Balancing Growth and Stability in 2025

Uganda’s financial landscape is a vibrant yet complex mix of fintech innovation, cautious monetary policy, and ambitious economic goals. From the bustling markets of Kampala to the rural fields in the north, the nation finds itself at a pivotal moment poised for growth while navigating challenges that test its resilience.

At the forefront of this financial evolution is the fintech sector, driven by the remarkable success of mobile money. Platforms like MTN Mobile Money and Airtel Money have transformed basic phones into powerful financial tools, reaching millions who were previously excluded from traditional banking services. By 2025, mobile money transactions have outpaced the formal economy, accounting for over 90% of GDP. This phenomenon extends beyond mere cash transfers; partnerships with banks have resulted in micro-loans and digital savings accounts, empowering individuals such as a boda boda driver in Kampala to repair his motorcycle or a savings group in Masaka to secure its funds. Additionally, new fintech players are emerging, offering asset financing and digital platforms for community savings, creating a diverse and thriving ecosystem. This boom, celebrated widely on March 6, reflects a surge in digital transactions fueled by expanding mobile networks and a push towards digitalization that is reshaping how Ugandans live and work.

However, this fintech flourish unfolds against a backdrop of stringent monetary policy. The Bank of Uganda has maintained its key lending rate at 10% since February 6, 2025, a decision made with caution in light of global uncertainties such as volatile oil prices and supply chain disruptions. The Uganda Economic Update report characterizes 2023/24 as a challenging year for businesses, with tight policy driving up borrowing costs and limiting access to credit. Core inflation, which reached 4.2% in January 2025 and is projected to remain between 4% and 5% this year, reinforces this cautious approach keeping prices in check but leaving businesses struggling with high loan costs. As of March 6, no changes to the interest rate have been reported, suggesting a continuation of this stability. While it offers predictability, it also provides little relief. Businesses ranging from small traders to manufacturers face a difficult choice: reduce operations or pass increased costs onto consumers, a trend evidenced by six consecutive months of rising output charges.

The Uganda Economic Update report provides a broader perspective on this landscape. It estimates that growth for FY23/24 will be 6%, up from 5.3%, driven by a rebound in agriculture, oil-related construction, and a services sector buoyed by telecommunications and trade. Industry and services lead the way, contributing 25% and 44% to GDP, respectively, while agriculture despite employing the majority of Ugandans continues to contend with climate-related challenges. Looking ahead, growth is projected at 6.2% for FY24/25, potentially reaching 7% as oil production begins later in the year. This aligns with an ambitious vision to achieve a $59.3 billion economy by June 2025, as targeted earlier this year. Yet, risks remain: high debt levels, weak domestic revenue, and poverty still affecting 40% of the population pose threats to this trajectory.

The financial system has shown resilience. A cybersecurity breach in February 2025 resulted in the theft of $21 million from the central bank, revealing vulnerabilities, yet fintech’s decentralized structure ensured that mobile money transactions continued uninterrupted. Currently, no major financial crises dominate the news cycle, although the repercussions of that breach may still be felt. At the same time, the private sector is showing signs of recovery, with improved business conditions reported on March 6, a potential nod to the buoyancy of fintech and the stability of monetary policy.

Uganda’s financial landscape in 2025 presents a study in contrasts. Mobile money and fintech innovations are rewriting the rules, driving financial inclusion and economic activity at an unprecedented pace. Nonetheless, tight monetary policy and structural challenges such as gaps in rural connectivity and high borrowing costs temper this progress, requiring resilience from both businesses and citizens. With oil production on the horizon and a youthful population eager for opportunities, the nation stands at a crossroads between promise and peril. As March 6 unfolds, Uganda is a country in motion, stable and growing, yet ever vigilant of the challenges that could tip the balance.