BOU NUMBERS SUGGEST STEADY PROGRESS, THE DEVIL IS IN THE DETAIL

The economy often whispers truths long before politicians ever shout them from podiums. The Bank of Uganda’s December 2025 macroeconomic indicators offer precisely this kind of whisper: a picture of resilience and caution, of macroeconomic stability shadowed by persistent structural questions, brought into sharper relief as Uganda approaches the 2026 elections.

At first glance, the numbers are superficially reassuring. Headline inflation settled around 3.1 percent by December, well within the policy target band—reflecting price stability unseen in many past cycles. The trends show that this is not a sudden anomaly but the continuation of a long-term trend.

In 2012 this column pointed out that the broader concern was that economic growth was outpacing development itself. Growth alone was insufficient because people still lacked basic services: there was just one doctor for every 11,000 Ugandans and nearly 50 pupils per primary school teacher—metrics that spoke of deep structural deficits even while GDP figures ticked upward. This column argued then that

for development to be real, gains from growth had to be distributed into human development—health, education, jobs—not just infrastructure or headline GDP numbers. Fast forward to 2025, inflation is low and stable, but the broader question remains: has this macro stability translated into better human outcomes across the country, or has it merely created a calmer statistical façade?

The answer today is more nuanced. Yes, price stability makes life more predictable than a decade ago, but many of the core challenges that frustrated development back then—limited access to quality healthcare, education gaps, and underpowered job creation, still linger beneath the surface. This echoes the earlier message: economic growth makes the numbers look better; actual development is measured in people’s lives.

Another instructive snapshot from Shillings & Cents’ archive comes from the same early-2010s lens: the 2012 reflection on institutional and market formalization. At that time, the informal economy, estimated to comprise two-thirds of all economic activity in Uganda, was cited as a major drag on development, because so much of the nation’s economic value was “invisible” to formal structures that could mobilise savings and lend for investment. More than a decade later, while digital finance and mobile money have expanded dramatically, a significant share of enterprise remains informal and undercapitalised.

The December macroeconomic indicators show modest private credit growth and a stable shilling, but that stability exists alongside an economy where informal businesses still struggle to access affordable credit, dampening the potential boosts from stable inflation and exchange rates.

Yet not all old narratives remain static.

The shift in Uganda’s economic structure is perhaps best captured by the transformation in the relative role of services, industry, and agriculture, a theme that Shillings & Cents explored in reflections about Uganda’s “uneven transformation” over the 2010s. Back then, services barely outpaced agriculture and manufacturing was a modest part of GDP, with real risk that growth might bypass large swathes of the population tied to the land or small enterprise.

By 2025, the story has changed enough to be visible in the Bank of Uganda data: the Composite Index of Economic Activity (CIEA) shows broad-based expansion across sectors, and private sector engagement in services and trade has strengthened. Growth has shifted slightly away from agriculture into services and light manufacturing, and digital transactions and formal financial participation have widened compared with a decade ago.

But the phrase “uneven transformation” still applies. Even as macro indicators improve, low inflation, a stable exchange rate, and rising activity, the underlying structural tensions remain. The import bill, for example, surpassing US$ 4.1 billion

in recent quarterly data, reflects stronger demand for capital and intermediate goods, but also highlights Uganda’s dependency on foreign inputs due to limited domestic industrial capacity. This echoes the old development concerns: industries that could absorb agricultural output and turn it into higher-value products are still underdeveloped, leaving Uganda with a persistent trade imbalance.

Moreover, the reserve cover remaining around three to three-and-a-half months’ imports reminds us that despite progress, the economy lacks a deep buffer against external shocks. In an election year this matters greatly: financial markets reward stability, but thin reserve buffers can quickly sour sentiment if political uncertainty rises.

What the historical Shillings & Cents examples make clear is that Uganda’s progress is neither linear nor guaranteed.

The 2012 debates about whether growth was accompanied by genuine development still echo through policies today; the persistence of a large informal sector continues to constrain credit and investment; and the structural connection between agriculture, industry, and exports remains too weak. Yet the fact that macroeconomic indicators are calmer now than they were in the early 2010s does indicate real progress in institutional stability and financial management.

The approach of 2026

thus finds Uganda in a place it has struggled to reach before—a moment where macro stability exists alongside tangible, if uneven, structural change. If the country can leverage this combination, stable prices, a dependable exchange rate, broader economic activity, and growing formalisation of finance, into deeper structural reforms in agriculture, industry, and human development, then the next decade could mark the long-sought pivot from growth to broad-based development.