BoU: Stronger Exports Key to Long-Term Shilling Stability

What the report says

Bank of Uganda Deputy Governor Prof. Augustus Nuwagaba has said Uganda’s shilling will only remain stable over the long term if the country improves export performance and brings in more foreign exchange. Speaking to Nile Post on the sidelines of an event in Kabale, he said the central bank has tools to manage short-term pressure, but lasting currency stability depends on stronger external earnings.

Nuwagaba pointed to exports of products such as coffee, milk and cocoa, and said value addition is important if Uganda is to earn more dollars from abroad. He also noted that a shortage of foreign currency can put pressure on the local unit. According to the article, the shilling averaged about Shs3,704 to the US dollar in July, though recent market reports have suggested some weakening in later weeks.

He also called for greater access to credit for private businesses, saying financing productive activity would support growth. The article says private-sector credit growth stood at 13.6 percent and that low domestic savings continue to limit lending. The Bank of Uganda has existing support programs, including credit facilities for agriculture and small business, as well as support for export-oriented firms. More broadly, the remarks underscore the link between export expansion, foreign exchange supply and macroeconomic stability.