This article was first published in the Observer on January 22, 2025
With just about 12 months to the 2026 general elections, this year will see intensified political events in the country. Although the Electoral Commission’s roadmap for the 2025/26 general elections sets August 2025 as the expected start of general election campaigns, ‘troop’ movements in various political parties shows the country has already hit elections fever.
Some candidates for the different positions, especially members of parliament, have already hit the ground to embark on political mobilisation activities. President Museveni’s countrywide tours can be seen in such lens, although officially, they are meant for wealth creation. For the economy, electoral period comes with huge implications, and a call for the managers to roll up their sleeves.
First, we are likely to witness increased expenditure like never before as current legislators fight to keep their seats while newcomers fight to grab anything they can. Since the re-introduction of the multi-party-political system in 2006, Ugandan politics have become increasingly monetised. It is a norm for politicians to use voter bribery through money and material goods such as soap and salt as a tool to win support. The appetite to receive bribes among voters is alarming because it is seen as the only benefit, they can realistically gain from politicians. Elections period is an opportunity to make money from politicians.
At political rallies during the 2020/21 general elections, one could observe that some voters were not even interested in listening to what candidates would do for them once in office. Many would start “scratching their throats” after two minutes of the candidate speaking, signalling their desire for something: money, soap, or salt.
Politicians must mobilise large sums of money for a chance to succeed. Some are mortgaging properties to build a war chest. The level of monetisation of the country’s electoral process has alarmed some religious and civil society groups. Alliance for Finance Monitoring (ACFIM), a political finance watchdog, has called for this to stop without success.
The increases in money circulation will not only boost consumption, but it could also lead to inflation in the aftermath, leaving Bank of Uganda with the usual task to mop out excess liquidity.
Secondly, we will see reduced tourism and foreign direct investment inflows due to heightened perceived and real risks. Uganda’s elections are characterised by violence, as highlighted by the Electoral Commission reports on the 2016 and 2021 general elections. The forms of violence witnessed in the previous elections include arrests and beatings of supporters for different political camps and disruption of rallies using teargas among others. The televising or social media circulation of such violent acts by local and international media scares away potential tourists. This will result in a decline in foreign exchange earnings from tourism.
Potential foreign investors will adopt a “wait-and-see” approach as they monitor the political situation in the country, thus impacting foreign exchange inflows.
Thirdly, we expect heightened government expenditure. Conducting general elections is a costly exercise in Uganda. According to the Electoral Commission Strategic Plan 2022/2023 to 2026/2027, the estimated cost for the 2025/26 general elections is UGX 1.387 trillion. This represents an almost 100 percent increase from the amount of money spent on the 2020/21 general elections (UGX 698.66 billion).
This will probably constrain the fiscal space since elections are wholly funded by the Government of Uganda through the Consolidated Fund. Social services such as education and health will witness a cash squeeze as political leadership direct cash to elections.
Lastly, we expect increased pressure on the Ugandan Shilling. The Ugandan currency has held on strongly against major currencies in the last year, supported by earnings from coffee exports, tourism, and inflows to NGOs. As we head into polls, the shilling is likely to slide as investors flee to safer jurisdictions, and others hold on intended investments awaiting elections outcomes. A week shilling means our imports during this period will be expensive, importing inflation and widening Uganda’s trade deficit. The shilling could still benefit from inflows into the oil and gas sector which are expected to continue with minimal interruptions.
In conclusion, the 2025/26 general elections will bring both opportunities and challenges to the economy. Overall, it will be a more painful period for ordinary citizens as social services are squeezed of resources while resultant raise in prices of goods and services limit their freedom of choice.
The writer is a research associate at EPRC, Makerere University
Featured photo: IFES – The International Foundation for Electoral Systems