Kampala – Uganda’s financial inclusion drive received a major boost in July 2025, with mobile money transactions reaching record highs despite sluggish job growth, a widening trade deficit, and environmental pressures, according to the Ministry of Finance’s latest Microeconomic Indicators and Developments (MIND) Report.
The report indicates that digital finance remains a central component of Uganda’s economy. The number of mobile money transactions increased by nearly 20% in just a year, while their total value jumped by almost a quarter. This signals both growing consumer reliance on digital platforms for everyday payments and the continued expansion of the financial sector into previously underbanked communities.
“The volume of mobile money transactions increased by 19.9% from 1.0 billion transactions in March 2024 to 1.2 billion in March 2025. The value of mobile money transactions increased by 23.9% from Shs33.9 trillion to Shs42.0 trillion,” the report highlighted.
Despite these positive strides, the broader economy faced several headwinds. Formal employment slightly contracted, suggesting businesses remain cautious in hiring. The number of employees captured under the PAYE register dropped by almost 700 in July, while the inflow of migrant workers also slowed, reflecting reduced demand for labor.
“Formal employment returns reduced by 0.08% from 890,111 employees in June 2025 to 889,422 employees in July 2025. Migrant workers also declined by 7.3% from 3,213 in June 2025 to 2,980 in July 2025,” the ministry revealed.
At the household level, inflationary pressures softened, giving some relief to families struggling with the high cost of living. Food and non-alcoholic beverage prices fell slightly, while energy and fuel prices also eased. This slowdown in price growth suggests greater stability in household expenditure, despite healthcare remaining a significant cost driver. On average, Ugandans spend about Shs32,000 per month on healthcare, but the disparities are wide — residents in Kampala spend more than four times the amount spent by households in West Nile.
While the cost of living showed some signs of easing, the environment deteriorated sharply. Kampala’s air quality worsened dramatically in July, with particulate matter nearly doubling within a month. This poses serious health risks, particularly for children and those with respiratory conditions, and highlights the challenge of balancing rapid urban growth with environmental sustainability.
“Air quality in Kampala deteriorated significantly, with particulate matter increasing by 90% from 28.75µg/m³ in June 2025 to 54.70µg/m³ in July 2025,” the ministry warned.
Adding to the strain were natural disasters that struck between June and July. Heavy rains, floods, and landslides displaced nearly 15,000 people, destroyed over 500 homes, and left thousands more vulnerable. The economic cost of such disasters continues to weigh heavily on affected communities and the government’s disaster response systems.
Uganda’s external sector also presented a worrying picture. The trade deficit widened dramatically, more than doubling from May to June. Higher import bills for petroleum products and minerals drove this imbalance, underscoring the country’s vulnerability to global price movements. A ballooning trade deficit not only puts pressure on foreign reserves but also risks weakening the shilling if not offset by stronger export growth.
“The monthly trade deficit significantly increased by 146.3% from $110.8 million in May 2025 to $272.9 million in June 2025. The increase was mainly attributed to a rise in import bills for petroleum and mineral products,” the report explained.
Still, there were bright spots. Capital markets recorded strong activity, with the Uganda Securities Exchange All-Share Index climbing by 4.6%. Turnover more than doubled to Shs10.8 billion, signaling renewed investor appetite, particularly in counters such as MTN Uganda and Umeme. At the same time, new business registrations rose by nearly a third in July, indicating growing confidence among entrepreneurs despite broader economic challenges.
Spotlight on Karamoja sub-region
While national averages showed a mixed picture of resilience and vulnerability, the MIND report singled out the Karamoja sub-region as an area of deep concern. With a population of 1.45 million, most of whom depend on subsistence farming and pastoralism, Karamoja continues to lag behind other regions in key development indicators.
The report revealed that poverty in Karamoja has worsened significantly over the past five years, with nearly three-quarters of the population now living below the poverty line. Although income inequality narrowed slightly, overall deprivation remains high. Unemployment in the sub-region stands at 14.5%, just under the national average, but limited formal job opportunities continue to drive dependence on livestock and small-scale agriculture.
“The poverty rate of the sub-region significantly increased by 13% from 65.65% in 2019/20 to 74.20% in 2023/24,” the report revealed.
Karamoja is endowed with significant natural resources, including 16.7% of Uganda’s cattle stock and minerals such as gold, marble, and limestone. However, these resources have not translated into sustained local prosperity, with wealth largely bypassing the communities. Tourism potential remains underexploited, as Kidepo Valley National Park, despite being Uganda’s largest game park, attracts only 1.7% of national park visitors.
Financial inclusion remains one of Karamoja’s biggest hurdles. The sub-region has very limited access to banking services, with only Centenary Bank and DFCU Bank present among the institutions listed on the Uganda Securities Exchange. This limited financial infrastructure has hindered access to affordable credit and slowed the uptake of government-led wealth creation initiatives such as GROW loans.
“Among the financial institutions listed on the Uganda Securities Exchange, only Centenary and DFCU Bank have presence in the sub-region. This makes the sub-region underserved in terms of financial inclusion and its inability to access affordable finance,” the ministry noted.
Outlook
Despite the challenges, the Ministry of Finance remained cautiously optimistic. It projected that lower inflation, especially in food and passenger transport, would boost consumer demand in the coming months.
“With a reduction in inflation pressures due to lower food crop and passenger transport prices during July 2025, aggregate demand is expected to increase. Domestic economic activity has remained resilient, thus pointing to a brighter microeconomic outlook in the near term,” the report concluded.
