KAMPALA, October 20, 2025 — Uganda’s economy continued to show resilience and adaptability through September 2025, despite a backdrop of tightening global conditions. Key indicators reflected a complex picture of rising credit demand, shifting fiscal and trade strategies, and measured government borrowing, according to the Performance of the Economy Monthly Report September 2025 released by the Ministry of Finance.
Lending rates ease slightly
In August 2025, shilling-denominated lending rates declined to a weighted average of 18.46 percent, down from 19.65 percent in July, the report says, adding, “Foreign currency-denominated lending rates remained relatively stable, dipping slightly to 8.34 percent from 8.35 percent the previous month. This modest easing suggests a gradual loosening in domestic credit conditions, likely in response to inflationary pressures and efforts to stimulate economic activity.”
Increased borrowing, balanced refinancing
The report shows government raised a total of Shs1,956.52 billion through two Treasury Bills [T-Bills] and one Treasury Bond [T-Bond] auctions in September. Of this, T-Bills raised Shs 645.32 billion, while the T-Bond brought in Shs 1,311.2 billion.
Approximately Shs 978.8 billion of the total proceeds were directed towards budgetary financing, with Shs 977.72 billion used to refinance maturing securities. “This near-even split suggests a prudent fiscal strategy aimed at meeting current obligations while sustaining government operations,” an official said.
PSC grows gradually
Outstanding Private Sector Credit [PSC] in the country grew by 1.1 percent between July and August 2025, rising from Shs 23.79 trillion to Shs 24.05 trillion, the report says. “The growth was primarily driven by shilling-denominated loans, which increased by 1.5 percent,” says the report.
Key sectors contributing to this growth included transport and communication, mining and quarrying, and community services. On an annual basis, PSC rose by 7.9 percent, reflecting growing confidence in borrowing as economic activity continues to recover.
Credit extensions strengthen
In August 2025, credit approvals totalled Shs 1,777.5 billion out of applications worth Shs 2,874.4 billion, an approval rate of 61.8 percent, slightly up from July, says the report.
The largest share of approved credit went to personal and household loans [27.8 percent], followed by trade [22.1 percent], agriculture (20.9 percent), community and social services [11.1 percent], and construction and real estate [7.1 percent]. These figures point to sustained consumer demand and ongoing business financing needs.
Trade balance worsens
Uganda’s merchandise trade deficit widened significantly, from US$ 197.6 million in August 2024 to US$ 336.2 million in August 2025.
Month-on-month, the deficit increased sharply from US$ 42.3 million in July to US$ 336.2 million in August. According to the report, this was largely driven by rising imports outpacing a fall in export revenues.
Exports under pressure
Total export earnings in August 2025 stood at US$ 1.06 billion, a 27.1 percent increase compared to August 2024. However, this represented a 15.4 percent decline from July 2025.
Coffee, Uganda’s leading export, experienced a notable drop in value, from US$ 249.87 million in July to US$ 202.75 million in August, due to both falling global prices and reduced volumes. Other key exports such as cocoa beans, tea, flowers, and base metals also recorded declines compared to the previous month.
Imports continue to rise
Uganda’s imports rose to US$ 1.39 billion in August 2025, representing a 35.3 percent year-on-year increase and a 7.9 percent rise from July.
The increase was largely attributed to higher formal sector imports, including petroleum products, machinery and vehicles, animal and vegetable products, and base metals and related goods.
Regional trade imbalances persist
The report highlights Uganda’s trade surpluses with the Middle East [US$ 316.9 million] and the European Union [US$ 50.1 million]. However, trade deficits were recorded with Asia [US$ 298.0 million], the East African Community [US$ 156.7 million], and the rest of Africa [US$ 219.4 million].
This points to Uganda’s continued reliance on imports from regional and Asian partners, while its exports remain concentrated in a limited range of commodities, including mineral re-exports.
Conclusion
The economic indicators for September 2025 paint a cautiously optimistic picture. Domestic credit is expanding, and government borrowing remains balanced between new financing and debt refinancing. However, rising imports and declining export performance continue to exert pressure on the trade balance.
As Uganda navigates global economic headwinds and undertakes local structural reforms, its capacity to manage borrowing costs, diversify exports, and stimulate private sector growth will be critical to sustaining economic momentum in the months ahead.
Buy your copy of thecooperator magazine from one of our country-wide vending points or an e-copy on emag.thecooperator.news
