Macroeconomic updateUganda

22 September 2022

Nuggets From The Pearl

In brief

  • Local folklore goes like this, ‘If you throw anything on the ground, it grows the next day’. That is what makes Uganda, the pearl of Africa

 

  • We spent the week of 12th – 16th September in Kampala meeting policymakers; financial services’ regulators and professionals; multilateral creditors; and the media. This note highlights our 5 take-aways from our Uganda trip

 

  • An IMF mission is underway in Uganda for combined second and part-third reviews, with operational challenges delaying the second review (initially scheduled for June 2022).

 

  • A monkey wrench has been thrown on Uganda’s oil project with last week’s resolution by the European Union seeking East African Crude Oil Pipeline (EACOP) to delay construction works by a year citing environmental concerns.

 

  • Uganda has a credible (relative to its peers) liberalized FX regime, which although painful against the current global macroeconomic environment, is comforting to offshore investors

 

  • We expect the BoU to maintain its tightening stance in the upcoming October MPC, to wade off the inflationary pressures whose second-round effects has catapulted core inflation from 2.9% (December 2021) to 7.2% (August 2022).

 

  •  The back-end of the curve (10 years and above) offers an attractive entry point with the reversal of the upward rates shift as environment normalizes. We see the 10-year (2032 maturities) offering the best risk-reward exposure, with c. 300bps downward rate adjustment to March 2022 levels.

 


We use cookies to improve and customize your experience on our site. If you accept cookies, we’ll also use them to show you personalized ads when you visit other sites.Manage cookies and learn more