Why market depth, not regulation, is Uganda’s next big test

At the recently held Absa Africa Financial Markets Index & Economic Outlook Forum, policymakers, regulators and bankers converged around a shared message: Uganda’s financial markets have earned credibility, but the next chapter will be defined by capital, liquidity and scale.

The global economic order is shifting, and not gently.

Monetary tightening in advanced economies, geopolitical fragmentation, and volatile capital flows are reshaping how emerging and frontier markets finance growth. For Uganda, this new reality presents both constraint and opportunity.

“The global economic environment today bears little resemblance to what we knew just a few years ago,” Bank of Uganda Governor Michael Atingi-Ego told delegates at the Absa Africa Financial Markets Index & Economic Outlook Forum. His tone was measured, but the message was clear: the era of easy capital is over.

Against that backdrop, the 9th edition of the Africa Financial Markets Index offered something rare in uncertain times: affirmation. Uganda scored 66 points, ranking 3rd in Africa, behind only South Africa and Mauritius. It is a remarkable climb from 10th place in 2018, and a signal of sustained reform, regulatory discipline and institutional credibility.

Yet, for Governor Atingi-Ego, the ranking was not a victory lap—it was a diagnostic.

“Our biggest constraint today is not regulatory sophistication,” he said. “It is capital mobilization and market depth.”

From Reform to Reach

Uganda’s ascent in the Index reflects years of deliberate policy choices: strengthening legal frameworks, modernising market infrastructure, and improving transparency. These reforms are beginning to show tangible results.

Under the Bank of Uganda’s 2022–2027 strategic plan, targets include achieving a 75% financial inclusion index, an e-payments index of 46%, and continued expansion of financial markets. Some benchmarks, the Governor noted, have already been surpassed.

Recent gains have been driven by deepening REPO and money markets, improved liquidity management, and closer coordination across government, regulators, Parliament and market participants.

“This progress is collective,” Atingi-Ego emphasised. “Markets do not deepen in isolation.”

Still, gaps remain, and none more significant than long-term capital.

The Pension Problem

If Uganda’s financial markets have a weak link, it is pension fund development.

Despite improved infrastructure, much of the system remains underutilised, limiting the pool of patient, long-term capital needed to finance infrastructure, industrialisation and innovation.

Governor Atingi-Ego was blunt. “An oil windfall managed by a shallow financial market is not an opportunity, it is a vulnerability.”

Without pension reform and stronger institutional savings, he warned, Uganda risks bottlenecks precisely when larger capital inflows, particularly from oil revenues, begin to materialise.

He called on government to prioritise pension reforms and urged fellow regulators to intensify efforts to mobilise long-term savings and bring more institutional investors into the system.

Discipline in an Uncertain World

As Chief Guest, Ramathan Ggoobi, Permanent Secretary and Secretary to the Treasury at the Ministry of Finance, Planning and Economic Development, placed Uganda’s progress within a global frame.

Tighter financial conditions, geopolitical tensions and shifting trade patterns, he noted, are redefining global capital, but they also reward discipline.

“Even in a period of tighter financial conditions and global uncertainty, opportunity still exists for economies that stay disciplined,” Ggoobi said.

Uganda, he reaffirmed, intends to be among them. Economic growth is projected between 6.5% and 7% in 2026, even in an election year—placing the country among the fastest-growing economies regionally and globally.

But growth alone is not enough. “Sustained growth must be matched with deeper, more inclusive capital markets,” he said.

Capital, Risk and SMEs

Uganda’s rise to 3rd place on the Africa Financial Markets Index, Ggoobi said, is a strong foundation, but the next phase will require more ambition.

Among the priorities he outlined, include rebuilding capital markets capable of providing long-term debt and equity financing, attracting venture capital that supports higher-risk innovation with lower collateral demands, and exploring the establishment of an SME-focused stock exchange for firms not yet ready for the main board.

Such measures, he argued, would broaden access to finance and better align markets with Uganda’s development needs.

Trust as Infrastructure

From the private sector perspective, David Wandera, Managing Director of Absa Bank Uganda, pointed to a less visible, but equally critical, driver of market depth, which is trust.

“Market depth is built on trust, and trust is built through strong regulation,” Wandera said.

He cited capital markets reforms introduced in 2025, covering collective investment schemes, securities offerings, licensing, approvals and corporate governance, as pivotal in strengthening investor confidence, unlocking domestic capital and attracting long-term international investment.

The macroeconomic environment, he added, reinforces that confidence. Inflation remains below the Bank of Uganda’s 5% target, the Central Bank Rate is steady at 9.75%, and the Uganda Shilling ranks among the more stable currencies on the continent.

“Uganda’s financial markets are no longer just growing,” Wandera observed. “They are stabilising—with confidence.”

Beyond the Rankings

As discussions at the forum made clear, Uganda’s financial markets have crossed an important threshold. Credibility has been earned. Institutions are maturing. Policy coherence is visible.

But the real challenge lies ahead.

Deepening markets is no longer about frameworks, it is about scale, liquidity, and long-term capital. It is about ensuring that growth, oil revenues and innovation are supported by financial systems robust enough to absorb them.

Uganda’s rise in the Africa Financial Markets Index signals progress. Whether that progress translates into transformational development will depend on what comes next.