Uganda’s country risk improves as oil production nears — Oxford report

Uganda is emerging as one of Africa’s notable gainers in the latest continental risk assessment, buoyed by an improved external outlook and the long-awaited start of oil production expected this year.

In its March 2, 2026, update titled “Fix your roof when the sun is out,” Oxford Economics Africa reports indicates that Uganda has experienced a “notable improvement in country risk over the past quarter,” placing it among the biggest gainers on the continent alongside Ethiopia.

“Paying off external debt is becoming easier due to a weaker dollar and lower interest rates, while major economies are clamouring for the continent's critical minerals,” said Head of Africa Macro Jacques Nel.

He added that “While there is volatility ahead due to developments in the Middle East, effective management of these exogenous shocks will enable African governments to make significant development gains in the coming years.”

However, Nel noted that complacency could leave governments ill-prepared for the inevitable next adverse external shock. Nevertheless, Nel said that “The sun is finally shining, and the question is which African governments will fix their leaky roofs?”

The report attributes the broader African upswing to favourable global conditions, noting that “Africa is currently a beneficiary, not a casualty, of international geopolitical ructions.”

For Uganda specifically, the most significant shift lies in its external accounts according to the report. “The outlook for external balances has improved considerably, with oil production expected to commence this year,” the report states.

Additionally, according to the assessment, “the public debt trajectory is looking better.” This milestone, long anticipated, according to the report, is also feeding into a more encouraging fiscal trajectory.

These gains come at a time when most major African economies are recording improvements in overall country risk as they head into 2026.

Factors such as “a weaker dollar, lower interest rates, higher mining commodity prices, and lower oil prices have improved market sentiment towards emerging and frontier markets, with most African markets benefiting,” according to the report.

Uganda stands out

According to the report, Uganda stands out in East Africa, where risk profiles are shifting unevenly. Ethiopia, for instance, has made “solid gains in reducing economic risk,” driven by an overhaul of its monetary policy framework and liberalisation of the banking sector.

However, the report cautions that political tensions are rising, including renewed friction with Eritrea and unresolved disputes over the Grand Ethiopian Renaissance Dam.

The Democratic Republic of Congo (DRC), while still carrying the least favourable country risk score in East Africa, has enjoyed a broad-based improvement in its risk profile according to the assessment.

The surge in demand for copper and cobalt has strengthened its currency and lowered inflation, while International Monetary Fund (IMF)-backed reforms are improving investor sentiment according to the assessment.

Uganda’s improved position contrasts with developments in other parts of the continent, particularly among oil-dependent economies that have struggled to adjust to structurally lower global oil prices.

The report identifies Angola and Algeria as clear outliers in a generally improving continental picture.

According to the report, neither country has succeeded in adequately diversifying away from oil, with external and fiscal balances struggling to adjust to a structurally lower international oil price.

The assessment notes that Angola’s current account balance could switch from a surplus to a deficit in 2026, while Algeria is forecast to experience slowing growth, rising inflation, and widening fiscal and current account deficits.

However, the report notes that the current global tailwinds offer a window of opportunity and not a permanent shield. Nevertheless, while borrowing costs are declining and commodity prices are favourable, the continent is again issuing large amounts of external debt according to the assessment.

The report notes that mineral windfalls have not yet translated into accelerated fiscal consolidation. However, in this context, Uganda’s approaching oil production represents both promise and pressure.

Renowned economist Dr. Fred Muhumuza noted that Uganda still faces other risk that need to be tackled. “Our risks are still with us and the interest rates here are still high.

Well, for the foreign debt we service it well because it’s a small commentate but for domestic debt is still a struggle. There are quite a number of issues still holding us as a country,” he said.

On his part, Pascal Muhangi, an economist from the Civil Society Budget Advocacy Group (CSBAG), gave credit to the bank of Uganda and ministry of finance for ensuring a conducive monetary policy which he said is a great contributor to the improved risk profile.

“I give credit to Bank of Uganda and ministry of finance for the good work they are doing. But also, even our exports have surged, and this is another factor. However, what we need to do is ensuring discipline as regards our fiscal policy. It needs to be sound, and we also need to make sure that as a country we invest in projects that guarantee a high return on investment,” he said.

High risk profile countries

Elsewhere in Africa, risk profiles remain fragile in several economies. Mozambique has overtaken Zimbabwe as the continent’s most risky major economy, following delays in liquefied natural gas (LNG) development, severe floods, and mounting external pressures.

Currency devaluations are expected in Malawi and Mozambique, with foreign exchange reserves under strain. In West Africa, Nigeria has improved its country risk score enough to move past the African median, supported by signs of greater central bank independence and a maturing non-oil sector.

Meanwhile, Côte d’Ivoire continues to record broad-based improvements, backed by higher gold production and expansion in hydrocarbons.