Global crises often unsettle markets. But they can also create openings for investors willing to take a longer view.
That was the message conveyed by analysts and investment advisers during a webinar hosted by SBG Securities Uganda Limited this week, where economists argued that while the conflict in the Middle East may introduce short-term volatility, it could also present opportunities for disciplined investors and policymakers in Uganda.
“Such times can come with a lot of uncertainty,” said Grace Semakula, chief executive of SBG Securities Uganda Limited, the investment and brokerage arm of Stanbic Uganda Holdings Limited. “But these are not times to panic. They are times to take a patient, long-term view and consistently allocate funds.”
Mr Semakula noted that geopolitical disruptions often create moments when investors can reposition their portfolios and identify emerging opportunities, provided they focus on long-term fundamentals rather than short-term noise.
Strong starting point
Uganda entered this uncertain period in a relatively strong position. Inflation has remained low, economic growth has been robust, and exports, particularly of gold and coffee, have increased significantly over the past year.
Yet economists caution that a prolonged global conflict could still have an impact on the economy. “We might see a protracted conflict,” said Christopher Legilisho, an economist at the Standard Bank Group. “That could weigh on global growth and create spillovers to different countries, including Uganda.”
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Central banks, meanwhile, are growing more cautious. Until recently, policymakers around the world had been preparing to ease monetary policy as inflationary pressures subsided. That outlook is now looking less certain. Rising geopolitical tensions have increased the likelihood of higher oil prices and renewed inflation, prompting a reassessment.
“Because of the conflict, we are starting to see expectations that inflationary pressures could return,” said Mr Legilisho. “Central banks may become more cautious or preventive in their policy stance.”
The Bank of Uganda has held its benchmark policy rate steady at 9.75 per cent since October 2024. If inflation accelerates, analysts say the central bank could delay any rate cuts — or even raise rates.
Risks and opportunities
Uganda’s trade links to the Middle East also leave it vulnerable. Gold exports, which are now the country’s largest source of foreign exchange earnings, are heavily concentrated in the region. Of the approximately $6bn worth of gold exported each year, around $5.2bn is destined for the United Arab Emirates. Any interruption to that trade route could leave exporters struggling to find alternative markets at short notice.
“If producers are unable to ship gold to the UAE, refiners and exporters may struggle to find immediate alternative markets,” said Mr Legilisho.
The disruption could, however, accelerate a domestic policy initiative already in the works. Bank of Uganda has been preparing to launch a gold purchase programme aimed at strengthening foreign-exchange reserves — a move that could gain urgency if export flows slow down.
Energy markets introduce an additional layer of complexity. Uganda still relies heavily on imported refined petroleum products, much of which comes from the Middle East. A sustained rise in oil prices would considerably increase the country’s import bill.
In a stressed scenario, Mr Legilisho estimates that inflation could reach around 8.3 per cent, likely prompting the central bank to raise interest rates — which would slow credit growth and hinder economic expansion. Remittances are another vulnerability: Uganda receives significant inflows from citizens working in the Middle East, and any regional disruption could affect those earnings.
The longer-term outlook for energy is more favourable, however. Uganda expects to begin producing oil later this year, which would alter the country’s trade balance over time.
Markets already moving
Financial markets have already begun to react. The Ugandan shilling has weakened by around 3 per cent since the conflict escalated, and analysts are warning that further rises in energy prices could be passed on to consumers.
The scale of any impact, though, will depend heavily on how long the conflict lasts. “If the crisis is resolved within a month, the economic impact would likely be limited,” Mr Legilisho said. “But if it continues for several months, the pressures on growth and inflation could become more significant.”
Looking beyond the turbulence
For investment advisers, the message is that volatility should be managed rather than feared.
“Even through crisis, there are significant opportunities to explore,” Mr Semakula said. “Our role as an investment partner is to help clients see beyond the immediate noise and make informed, long-term decisions.”
For Uganda’s economy, the coming months may test its resilience. But as the analysts suggested, periods of uncertainty can also reward those prepared to look past the immediate horizon.
Grace Semakula is chief executive of SBG Securities Uganda Limited. Christopher Legilisho is an economist at the Standard Bank Group.
