Uganda’s weakening shilling is usually discussed in the language of economics: import bills, oil prices, export earnings, interest rates and demand for the US dollar. These factors are important. But there is another issue that deserves greater attention in our national debate: the economic consequences of human rights violations, restrictions on civic freedoms and declining confidence in public institutions.
Can a country build lasting economic confidence while citizens fear arbitrary detention, journalists face intimidation and government critics struggle to exercise their constitutional rights? My supervisor at Makerere, Dr. E. Okello Ogwang once observed that it would be short-sighted to examine economic performance without considering the quality of governance, institutional accountability and the confidence these institutions inspire.
My argument is that when government actions weaken the rule of law and public trust, they risk undermining the institutional foundations on which sustainable investment and economic resilience depend. Uganda should take this connection seriously.
The evidence raises difficult questions
Uganda’s human rights record has attracted significant international scrutiny. In its World Report 2026, Human Rights Watch documented restrictions on freedom of expression and peaceful assembly, and reported arrests and violence affecting opposition supporters, journalists and protesters during 2025.
In July 2026, Human Rights Watch also reported alleged unlawful detentions of government critics and pressure on independent media. These are serious allegations that require transparent investigation and appropriate legal accountability.
Investors do not make decisions based on exchange rates alone. They also consider whether contracts will be enforced fairly, whether courts can act independently, whether regulations will be applied consistently and whether businesses can operate without arbitrary interference.
When these safeguards are questioned, some investors may delay projects, reduce exposure or direct new investment elsewhere. If such decisions significantly affect foreign-exchange inflows, they can add to currency pressures. This is a credible economic risk.
Gross human rights violations can weaken a country’s currency, not necessarily by directly reducing its value overnight, but by undermining investor confidence, discouraging foreign investment, increasing economic uncertainty and placing pressure on foreign-exchange reserves.
In Uganda, the relationship between human rights, governance and the exchange rate is an important subject for economic and political analysis. However, it is important to distinguish between a factor that contributes to currency depreciation and the factor that directly causes it. The Ugandan shilling’s value against the US dollar is also affected by import demand, export earnings, monetary policy, global dollar strength, foreign debt payments and capital flows.
Here is how human rights abuses, when they undermine the rule of law and institutional stability, can contribute to pressure on the Ugandan shilling.
Five ways human rights violations can weaken the shilling
- Discouraging foreign investment
Investors look beyond profits: they also consider political stability, judicial independence, property rights and the risk of arbitrary detention or government interference. If investors believe that their employees, assets or business operations could be exposed to political risks, they may postpone projects or move their capital elsewhere.
When fewer investment dollars enter Uganda, the supply of foreign currency can decline, putting downward pressure on the shilling. The US State Department’s 2024 investment-climate assessment identified human rights violations, corruption, democratic backsliding and weak rule of law as risks to Uganda’s investment environment.
- Damaging trade relationships and export opportunities
Human rights concerns can trigger trade restrictions or the withdrawal of preferential market access. This matters because Ugandan exporters earn foreign currency when they sell products abroad.
A concrete example is Uganda’s loss of eligibility for US African Growth and Opportunity Act (AGOA) trade preferences from 1 January 2024. The US government explicitly linked that decision to gross violations of internationally recognized human rights. This created a disadvantage for eligible Ugandan exports that had benefited from preferential access, although it does not establish how much the decision affected the exchange rate.
- Increasing political uncertainty and capital flight
When opposition supporters, journalists, activists or other citizens face violence, arbitrary detention or restrictions on expression, investors may become concerned about political stability and the predictability of government decisions.
Some investors may transfer funds abroad or choose safer markets. Ugandan businesses and households may also increase their demand for dollars as a precaution.
Human Rights Watch’s World Report 2026 documents restrictions on expression and repression of opposition activity during 2025. These conditions can create economic risks, although the exchange-rate impact must be established using actual capital-flow and foreign-exchange data.
- Weakening confidence in public institutions
Human rights abuses can become an economic problem when they are accompanied by impunity, corruption, weak accountability and unpredictable enforcement of the law.
Investors need confidence that contracts will be enforced, disputes will be resolved fairly and public officials will follow established rules. If this confidence deteriorates, investment may become more expensive or less attractive.
The result can be lower long-term investment, slower growth in productive capacity and weaker future export earnings. These effects develop over time rather than automatically producing an immediate fall in the exchange rates.
- Putting foreign remittances and development funding at risk
Money sent home by Ugandans abroad is an important source of foreign exchange. International development organizations and civil society groups also bring funds into the economy.
Policies that create excessive uncertainty around foreign funding, or that expose legitimate recipients to arbitrary restrictions, may discourage some transfers and activities. In May 2026, Reuters reported concerns from Uganda’s central bank governor and the World Bank about an earlier version of the Protection of Sovereignty legislation and its potential effects on remittances and development work. Parliament subsequently softened some provisions before the law was signed. The extent of any actual reduction in inflows would need to be measured. If dollar inflows decline while demand for dollars remains strong, the shilling can come under pressure.
Uganda’s human rights record is economically relevant. Repression, restrictions on civic freedoms, weak accountability and unpredictable government action can undermine investor confidence, threaten trade relationships and create risks for foreign-currency inflows.
The author is a lecturer and a researcher in Literature and the Economics of Liberty.
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