By Nicholas Bariyo

KAMPALA, Uganda--Uganda's central bank maintained its key lending rate at 9.75%, citing rising inflationary pressure and high oil prices amid sustained geopolitical uncertainty.

Uganda's headline inflation rate rose to 3.2% in January from 3.1% in December, driven by higher prices in energy and services. Bank of Uganda Governor Michael Atingi-Ego told reporters in Kampala that although the inflation rate remains below the central bank's medium-term target of 5%, geopolitical tensions and trade barriers pose risks to the inflation outlook for Africa's top coffee exporter and an upcoming oil producer.

"Risks to inflation outlook remain elevated, mainly due to heightened geopolitical tensions that could disrupt global supply chains," he said.

Uganda's central bank has held the rate at 9.75% since October 2024, amid increased investments in crude oil fields along the western border with the Democratic Republic of Congo, where France's TotalEnergies and China's Cnooc are developing a 230,000-barrels-a-day crude oil project slated to commence in the second half of the year.

Uganda announced in November last year that its recoverable crude oil reserves had increased to 1.65 billion barrels from 1.4 billion following updated evaluations, positioning the country as the latest frontier in Africa's energy markets.

Economists at Oxford Economics Africa expect the central bank to hold rates unchanged at 9.75% through 2026.

Following last month's election victory of long-serving leader Yoweri Museveni, which extends his 40-year rule into a fifth decade, Uganda remains among the highest-risk political jurisdictions for investors due to uncertainty over a leadership transition, according to Mucahid Durmaz, senior Africa analyst at risk intelligence company Verisk Maplecroft.

"Museveni's re-election means continuity in the business environment, but foreign investors remain exposed to potential political interference and reputational risks," he said.

Write to Nicholas Bariyo at nicholas.bariyo@wsj.com

(END) Dow Jones Newswires

February 09, 2026 05:29 ET (10:29 GMT)

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