Uganda Economic Outlook

  • In 2014 Uganda saw the consolidation of macroeconomic stability and a gradual recovery of economic activity, with real GDP growth projected to reach 5.9% in FY 2014/15 from 4.5% growth in FY 2013/14.
  • This recovery in economic activity is mainly supported by public investment on infrastructure, recovery in private domestic consumption and investment demand, and a rebound in agriculture.
  • Uganda remains on track to achieve the Millennium Development Goal poverty reduction target as absolute poverty rates continue to drop, from 24.5% in FY 2009/10 to 19.7% in FY 2012/13 (with corresponding improvements in child nutrition and declining infant mortality) and overall life expectancy advances to 59, three years higher than in 2009.

In 2014, Uganda saw the consolidation of macroeconomic stability and a gradual recovery of economic activity. Real GDP growth in FY 2013/14 reached 4.5% (July 2013 through to June 2014), which was significantly weaker than expected (5.7%), mainly due to under-execution of externally financed public investment and depressed exports as demand from trading partners stalled. Nevertheless, Uganda’s economy recovered as compared to the previous year. Growth prospects are expected to improve, with GDP growth projection for FY 2014/15 at 5.9% owing to the government’s resolve to improve the fiscal space through domestic revenue mobilisation efforts, scaled-up public investment and a recovery in private demand as households and corporations start accessing bank credit.

The recent Poverty Status Report paints a mixed human development outlook. On the one hand, the Uganda National Household Survey (UNHS 2012/13) estimates that poverty levels declined by 4.8 percentage points to 19.7% (6.7 million persons) from 24.5% reported in 2009/10 (7.5 million persons lived in absolute poverty). On the other hand, there is stagnation or reversals in progress for other areas including universal primary education, and health, in particular HIV. Development progress across regions also varies, with the North and Northeast lagging behind the rest of the country. Uganda’s Human Development Index is currently 0.484 and ranked 164 out of 187 countries (HDR 2014).

Although poverty has generally declined, rural areas continue to have the highest concentration of national poverty compared to urban areas.

Development in Uganda has continuously been skewed towards the Central and Western regions while the rest of the country lags behind. Poverty levels are lowest in the Central region, estimated at 5%, compared to 9% in the Western, 25% in the Eastern and 44% in the Northern regions (UNHS, 2012/13). Regional economic disparities arise mostly from unevenly distributed socio-economic infrastructure such as road networks, good access to markets, health and educational facilities and private sector investments. The rural-urban divide has also been expanding mainly for similar reasons. A key development intervention by the government to address regional disparities has been the 2007 Peace, Recovery and Development Plan (PRDP). Although the regions still lag behind, implementation of this plan has produced some positive strides, especially in infrastructure development, which can support the region’s transition in the future from recovery to sustainable human development.