Source : UDB
A collage of Dr. Francis Mwesigye (L), the Director Economic Research & Knowledge Management at UDB and Joseph Mawejje (R), a Senior Economist at the World Bank Group
Analysts warn that disruptions to global fuel supplies, shipping routes, and commodity markets could quickly filter through to transport costs, food prices, and the broader cost of living, deepening uncertainty for businesses and consumers alike. These projections featured prominently during a webinar organized by Uganda Development Bank (UDB) on May 6 under the theme Impact of the US-Israel-Iran conflict on Uganda’s Economy.
Dr. Francis Mwesigye, the Director Economic Research & Knowledge Management at UDB who doubles as Chief Economist at the Bank, while establishing Uganda’s exposure to the Middle East conflict said the country imports 100 percent of its refined petroleum products, and approximately 50 percent of that supply passes through the Strait of Hormuz — the very choke point at the centre of the conflict.
He emphasized that the war, though geographically distant, travels through specific economic channels that ultimately land in the pockets of Ugandan farmers, manufacturers, and households.
Dr. Mwesigye identified transport, logistics and distribution, agriculture, manufacturing and processing, and finance as sectors that are most directly hit.
On his part, Joseph Mawejje, a Senior Economist at the World Bank Group, flagged a less-discussed transmission channel, explaining that Gulf countries such as Saudi Arabia, Qatar, UAE, Kuwait have become significant sources of foreign direct investment in Uganda’s energy, minerals, agro-processing, telecoms, and banking sectors.
Uganda receives approximately USD 1.5 billion per year in remittances, of which approximately 30 percent (around USD 450 million) comes from the Middle East alone.
Mawejje pointed out that remittance inflows now exceed Uganda’s Official Development Assistance (ODA) receipts — making the Middle East labour channel not a peripheral welfare matter but a core macroeconomic factor.
He referenced Islamic finance flows noting that when these source economies are disrupted, planned investments may be deferred or cancelled — with potentially large ramifications for Uganda’s development pipeline.
The economist devoted significant attention to Uganda’s imminent transition to oil-exporting status (anticipated around 2027), arguing this changes the calculus of the current discussion fundamentally.
However, he raised the spectre of the ‘Dutch disease’ which implies the risk of losing competitiveness in other productive sectors (agriculture, manufacturing) when countries begin to export significant natural resources, as the resource windfall pushes up the exchange rate and redirects investment.
His key concern was whether Uganda is institutionally prepared to manage the oil windfall in a way that avoids the resource curse while preserving the social contract between State and citizen, maintaining investment in non-oil sectors, and ensuring that oil revenues are channelled into inclusive growth rather than elite capture.
Uganda’s dependence on agriculture — which employs 68 percent of the population but contributes only 22 percent of GDP — means that fertiliser price shocks directly threaten food security, household incomes, and agricultural export competitiveness.