Every morning at 5:30am, long before the sun melts the mist off the hills of Kisasi, Musa swings a leg over his boda boda and starts the day. But unlike a few months ago, his first trip isn’t for a passenger. It’s a detour. He rides nearly several kilometres down the Kisaasi-Kyanja road to a roadside fuel pump offering petrol at UGX 4,950 a litre.
It’s not Total. It’s not Shell. The
fuel might be mixed with paraffin, and sometimes it stutters in his engine. But
at sh350 less per litre than the pump price at branded stations, Musa says he
has no choice.
“The savings are small, but in this
business, 1,000 shillings can be your profit or loss for the day,” he explains.
Musa hasn’t read the Bank of Uganda’s (BOU) July 2024 indicators, or ever. But those numbers explain exactly why he’s
making longer, riskier trips just to fuel his bike.
Start with the petrol price: just above
sh5,300 per litre in Kampala’s mainstream stations. It's driven by high global
crude prices, a strong dollar, and hefty local taxes. And unlike salaried
professionals who can absorb a few hundred shillings more, people like Musa
feel it immediately. The extra cost isn’t just eating into his daily
earnings—it’s forcing him into trade-offs. Shorter rides? No thank you. Picking
up passengers off-route? Absolutely—especially if they help him hit his
sh40,000 daily target.
And while the BOU has held the Central Bank Rate at a steady 10.25 percent to tame inflation, it also means borrowing remains costly. Musa, like many in the informal sector, relies on short-term digital loans or SACCO credit. With commercial lending rates averaging 19.7 percent in July and mobile lenders charging effective interest rates several multiples of that, debt is more a trap than a bridge...
Credit is not only expensive—it’s
scarcer too.
Private sector credit growth slowed to
under nine percent year-on-year in July, down from pre-pandemic levels of 14–16
percent. Lenders remain cautious. Many are still managing bad loans from the
COVID-era restructuring wave and are wary of high-risk borrowers. Trade,
personal loans, and even agriculture—once stable bets—have seen reduced
disbursements. That’s a squeeze on exactly the sectors that employ the likes of
Musa and his peers.
Yet, the broader macro picture offers
glimmers of resilience.
The Uganda shilling strengthened
slightly to sh3,755 per dollar from sh3,778 in June. Modest as it may seem, it
helps moderate the cost of imported fuel, spare parts, and other essentials.
Musa might not know it, but a weaker shilling would have pushed even his
sh4,950 fuel closer to sh5,500.
Behind the shilling’s stability is a healthy stash of foreign exchange reserves—now above $4.1 billion, or enough to cover 4.5 months of imports. These reserves act like shock absorbers—critical at a time of Red Sea shipping disruptions and geopolitical jitters. They keep inflation in check and the currency steady, even when sentiment swings wildly.
Inflation itself remains within range,
with headline inflation at 3.9 percent and core inflation (excluding food and
fuel) edging lower to 3.2 percent. But the food crops index tells a more
immediate story. Erratic rains and high transport costs pushed food prices
higher in July, directly affecting Musa’s lunch bill and his family’s grocery
budget.
On the trade front, Uganda’s export
engine kept humming. Coffee brought in over $90 million in July, supported by
strong global prices. Gold remained the top performer at over $160 million,
thanks to its safe-haven demand. Fish exports, especially Nile perch to Europe,
continued their recovery, and tea, maize, and sugar held their own.
What’s encouraging is not just the
volume, but the market diversification. Uganda is selling more to Asia and the
Middle East, reducing its reliance on traditional EAC and COMESA buyers. That
diversification helps earn the dollars that keep Musa’s bike moving—even if the
fuel isn’t always clean.
Then there’s the silent hero: remittances. Over $130 million came in from Ugandans abroad in July. These flows now rival foreign direct investment and are often more impactful. Chances are, Musa knows someone whose sibling in Doha or Toronto sent back money to cover rent, school fees, or top up a side hustle. In an economy where credit is tight, remittances are informal insurance and working capital rolled into one...
And digital finance? It’s booming. More
than sh15 trillion changed hands via mobile money platforms in July. Musa
increasingly gets paid by phone, tops up fuel digitally, and avoids the risk of
carrying too much cash. For the informal economy, mobile money is now the
bloodstream. Fast, traceable, and safe.
So what do July’s indicators really
mean for Musa?
They mean he works harder, rides
farther, and takes more risks to earn the same. He gambles daily on whether
cheaper fuel will clog his engine. His access to credit is narrowing, even as
operating costs rise. But they also mean the economic foundations—shilling
stability, export earnings, and diaspora support are holding firm, for now.
The challenge is whether these macro
wins can trickle down faster than inflation eats into earnings. Whether a
stronger shilling can translate into lower fuel costs. Whether export dollars
and remittances can open credit channels or drive real demand.
Until then, Musa will keep riding—past
the big stations, past the safe pumps, into the lesser-known corners of the
city chasing margins the economy says he shouldn’t have to fight for.
That’s the real economy, beneath the
spreadsheets. Where the duck is paddling hardest.
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