The Deputy Governor of the Bank of Uganda, Prof Augustus Nuwagaba, has warned that rising geopolitical tensions in the Middle East and Eastern Europe pose direct risks to Uganda’s economy, calling for urgent measures to build resilience against external shocks.
Speaking on the impact of global instability, Nuwagaba said renewed tensions in the Middle East and the ongoing Russia-Ukraine conflict are already disrupting oil markets and global trade routes, pushing up fuel and transport costs in import-dependent economies.
He cited disruptions around the Strait of Hormuz a key global oil transit corridor warning that any instability increases insurance and freight costs, which are ultimately passed on to consumers through higher fuel and commodity prices.
“When fuel prices rise, transport, food and production costs increase, resulting in inflationary pressures that erode household incomes,” Nuwagaba said.
He emphasized that Uganda must focus on strengthening sectors within its control, particularly energy security, food production and export diversification.
On energy, he urged investment in domestic production, renewable sources and strategic reserves to reduce reliance on imported petroleum products.
With commercial oil production approaching, he called for disciplined management of future revenues, prioritising infrastructure, industrial development and long-term savings over consumption spending.
Nuwagaba also highlighted the vulnerability of global grain and fertilizer supply chains, urging greater investment in irrigation, agro-processing and local fertilizer manufacturing to ensure food self-sufficiency.
On exports, he stressed the need for value addition in coffee, dairy, minerals and manufacturing to stabilize foreign exchange earnings and support the shilling.
He further cautioned that global uncertainty makes borrowing more expensive, urging prudent debt management and directing borrowed funds toward productive investments.
