Browsing: @ministry of Finance

Uganda’s economy is on the rise, with 6.1% GDP growth in FY2023/24 and inflation dropping to 3.2%, according to the World Bank’s 24th Economic Update. The country’s oil production, set to begin in FY2025/26, is expected to drive GDP growth to 10.8%, generating $3.3 billion annually by 2030. However, Uganda faces critical fiscal and trade challenges, including a 7.9% current account deficit, declining foreign reserves, and risks associated with oil revenue management. Will Uganda’s economic policies steer the nation toward sustainable growth, or will external financial pressures derail progress?

Uganda’s economy grew by 6.1% in FY2023/24, driven by strong industrial and service sector performance, while inflation fell to 3.2%. However, challenges remain, including a 7.9% current account deficit, declining foreign exchange reserves, and fiscal discipline concerns. With oil production set to begin in 2025/26, Uganda faces a critical moment to strengthen its economic policies and sustain long-term growth.

Uganda’s economy is showing impressive growth, with GDP rising to 6.7% and export earnings surging by 21.8% in Q1 of FY 2024/25. However, the widening trade deficit and inefficiencies in service delivery pose challenges to sustained progress. The Ministry of Finance projects steady growth and stable inflation but emphasizes the need for export diversification, fiscal discipline, and investment in human capital to secure long-term economic resilience.

In August 2024, Uganda’s trade deficit widened by 16.6% from the previous month, reaching USD 314.10 million as the country saw an upswing in infrastructure-related imports. Yet, year-over-year, the deficit shrank by 8.4%, driven by robust export growth, especially from coffee and mineral products. As Uganda capitalizes on a robust coffee sector and diversified mineral exports, questions arise on balancing the gains with the rising import bill—largely fueled by government-led infrastructure investments.

As thousands of university graduates turn to boda-boda riding to make ends meet, Uganda faces a stark employment crisis. Finance Minister Matia Kasaija’s revelation that nearly half of the country’s one million boda-boda riders are graduates highlights the urgent need for sustainable job creation, education reform, and targeted economic policies. This phenomenon raises critical questions about the effectiveness of Uganda’s current economic strategies and the future of its young workforce.

Uganda’s external sector in 2024 shows strong performance with coffee exports surging by 82%, foreign direct investment hitting record highs, and remittances returning to pre-COVID levels. Inflation remains controlled, and the Ugandan shilling maintains stability against the US dollar. However, challenges in debt management persist as the government navigates domestic financing needs. With oil production on the horizon, Uganda’s economic outlook appears promising, but careful fiscal management remains essential.

Despite the availability of Shs 200 billion under the Small Business Recovery Fund (SBRF) to aid struggling enterprises post-COVID-19, small businesses in Uganda have been slow to take up the loans. As of September 2023, only Shs 16 billion had been disbursed, representing just 8% of the fund. Key barriers include short repayment periods, stringent collateral requirements, and low awareness about the fund.

Business conditions in Uganda declined sharply in the first quarter of 2024, driven by rising inflation, increasing costs, and Uganda’s suspension from the African Growth and Opportunity Act (AGOA). The Uganda Business Climate Index dropped 11 points, signaling a challenging outlook for key sectors such as agriculture, manufacturing, and services.

Uganda has seen significant improvements in economic and social development, with per capita income reaching USD 1,146 in FY2023/24, surpassing the lower-middle-income threshold. Poverty has declined to 20.3%, and life expectancy has risen to 64 years. As outlined in the 2025/2026 budget strategy, key advancements in education, healthcare, and agriculture reflect a more equitable distribution of wealth and improved well-being. However, challenges in agro-processing capacity and social protection coverage remain.

In July 2024, Uganda’s Shilling appreciated against the US Dollar, bucking the regional trend of currency depreciation across the East African Community. Meanwhile, Uganda’s fiscal performance outpaced projections, with revenue surpluses and restrained spending resulting in lower borrowing needs. As Tanzania, Kenya, Rwanda, and Burundi faced currency pressures, Uganda’s disciplined approach highlights a shift in regional fiscal dynamics.