Understanding the Iran–Israel–US war and its potential impact on businesses and investments in Uganda

Periods of global instability often unsettle financial markets, sending investors searching for safe ground. Yet seasoned analysts say such moments can also open doors for disciplined investors willing to look beyond immediate turbulence.

That was the central message during a webinar hosted by SBG Securities Uganda Limited, where economists and investment advisers explored how escalating tensions in the Middle East could shape economic and investment prospects for Uganda.

While geopolitical conflict typically injects volatility into global markets, analysts argued that investors who maintain a long-term outlook may find opportunities amid the uncertainty.

“Such times can come with a lot of uncertainty,” said Grace Semakula, chief executive of SBG Securities Uganda Limited, the investment and brokerage arm of Stanbic Uganda Holdings Limited.

“But these are not times to panic,” she added. “They are times to take a patient, long-term view and consistently allocate funds.”

Semakula explained that geopolitical disruptions often create moments for investors to rebalance portfolios and identify new opportunities—provided they remain focused on underlying economic fundamentals rather than reacting to short-term market noise.

Uganda’s Economic Cushion

Uganda enters this period of uncertainty from a position many economists describe as relatively resilient. Inflation has remained subdued, economic growth steady, and export earnings—particularly from gold and coffee—have expanded significantly over the past year.

According to Christopher Legilisho, an economist at Standard Bank Group, the country’s economic momentum offers a cushion even as global conditions become more fragile.

“We might see a protracted conflict,” Legilisho said. “That could weigh on global growth and create spillovers to different countries, including Uganda.”

Global monetary policy is already becoming more cautious. For much of 2024 and early 2025, central banks around the world had been preparing to ease interest rates as inflation pressures moderated. The renewed geopolitical tensions, however, have complicated that outlook.

“Because of the conflict, we are starting to see expectations that inflationary pressures could return,” Legilisho said. “Central banks may become more cautious or preventative in their policy stance.”

Uganda’s central bank, Bank of Uganda, has kept its benchmark policy rate steady at 9.75 percent since October 2024. Should inflation begin to accelerate, analysts say policymakers may delay planned rate cuts or even tighten monetary policy.

Trade Risks and Strategic Shifts

Uganda’s growing trade ties with the Middle East also expose the economy to potential disruption.

Gold exports—now the country’s largest foreign exchange earner—are heavily concentrated in the region. Uganda exports roughly $6 billion worth of gold annually, with about $5.2 billion destined for the United Arab Emirates.

“If producers are unable to ship gold to the UAE, refiners and exporters may struggle to find immediate alternative markets,” Legilisho noted.

However, such disruption could also accelerate domestic policy initiatives. The Bank of Uganda has been preparing to launch a domestic gold purchase programme aimed at strengthening the country’s foreign exchange reserves—a strategy that could gain urgency if export flows are interrupted.

Oil Prices: A Double-Edged Sword

Energy markets present another layer of complexity. Uganda remains heavily dependent on imported refined petroleum products, much of which originates from the Middle East.

A surge in global oil prices would therefore increase the country’s import bill in the short term.

“You could see Uganda’s oil import requirements rise significantly if prices spike,” Legilisho said.

Yet Uganda’s long-term energy outlook may soon shift dramatically. The country expects first oil production from its emerging petroleum sector later this year, a development that could transform its trade balance and reduce reliance on imported fuels over time.

Market Signals Emerging

Financial markets have already begun reacting to the geopolitical tensions. The Ugandan shilling has weakened by about 3 percent since the conflict escalated, and economists warn that inflation could rise if energy prices continue climbing.

In a severe scenario, analysts estimate inflation could rise to around 8.3 percent, potentially prompting the Bank of Uganda to raise interest rates. Higher borrowing costs would slow credit growth and could dampen economic expansion.

Another area of concern is remittances. Uganda receives significant inflows from citizens working across the Middle East, and any prolonged disruption in the region could affect these earnings.

Still, the magnitude of the impact will largely depend on how long the conflict persists.

“If the crisis is resolved within a month, the economic impact would likely be limited,” Legilisho said. “But if it continues for several months, the pressures on growth and inflation could become more significant.”

Opportunity in Volatility

For investment advisers, however, volatility is not necessarily a threat—it is part of the investment cycle.

“Even through crisis, there are significant opportunities to explore,” Semakula said. “Our role as an investment partner is to help clients see beyond the immediate noise and make informed, long-term decisions.”

The growth of SBG Securities Uganda Limited reflects that philosophy. The firm closed 2025 with more than UGX540 billion in assets under management and added over 4,000 new clients during the year. It was also recognised by the Capital Markets Authority Uganda as Collective Investment Scheme Manager of the Year.

For Uganda’s economy, the months ahead may test its resilience. But as analysts suggest, history shows that periods of uncertainty often reward those willing to look beyond the immediate horizon—and invest with patience.