By Aggrey Baba
As Uganda gears up for another election cycle, the familiar pattern of cautious decision-making by investors begins to unfold.
Just like the old saying, that [a bird in the hand is worth two in the bush], many investors are opting to wait until the dust settles before making any substantial investments.
While Uganda has held regular elections for nearly 40 years, the uncertain political landscape that surrounds election periods often leads to hesitation in the business community, delaying plans and revisions to investment strategies.
Accordibg to journalists; Ismail Musa and Racheal Nabisubi, Uganda’s general elections have over the years been marked by intense political rivalries, occasional violence, and widespread protests.
The uncertainty that these factors introduce to the national landscape makes the environment unpredictable. Businesses, especially those with large financial commitments, tend to hold back on investments until they feel confident that the outcome is clear and stability is restored.
Investor sentiment during election periods is shaped by the fear of instability and disruptions that could impact business operations.
Susan Khainza, a Chartered Financial Analyst, explains that global markets typically dislike uncertainty. “In uncertain times, investors often seek refuge in safe assets, like the dollar, until they gain more confidence in the future,” she says. This caution stems from the difficulty in projecting future outcomes when the political and economic climate is volatile.
Khainza further elaborates that investment decisions are often based on long-term projections, and during uncertain times, these projections become more challenging to make.
When investors are unsure about the political future, they may hold off on significant capital expenditures or make only minimal adjustments. In turn, this contributes to slower economic activity, as both local and foreign investors adopt a “wait-and-see” attitude.
Historically, Uganda’s elections have left the economy grappling with inflation and a depleted national treasury. After the 2011 elections, the late former Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, noted that inflation surged, partly due to the government’s spending in the lead-up to the elections.
This trend has repeated itself, with election years often resulting in a temporary economic boost followed by fiscal challenges.
The national budget for the 2024/25 financial year is already being closely scrutinized, with concerns over the potential political pressures that could lead to fiscal mismanagement.
Dr. Ramathan Ggoobi, the Secretary to the Treasury, assures the public that the budget will remain stable despite political speculation, with a focus on technical efficiency and cost-effectiveness.
Khainza argues that one way to reduce the uncertainty that typically surrounds election years is to improve governance and ensure continuity of leadership. This would help mitigate the risks associated with elections and foster a more stable investment climate.
She points out that elections often lead to expansionary fiscal policies as governments increase spending to appeal to voters, which can cause inflation once the elections are over.
The challenge, however, lies in managing the complex dynamics between political cycles, fiscal policies, and the broader economy. While some investors may worry about the immediate aftermath of an election, many experts argue that Uganda has developed resilience in managing these challenges.
According to Dr. Adam Mugume, the Director of Research and Policy at the Bank of Uganda, the country’s robust monetary policy framework has helped mitigate the negative effects of election cycles.
Despite the political uncertainties, Uganda continues to attract investment due to its relative peace and stability compared to other regions. The country’s rich natural resources, including raw materials for agro-processing and minerals for industrialization, make it an appealing destination for investment.
The Uganda Investment Authority (UIA) has noted a growing interest in the country’s investment climate, even during election years. Investors are increasingly drawn to Uganda’s stable gov’t and predictable market conditions.
However, the chairman of the Kampala City Traders Association (KACITA), Mr. Thadeus Musoke Nagenda, highlights concerns about the slowdown in business activity during election periods.
He points to the uncertainties that accompany electioneering, which can disrupt normal trade and business operations. While Mr. Nagenda acknowledges that the political environment is critical, he also notes that smoother election cycles are becoming more common, with businesses adapting to the rhythm of the electoral process.
Despite the uncertainties, Uganda remains an attractive market for investors, with its growing economy and the potential for long-term growth.
Foreign direct investment and remittances continue to be strong, and the Uganda Securities Exchange (USE) offers a promising platform for bond investors.
As the 2026 elections draw nearer, it is clear that while uncertainty will always be a part of Uganda’s political landscape, the country’s resilience and the strategic approach of investors will likely keep the economy on a steady path.
In conclusion, as Uganda approaches yet another election year, it’s evident that uncertainty will continue to loom large in the business sector.
However, just as [every cloud has a silver lining], there are still opportunities for growth, and with careful planning and strategic decision-making, investors can weather the storm and continue to thrive in Uganda’s evolving market. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
