Last week, the ministry of Finance, Planning and Economic Development decried the growing decline of external financing in Uganda, warning that this could constrain government’s ability to meet its expenditures on time.

The government revealed this during the presentation of the Budget Strategy for Financial Year 2025/2026. According to Amos Lugoloobi, the state minister for planning, the decline in external financing is linked to the ongoing wars in Ukraine and Palestine, which have shifted their attention – and wallets – from supporting developing countries such as Uganda, to financing those affected by the wars.

“They are sponsoring the wars in Ukraine, Israel and Palestine. Their priorities have since shifted. Remember that for any country, as you grow beyond a middle-income level, they look at you as an adult who should be able to sustain your own growth. So, they shift attention from you to the least developed countries because they need concessional support. Then they start believing that you can borrow commercially to finance your activities,” he said.

He added: “We have been relying on external sources of financing for our budgets for a long time. But these sources are dwindling. Now we have to run to innovative ways of financing the budget through domestic financing, and one of such measures is to leverage our available assets to issue long-term bonds like infrastructure bonds, where we can mobilise investment from private individuals, the diaspora, to be able to invest their resources.”

Lugoloobi said if you invest in a bond, you earn income.

“Previously, if you issued a bond externally, that income goes to someone who is out there. This is now to give an opportunity to all Ugandans to participate and earn from this type of financing. We have institutions such as the NSSF; they can take full advantage of this investment. So, the only challenge is to mobilise as much savings as possible through these innovative means of finance,” he said.

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