Kabweri County MP Patrick Godfrey Wakida has questioned President Museveni’s economic approach as the shilling weakens, fuel prices rise and borrowing costs increase, raising concerns about the cost of living and the government’s tenfold economic growth ambition.
Kabweri County MP Patrick Godfrey Wakida has questioned the effectiveness of President Yoweri Museveni’s economic management philosophy, arguing that the tumbling shilling, rising inflation and higher borrowing costs are exposing tensions in the government’s strategy for achieving rapid economic growth.
Wakida questioned whether Musevenomics, the economic philosophy associated with Museveni’s approach to balancing market forces, state guidance and national economic sovereignty, was delivering the intended results.
His criticism comes as the Shilling faces renewed pressure against the US dollar, increasing the cost of imports and complicating efforts to expand domestic production, manufacturing and other productive sectors.
According to Wakida, the Shilling had become Africa’s worst-performing currency in October, losing 14.68 per cent against the dollar year-to-date and 7.29 per cent during the month, based on figures he attributed to Bloomberg as of October 22.
He cited capital outflows, increased dollar demand from manufacturers and energy importers, and elevated international oil prices among the factors driving the depreciation.
Wakida, in an October 23 statement, said foreign investors had withdrawn about $200 million from Uganda’s financial markets over two weeks as they shifted investments towards higher-yielding US Treasury securities.
The depreciation has coincided with mounting domestic price pressures. Uganda Bureau of Statistics figures show that annual headline inflation rose to 4.6 per cent in September from 4.1 per cent in August, while annual energy, fuel and utilities inflation reached 14.5 per cent.
Petrol prices increased by 30.9 per cent and diesel prices by 42.5 per cent year-on-year.
The weakening currency adds to these pressures because importers require more shillings to purchase the same amount of foreign currency. Businesses dependent on imported fuel, machinery, industrial inputs and other supplies may pass some of the additional costs on to consumers.
Wakida argues that the government's response reflects Museveni’s preference for preserving foreign exchange reserves and encouraging domestic production rather than extensively intervening to defend the shilling.
He said Museveni had resisted using Uganda’s foreign exchange reserves to support the currency, preferring to promote local consumption, exports and reduced dependence on imported goods.
The President has previously argued that Uganda should increase domestic production and exports instead of spending foreign exchange reserves to finance imports of non-essential goods.
However, the strategy presents a difficult trade-off: while preserving reserves protects a buffer against external shocks, a rapidly depreciating currency can increase the cost of living and raise production costs before domestic alternatives become available.
The Bank of Uganda has responded by tightening monetary policy. On October 14, it raised the Central Bank Rate from 9.75 per cent to 12 per cent, seeking to contain inflationary pressures and support the shilling by tightening financial conditions.
Wakida contends that the combination of currency depreciation, rising inflation and higher lending costs threatens the government's ambition to expand the economy tenfold by 2040.
The Tenfold Growth Strategy seeks to grow Uganda's economy from approximately $50 billion to $500 billion by 2040, with agro-industrialisation, tourism, mineral-based industrialisation, and science, technology and innovation identified as priority areas.
The challenge is that businesses in these sectors require affordable financing, machinery, fuel and other inputs to expand production. A weaker Shilling can improve the local-currency earnings of exporters, but it can also increase their operating costs when they rely on imported equipment and materials.
Agricultural processors, for instance, could earn more shillings from export proceeds while simultaneously paying more for imported machinery, fertilisers, packaging materials and fuel. Tourism operators earning foreign currency may benefit from the exchange rate, although those relying on imported supplies could face higher costs.
Wakida also pointed to rising lending rates as a threat to the growth agenda, arguing that expensive credit could constrain investment in tourism and agro-industrialisation.
The government’s broader economic argument is that expanding local production and value addition will eventually reduce import dependence and generate more foreign exchange through exports.
The immediate question, however, is whether those gains can materialise quickly enough to offset the pressures facing consumers and businesses.
Wakida’s criticism puts that balance at the centre of the debate over Musevenomics: whether preserving reserves and allowing market adjustment can deliver sustainable growth without imposing excessive short-term costs on households and productive enterprises.
The effectiveness of the approach will depend on the trajectory of the shilling, the persistence of inflationary pressures, access to affordable credit and the pace at which Uganda expands domestic production and export earnings.