Uganda Roundup: Chinese visa, South Sudanese refugees, education expenditure

Policy rate

The Bank of Uganda has opted to maintain its policy rate at 9.5%, citing subdued inflationary pressures within the economy. Deputy Governor of the Bank of Uganda Michael Atingi-Ego, explained that the decision is influenced by the sustained easing of inflationary pressures, The New Vision reports. This easing is attributed to the diminishing effects of supply-side shocks, a global decline in inflation rates, and the implementation of stringent monetary and fiscal policies. In January, both headline and core inflation recorded slight increases, reaching 2.8% and 2.4%, respectively, compared to 2.6% and 2.3% in the previous month, according to data from the Uganda Bureau of Statistics. Despite this increase, inflation remains below the central bank's target of 5%. The Deputy Governor highlighted that the continuing decrease in inflation is a positive outcome, reflecting the effectiveness of measures implemented to address supply-side challenges and stabilize the economy. The global trend of decreasing inflation has also contributed to the overall favorable economic environment.

Sudanese refugees

The Archbishop of Gulu Diocese John Baptist Odama, and the South Sudan Ambassador to Uganda, Simon Deng, have jointly called upon South Sudanese refugees currently residing in Uganda to consider voluntary return to their home country. The leaders believe that their return could play a crucial role in contributing to the social and economic development of South Sudan, Observer UG reported. “In my archdiocese, there are over 70,000 refugee settlements. We are concerned about peace all over the region. With the Democratic Republic of the Congo, we shall soon be engaging the President, Felix Tshisekedi. Whether in Sudan, Kenya, or Tanzania, there shouldn't be any fighting in East Africa. These are our brothers, and that is what we are all after. We are appealing to all South Sudanese who are in urban settings to voluntarily come back home and contribute to economic growth because there's been peace since the implementation of the peace agreement in 2018 up until now. The next challenge is the election, where South Sudanese will decide who to lead them for the next five years. And that will not be determined when people are not at home. They should come to register and vote. The government is doing everything possible to ensure this crucial step is undertaken in a free and fair manner in a very peaceful atmosphere,” Deng said. According to the United Nations High Commission on Refugees (UNHCR), as of the end of June 2023, Uganda hosted a substantial number of refugees and asylum seekers, reaching 1,561,634 individuals. Among them, 923,658 were from South Sudan, highlighting the significant presence of South Sudanese refugees in the country. Other refugees originated from the Democratic Republic of the Congo (DRC), Somalia, Burundi, Eritrea, Rwanda, and various other regions.

Chinese visas

The Chinese Ambassador to Uganda, Zhang Lizhong, has noted a noticeable uptick in visa applications to China from Uganda in the aftermath of the COVID-19 pandemic. Uganda had implemented stringent measures in March 2020, including the suspension of all air travel to Beijing, as part of efforts to control the spread of the virus, which was initially identified in China, The Monitor reports. “It is the only entity entrusted by the embassy to provide services related to Chinese ordinary visas and consular legalisation applications. It operates independently and is responsible for its own profits and losses, which is not an extension of the embassy. We are seeing an increasing number of people coming to China after COVID-19. Before COVID, over 40,000 Ugandans were visiting China annually. Last year, we saw a recovery, and the embassy has received 12,000 applicants. Some of them may have multiple entries, and the actual number of people going to China is larger than the applications in the embassy,” said Lizhong. However, the embassy clarified that individuals holding diplomatic or services/official passports, as well as those applying for Chinese diplomatic, courtesy, or official visas, are still required to submit their applications directly to the embassy. The Chinese embassy has announced that it will no longer accept visas of ordinary categories from ordinary passport holders or legalisations.

Education expenditure

Uganda's education spending has fallen significantly behind that of its East African counterparts and international benchmarks, according to the latest analysis by the World Bank. The findings, unveiled in the 22nd edition of the Economic Update for Uganda's Economy, underscore the need for increased investment in education to fuel the country's development, the Monitor reports. The World Bank's report highlights that Uganda's education budget is predominantly funded through domestic resources. “Public education spending per student at the primary, secondary, and tertiary levels is consistently below the regional average. As a share of GDP per capita, the per-student government expenditure across all levels of education is below the regional average, including tertiary education. Indeed, expenditures on higher education are the most regressive at any level. Public education spending has grown over the past decade, driven by an increase in expenditures on higher education. Between FY2011 and FY2022, domestically financed public education spending rose by 76 percent in real terms - an average annual increase of 6.9 percent. About 43 percent of these additional resources were directed to tertiary education, especially to finance the establishment of new universities in sub-regions without them. Another 24 percent of expenditures were not classified by education level,” the World Bank noted.

Weak currency

During Wednesday's trading session, the Ugandan shilling experienced a decline, closing at lows of 3830/3840 compared to the day's opening of 3818/3828. The weakening of the shilling was attributed to a notable surge in demand for the US dollar, with inflows being overshadowed by robust interbank and corporate demand, The New Vision reports. Market analysts observed that the heightened demand for the dollar during the session exerted pressure on the shilling, leading to its depreciation against the greenback. The closing rates reflected the impact of this increased demand, signalling a dynamic foreign exchange market influenced by various economic factors. Despite the fluctuations in the forex market, money markets remained relatively liquid during Wednesday's session. Overnight yields were reported at averages of 10.43%, as indicated by Absa. This stability in money markets suggests a balanced liquidity situation, providing financial institutions and investors with a steady environment for short-term transactions.