Bank of Uganda Deputy Governor Prof. Augustus Nuwagaba has underscored the necessity of increasing export earnings to ensure the shilling’s long-term stability, stating that sustained exchange-rate resilience depends on Uganda’s ability to generate foreign exchange. Speaking to Nile Post on the sidelines of an event in Kabale, Nuwagaba noted that the shilling remained stable in July, averaging Shs3,704 against the US dollar, but warned of recent market pressures as the currency weakened compared to its late-August position. 'The long-term stability of the exchange rate will hinge on Uganda’s export performance,' he said, highlighting the need to scale up exports of commodities like coffee, milk, and cocoa while prioritizing value addition to strengthen foreign exchange inflows.
Nuwagaba emphasized that the scarcity of US dollars in the market exacerbates pressure on the local currency, a challenge shared by all nations seeking stable exchange rates. He called for deliberate efforts to expand export revenues, noting that the Bank of Uganda (BoU) has short-term tools to manage exchange-rate fluctuations but stressed that structural solutions require improved export performance. The central bank, which publishes daily indicative exchange rates and oversees foreign exchange policy, also reiterated its focus on expanding credit access for the private sector to stimulate economic growth. 'Low domestic savings drive the shallow financial depth limiting lending,' Nuwagaba explained, citing a 13.6% growth in private-sector credit, which remains constrained by limited savings pools.
To address these challenges, the BoU has supported targeted credit initiatives such as the Agricultural Credit Facility, Small Business Fund, and the INVITE project, which provides financing and technical assistance to manufacturing and export-oriented enterprises. These programs aim to bolster productive sectors, including agriculture, mining, and manufacturing, while the central bank continues to monitor private-sector credit expansion. Nuwagaba’s remarks align with broader economic goals, linking export growth to foreign exchange availability and exchange-rate stability, while underscoring the need to strengthen domestic financing mechanisms as Uganda seeks to broaden economic activity.
The BoU’s approach balances immediate measures with long-term strategies, acknowledging that while short-term stability is achievable through policy tools, sustained resilience requires structural reforms. Nuwagaba’s comments reflect the central bank’s dual mandate of macroeconomic stability and external competitiveness, as Uganda navigates currency pressures and seeks to leverage its export potential. The emphasis on export diversification and financial sector development highlights the interplay between monetary policy and economic transformation in the country’s growth trajectory.