Global risk-on sentiment is pushing investors deeper into frontier markets, with Uganda emerging as an unexpected hotspot for yield seekers.
Offshore holdings of Uganda’s local bonds have hit a record $2–2.7B (≈12% of total domestic debt), even though the country isn’t included in major JPMorgan indices.
Why Uganda?
- Weak USD + revived risk appetite fueling EM inflows
- Local currency EM debt +17% YoY
- Uganda’s perks: credible central bank, resilient FX market, prudent policymaking
- IMF/World Bank meetings revealed ~$3B in total offshore holdings
But Frontier Risks Remain
- Currency volatility & capital controls
- Hedge-fund “hot money” prone to rapid exits
- January elections under President Museveni add political risk
- Global risks: stronger USD, weaker commodities, fading growth
Broader Trend
- JPMorgan & BofA see strong demand for frontier LCY debt
- Recommended buys: Nigeria, Dominican Republic, Paraguay
- Strong performers: Ghana, Zambia, Uzbekistan
- Only laggard: Vietnam (per JPMorgan late-Oct note)
As investors “squeeze the last drop” from global yield opportunities, frontier markets like Uganda benefit — but sustainability hinges heavily on the macro backdrop.