Uganda’s President Yoweri Museveni has long held mixed views on foreign exchange reserves. In 2013, 2016, and 2021, he sharply criticised the practice of keeping liquid reserves in foreign banks, describing it as “donating” African wealth to developed nations.
Now he has proposed a significant reversal: the creation of a Uganda Oil Fund, once oil revenues begin to flow, explicitly modelled on Norway’s Government Pension Fund Global – widely known as the Oil Fund.
Regarded as the world’s most successful sovereign wealth fund, Norway’s Oil Fund invests 100% of its assets abroad. Norwegian law expressly forbids domestic investment, and the fund’s entire $2 trillion portfolio is held in international financial markets.
His earlier attacks on foreign reserves appear to have been triggered by criticism of his 2011 decision to bypass parliament and order the central bank to draw down $400 million –eventually rising to $740 million – from Uganda’s foreign reserves to purchase Russian Sukhoi Su-30MK2 fighter jets. That unilateral move reduced the country’s import cover from six months to four months, triggering high inflation and a serious domestic economic crisis in late 2011.
Whether this marks a genuine shift in Museveni’s convictions remains to be seen when US dollars or Euros land in Uganda’s oil accounts in Kampala in future.