From the fuel pump to the supermarket shelf, a weaker shilling can quietly make everyday life more expensive.
A Kampala shopkeeper does not need to follow the foreign exchange market to know when the shilling is under pressure. She may simply notice that her wholesaler has increased the price of a carton of goods.
The wholesaler, in turn, may have received a higher invoice from an importer. The importer may be spending more shillings to buy the dollars needed to pay suppliers. At the beginning of that chain lies a simple problem: the shilling buys fewer dollars.
This is how an exchange rate movement that begins in a bank or forex bureau eventually reaches the pockets of ordinary Ugandans.
The Ugandan shilling has weakened significantly in September after remaining relatively stable for much of the year. The exchange rate averaged about Shs 3,704.51 to the dollar in August but reached around Shs 3,917 by September 14 and Shs 3,920–3,930 in subsequent trading.
For many people, the question is simple: why does this matter if I do not buy dollars? It matters because Uganda imports many goods, and many of those purchases are paid for in dollars. Fuel is one clear example.
When a fuel importer needs dollars to pay for petroleum products, it must buy those dollars using shillings. If the shilling weakens, the importer needs more shillings to pay the same dollar bill. That additional cost can eventually reach the pump.
Fuel prices have already approached Shs 7,000 per litre in some parts of the country. With international oil prices also elevated, the weaker shilling adds another layer of pressure because petroleum products are bought internationally in dollars. And the effects of higher fuel prices extend beyond motorists.
A taxi uses fuel. A boda boda uses fuel. A truck carrying tomatoes from Mbarara to Kampala uses fuel. A factory producing roofing sheets uses fuel or electricity. A shopkeeper whose goods are transported from one town to another ultimately pays a transport cost that contains a fuel component.
When fuel becomes more expensive, the effect travels through the economy. The price increase can start long before the customer sees it
Suppose a shopkeeper buys a product from a local wholesaler. The shopkeeper may not be importing anything. Yet if the wholesaler imported the product, or imported the materials used to make it, the exchange rate can still affect the final price. This is why currency movements can be deceptive.
The dollar does not have to appear on the price tag for the dollar to influence the price. A weaker shilling raises the local-currency cost of imported fuel, machinery, spare parts, medicines, industrial materials, electronics and many other products. Businesses then have to decide whether to absorb the additional cost or pass some of it to customers.
For a small business already operating on a narrow margin, absorbing every increase may simply not be possible. This matters more because Uganda’s import bill has been rising.
In July 2026, merchandise imports reached US$1.612 billion, a 25.4 per cent increase from US$1.285 billion in July 2025. Exports also increased, reaching US$1.402 billion, up 10.1 per cent year-on-year.
The figures tell us something important: Uganda is earning more dollars, but it is also demanding more dollars.
More imports do not automatically mean a bad economy. It would be wrong to conclude that Uganda should simply stop importing. A growing economy needs imports.
A farmer may need a tractor. A manufacturer needs machinery. A hospital needs medical equipment. A construction company needs specialized equipment. A telecommunications company needs technology.
Such imports can strengthen the economy because they can help businesses produce more efficiently and create jobs. The real issue is what happens after the dollars leave.
If Uganda imports a machine that enables a factory to produce goods for export, that foreign exchange outflow can eventually help generate new foreign exchange earnings.
But if the economy keeps importing finished goods while producing too little for the rest of the world to want to buy, pressure on the currency can persist. This is where the country’s export performance becomes important.
Uganda’s export earnings have been improving, with gold, coffee, agricultural products and industrial goods contributing to foreign-exchange inflows. But in July, imports rose much more than exports. The dollar story is really an earnings story.
The long-term question for Uganda is therefore not simply whether the shilling is at Shs 3,800, Shs 3,900 or another level.
The deeper question is: How many dollars does Uganda earn compared with how many it needs?
That question takes the conversation into agriculture, manufacturing, tourism, minerals and value addition.
Uganda can earn more from coffee if it processes more of it locally. It can earn more from agricultural products by moving from exporting raw commodities to higher-value products. Mineral resources can generate more value when local processing and related industries develop.
Manufacturing can also reduce some dependence on imported finished products while creating goods that can be sold abroad. These are not overnight solutions. But they are the foundations of a stronger foreign exchange position.
What the ordinary Ugandan should watch: For households, the most immediate concern is how exchange-rate pressure interacts with fuel and other imported costs.
For businesses, it means paying closer attention to foreign-currency exposure. A company that depends heavily on imported goods or materials needs to understand how a weaker shilling can affect its costs, prices and cash flow.
For policymakers, the challenge is to contain excessive volatility without choking economic activity and access to credit.
The Bank of Uganda has already tightened liquidity conditions, increasing the cash reserve requirement for commercial banks from 11 per cent to 13.5 per cent effective September 24. The measure is intended to reduce excess liquidity and support monetary stability, although it may also affect the amount of money banks have available for lending.
Ultimately, the shilling is telling Uganda something bigger than the price of one dollar. A country becomes more resilient when it does not merely consume foreign currency but consistently produces things the world is willing to pay for. That is the conversation Uganda needs to keep having.
The author is a chartered accountant & international tax advisor