification programmes to meet international ESG requirements and tap into premium markets.
Exporters
Exporters can leverage increased Foreign Direct Investment (FDI) in the extractive industries and the commencement of oil production in 2025/26. The geopolitical risks highlighted in the policy demand vigilance, particularly for exporters dealing with volatile global markets. A proactive risk management approach will be key.
Manufacturers
Manufacturers should gear up for increased domestic demand driven by GDP growth projections of up to 7.5% over the medium term. However, global inflationary pressures and potential supply chain disruptions remain risks. Diversifying supply sources and adopting lean manufacturing processes can provide a buffer.
The Pension Fund Sector
A thriving pension sector and stable economic growth create opportunities for long-term investment in infrastructure and productive assets. This sector’s vibrancy signals hope for improved financial security for workers and retirees, fostering consumer confidence and spending.
A CPA’s Perspective
As a business advisory professional, I believe that monetary policy offers a blueprint for assisting clients across sectors. Here is how I view it:
- Tax Advisory Services: With URA’s aggressive compliance measures, businesses need strategic advice to align with tax regulations and avoid penalties.
- Business Resilience Planning: Helping clients prepare for potential election-related disruptions by diversifying operations and securing liquidity.
- ESG Compliance Guidance: Supporting businesses in meeting international ESG standards to sustain partnerships with global players.
- Investment Advice: Encouraging strategic investments in high-growth sectors like agriculture, oil, and extractives.
Painting a Picture of 2025
Uganda’s 2025 holds immense promise despite the inherent challenges of an election year. With economic growth accelerating and strategic interventions by stakeholders, the nation can stride confidently toward socio-economic transformation. However, vigilance will be key—from ensuring compliance under the tight tax regime to seizing ESG-driven global opportunities. Let us embrace this moment with optimism and action, making 2025 a year of resilience and growth.
CPA Frederick Wanume Kibbedi
Partner at PKF Uganda, & 8th President of the Institute of Certified Public Accountants of Uganda
