Uganda Shows Six Signs of Economic Recovery

OUR REPORTER

In a recent update on the progress made towards implementing the commitments outlined in the NRM Manifesto 2021-2026, Amos Lugoloobi, the minister of State for Finance, Planning, and Economic Development highlighted positive indicators of economic recovery. Let’s take a closer look at the encouraging economic trends:

1. Economic Growth: The economy experienced a growth rate of 4.6 percent in the fiscal year 2021/22, an improvement from the previous year’s 3.5 percent. Notably, during the first quarter of the current financial year, the economy grew by 7.5 percent, compared to 2.7 percent in the same quarter of the previous year, the minister said. This growth was primarily driven by increased value addition in the industry and services sectors, which grew at 12.7 percent and 9 percent, respectively. The economy is projected to further expand by 5.5 percent by the end of FY 2022/23.
2. Inflation: Although prices remain elevated, he said, there has been a gradual decline in annual headline inflation, decreasing from 10.7 percent in October 2022 to 8.0 percent in April 2023. This reduction can be attributed to a slowdown in the increase of prices for food, beverages, as well as a decrease in prices of building materials, fuel, and electricity.
3. Cost of Borrowing: Shilling-denominated lending rates offered by commercial banks decreased to 18.76 percent in March 2023, down from 20.24 percent in February 2023, he said, adding that the decline in the inflation rate, reduced government participation in the domestic credit market, and increased access to credit for prime borrowers with good credit ratings were cited as factors contributing to this reduction.
4. External Trade: Uganda’s trade deficit with the rest of the world narrowed to US$ 241.93 million in March 2023, compared to US$ 297.66 million in February 2023, he said. “The decrease was driven by increased export earnings, which more than offset the rise in the import bill. Within the East African Community (EAC), Uganda recorded a trade surplus of US$ 15.9 million,” he added.
5. Value of Merchandise Export: Uganda’s merchandise exports reached US$ 674.54 million in March 2023, reflecting a significant increase of 93.0 percent compared to US$ 349.44 million in February 2023. The minister said this growth was primarily due to higher export earnings from mineral products, tobacco, maize, and cotton.
6. Employment Creation: Formal employment, as captured by the PAYE Register, witnessed a 3.03 percent increase from 1,380,972 employees in 2020/21 to 1,422,857 employees in 2021/22, he said, adding that the Public Administration Sector registered the highest number of Pay As You Earn (PAYE) employees (456,782), followed by the Manufacturing Sector (145,448), Wholesale and Retail Trade (97,261), and the Agricultural Sector (57,731). Most formal sector jobs (83 percent) were contributed by the private sector, with a significant concentration in agriculture and fishing (69.4 percent).

Having provided these key highlights of the economic recovery, the minister emphasized the government’s commitment to the NRM manifesto objectives. These objectives include; broadening the economic base by creating opportunities across all regions, establishing an integrated and self-sustaining economy through import substitution and export-oriented growth, formalizing the economy, achieving lower middle-income status, and generating productive jobs.

To realize these objectives, the government has made various commitments within the manifesto. The government aims to create more productive jobs by leveraging all factors of production.