Agusto & Co., a Lagos-based pan-African agency, assigned a “B” rating with a stable outlook to the Republic of Uganda due on September 30, 2025 through a statement on its website.
“The rating reflects the Country’s satisfactory macroeconomic fundamentals evidenced by a 5-year real gross domestic product (GDP) average growth rate of 4.5% and a projected 5.5% and 5.8% acceleration in FY 2023/24 and FY 2024/25 respectively, supported by improvement in the services sector and continued growth in the agriculture sector. The rating also takes into cognizance the Country’s stable inflationary environment with an average inflation rate of 3.9% over the past five years (2019 – 2023). The rating is however constrained by the Country’s political risk due to the perceived repression of opposition and civil societies, uncertainty in political succession, and reliance on declining foreign aid and grants as one of its major sources of foreign exchange earnings. Furthermore, Uganda’s weakening foreign reserves buffer and import cover which stood at US$ 3.5 billion (3.2 months of import cover) as at the end of April 2024 attributable to net outflows of foreign currency relating to government payments to meet external debt and import obligations also tempered the rating.“
“Going forward, Uganda projects to record UGX 29.9 trillion revenue in FY 2024/25 backed by the government’s strategic goal of accelerating economic growth to at least 7%, pivoting from a raw-materials-based to a manufacturing and knowledge-based economy; as well as improving the ease of doing business and making Uganda competitive. By fully enhancing tax and non-tax revenue assessment and collection for all income lines including the informal sector, we expect Uganda to achieve its revenue targets in the near to medium term. Agusto & Co. expects the Country’s expenditure to remain within the budgeted threshold at the end of FY 2024/25 as Uganda continues to explore additional revenue streams including sourcing from the budget support account.“
“The average annual inflation rate in the Country for the year 2023 was 5.5%, which is an improvement from the previous year’s average of 7.2%. Agusto & Co. expects the average inflation rate to inch up but remain within the Bank of Uganda’s medium-term target of not above 5% by year-end 2024. Our expectation is hinged on the uncertainty posed by global crude oil prices and commodity prices given Uganda’s dependence on imports, particularly industrial goods and household consumer products.“
