Prof. Mbabazi (left) with Dr Magara during the Yobel Biashara conference at Makerere University Kampala on Wednesday, October 1st 2026
HABARI DAILY I Kampala, Uganda I The oil curse is looming upon Uganda, with Bank of Uganda officials warning that failure to properly manage the country’s anticipated petroleum revenues could turn the long-awaited oil windfall into an economic disaster.
The warning was delivered by Doreen Katangaza Rubatsimbira, the Bank of Uganda director for Monetary Policy, who urged government to strictly ring-fence oil revenues so that petroleum wealth supports long-term economic transformation instead of fuelling short-term government expenditure.
Uganda is projected to earn up to $2 billion, equivalent to more than Shs7.7 trillion, annually from oil production once output reaches peak levels. Over the entire lifespan of the petroleum industry, government revenues are estimated at more than $36 billion, or about Shs130 trillion.
Katangaza made the remarks during the Yobel Conference 2026 at the Makerere University School of Public Health in Kampala. The conference, held under the theme “Africa’s Agency in an Era of Geographical Change,” brought together stakeholders to discuss how African countries can shape their economic and development futures amid changing global conditions.
Oil wealth must be protected
Katangaza said Uganda already has an institutional framework for managing petroleum revenues, anchored in the Public Finance Management Act.
The framework provides for a Petroleum Fund and a Petroleum Revenue Investment Reserve (PRIR), intended to ensure that oil revenues are managed transparently and sustainably.
She explained that petroleum revenues not appropriated to the Consolidated Fund are transferred to the PRIR for investment, creating an avenue through which part of the country’s oil wealth can be preserved for future generations.
The system is also intended to impose fiscal discipline and prevent the sudden influx of petroleum revenues from destabilising the wider economy.
Katangaza said Uganda must ensure that oil production does not undermine the competitiveness of the non-oil economy.
“As petroleum revenues increase, we should remain focused on ensuring that the non-oil exports remain competitive and the resulting public investment strengthens the productive capacity of the non-oil economy,” she said.
Fiscal rules limit oil spending
The Charter for Fiscal Responsibility is another safeguard against excessive spending of petroleum revenues.
Katangaza explained that the charter establishes limits on fiscal deficits and public debt in relation to non-oil Gross Domestic Product. It also provides restrictions on the amount of petroleum revenue that can be transferred to the Consolidated Fund for financing government operations.
Under the framework, the amount of petroleum revenue transferred to the Consolidated Fund in any financial year should not exceed 0.8 per cent of the preceding year’s estimated non-oil GDP.
The remainder is expected to be transferred to the Petroleum Revenue Investment Reserve for investment.
The restrictions are intended to prevent government from rapidly expanding expenditure simply because oil revenues have started flowing, a situation that could create inflationary pressures, weaken other productive sectors and expose the economy to the volatility of international oil prices.
Debt raises concern
Yobel Biashara chairperson Dr James Magara separately urged government to protect monetary and macroeconomic stability as Uganda moves towards commercial oil production.
Magara warned that petroleum revenues could either strengthen Uganda’s productive capacity or worsen existing financial pressures, depending on how the money is managed.
He pointed to the country’s rising debt burden, noting that Uganda is projected to spend about 45 per cent of domestic revenue servicing existing debt.
Public debt, he said, has risen from 48 per cent of GDP in 2021 to about 52 per cent. “We are about to receive a major new revenue stream, arriving into a fiscal position that already commits nearly half of every shilling government collects to servicing old debt. Is that a windfall? Or is it simply fresh collateral for the next round of borrowing?” Magara asked.
His concern highlights the danger of using future oil revenues to support additional borrowing rather than investing the proceeds in sectors capable of generating sustainable economic growth.
Oil and the $500b ambition
Prof Pamela Mbabazi, the executive chairperson of the National Planning Authority, said the country’s oil wealth should be incorporated into Uganda’s broader development strategy.
As government moves into implementation of the Fourth National Development Plan, she said policies should be aligned with the ambition of transforming Uganda’s economy from its current estimated $55 billion to $500 billion by 2040.
For Uganda, the challenge will therefore extend beyond extracting oil and collecting revenues. The management of the expected windfall will determine whether petroleum becomes a source of productive investment and intergenerational wealth or contributes to fiscal pressures that could undermine the wider economy.
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