Uganda's Finance Minister Henry Musasizi has defended the country's economic performance while acknowledging the shilling's recent depreciation, arguing that expanding exports and reducing import dependence are essential to restoring foreign exchange stability. Speaking on NBS Morning Breeze during a discussion on the state of the economy, Musasizi attributed the currency weakness largely to increased demand for dollars driven by rising global fuel prices and reduced foreign exchange inflows. The shilling traded at around Shs3,600 against the US dollar in March but weakened significantly in subsequent months, briefly approaching Shs4,500 in October.
Musasizi identified Uganda's reliance on imported fuel as a major source of pressure on the currency. When global oil prices rise, Uganda needs more dollars to meet domestic fuel demand, he explained. At the time of his interview, diesel was selling at approximately Shs7,200 per litre, while petrol cost about Shs6,900. Higher fuel costs have also increased transport expenses from the port of Mombasa to Kampala, raising the cost of imported goods for businesses and consumers.
The minister cited reduced foreign exchange earnings from tourism and agriculture as additional factors weighing on the shilling. Travel restrictions during the Ebola outbreak affected tourist arrivals and currency earnings from the tourism sector, with effects persisting even after Uganda declared the outbreak over. International prices for agricultural commodities including coffee and cocoa have also declined, reducing export earnings. Coffee prices fell from about Shs14,000 to Shs12,000 per kilogram, according to Musasizi.
To address the crisis over the long term, Musasizi said Uganda must increase the volume and value of exports to generate more foreign exchange. He identified agro-industrialisation, tourism, mineral development, value addition and investment in science and technology as key areas for strengthening export capacity. Producing more finished goods and exporting them would enable Uganda to earn additional dollars while reducing pressure from import requirements.
In the short term, government is responding by tightening public expenditure and prioritising essential spending. Musasizi said ministries and departments have been encouraged to reduce unnecessary travel, limit official delegations and increase use of virtual meetings. He questioned whether five-person delegations could be reduced to two with others attending remotely. Reducing government expenditure would help conserve resources and direct available funds towards priority areas.
A weaker shilling makes imported goods and production inputs more expensive, raising costs for transport, manufacturing, food prices and household spending. Musasizi's strategy centres on expanding exports to improve Uganda's foreign exchange position long term while tighter public spending manages immediate pressures. The challenge for government will be translating these priorities into stronger export earnings, reduced vulnerability to external shocks and greater currency stability, with tangible benefits for households and businesses.