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The January 2026 general elections undeniably shook Uganda’s economy, but the very forces that produced short-term turbulence also contain the ingredients for a robust rebound.
While voters decided the nation’s political future, businesses and households felt the immediate impact of heightened public spending, internet shutdowns, and a cloud of uncertainty that rattled prices, the exchange rate and investment plans.
The same episode has ignited market optimism, revived credit flows and highlighted policy levers that, if wielded wisely, can steer Uganda toward a period of sustained growth. Election season in Uganda traditionally triggers a surge in spending, and 2026 was no exception.
The government allocated Shs 469 billion to the Electoral Commission in the first quarter of FY 2025/26, followed by an additional Shs 53 billion in the second quarter. This infusion of cash boosted household demand for goods and services, but it also crowded out spending for essential public programs such as health and education.
The temporary internet shutdowns and other restrictive measures to manage the political climate hit hard for the business community. The loss of digital payment channels and delayed logistics translated into “wait-and-see” postures, pushed up the price of everyday commodities.
The resulting demand-supply mismatches have exerted upward pressure on the general price level and heightened volatility in the value of the Ugandan shilling. Inflation data underscore vulnerability.
After a relatively tame 3.6 per cent average headline inflation throughout 2025 — well below the Bank of Uganda’s 5 per cent target — historical patterns suggest that election years can trigger sharp price spikes.
Ordinary Ugandans hope there will be no such disruptions. Export activity, a vital source of foreign exchange earnings, also suffered. Disruptions to production and trade logistics reduced the volume of earnings flowing into the economy, threatening the resilience the shilling had displayed for most of 2025.
Business owners and investors, wary of political uncertainty, postponed major commitments, further dampening private-sector dynamism. Despite these headwinds, market signals have begun to paint a more hopeful picture.
Appetite in government securities has rebounded and some stocks on the Uganda Securities Exchange rallied sharply after the polls. MTN Uganda’s share price climbed more than 12 per cent and Stanbic Bank’s rose about nine per cent within the two weeks following the election.
Such gains indicate that investors view the post-election environment as a window of opportunity rather than a prolonged crisis. Perhaps more consequential is the influx of credit aimed at jumpstarting infrastructure.
Standard Chartered Bank signed loan agreements worth Shs 2.7 trillion at the end of January 2026 to finance energy, road and water projects. These funds can generate multiplier effects — creating jobs, improving logistics and lowering production costs — that offset the temporary disruptions caused by the electoral cycle.
The key policy challenge now is to translate the burst of fiscal outlays and renewed market confidence into lasting macroeconomic stability. First, the Bank of Uganda must anchor inflation expectations through clear, forward-looking communication.
Transparent guidance can mitigate the risk that past election-related price spikes emerge, reassuring both consumers and investors. Second, fiscal discipline is essential. While the government’s election-related spending was politically motivated, post-election budgetary choices should prioritise productive investment over adhoc expenditures.
Maintaining a balanced fiscal stance will protect the shilling from further depreciation and preserve the foreign exchange buffer built up in 2025. Third, avoiding prolonged internet shutdowns will be critical.
Digital payments and mobile money have become lifelines for small-scale traders and informal businesses; reinstating reliable connectivity will restore the flow of transactions that underpin household consumption and business cashflows.
Finally, a predictable tax environment can reverse the “wait-and-see” mentality that has plagued investors. Business climate analyses from the Economic Policy Research Centre indicate growing dissatisfaction with the current tax regime; a post-election review that seeks to streamline tax administration without raising rates could unlock private sector confidence.
Uganda’s recent gains in foreign exchange earnings and the swift mobilisation of credit for infrastructure demonstrate what the economy can achieve under stable conditions.
If policymakers capitalise on this momentum — maintaining a stable exchange rate, ensuring fiscal prudence, and fostering a digital ecosystem that supports commerce — the nation can move from a brief adjustment phase to a sustainable growth trajectory.
The author is a research analyst at Economic Policy Research Centre
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