Uganda flag Uganda: Economic and Political Overview

The economic context of Uganda

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Uganda is the third-largest economy in East Africa, after Kenya and Tanzania. The country has achieved astonishing economic performances in the last decades and, although slower, growth remains sustained. Between 1992 and 2010, the country experienced average economic growth of 8%, GDP per capita tripled and the poverty rate was cut in half. In 2021, however, the economy grew 4.7%, and it is expected to continue growing in 2022 and 2023, at an estimated rate of 5.1% and 6.6%, respectively. Public investment was a key driver of growth in 2021. In 2022, growth expected to be more dynamic mainly thanks to household consumption.

In 2021, the country's current account deficit widened to USD 3.85, as the increase in export revenues linked to the recovery in activity following the initial shock of the pandemic was offset by imports of capital goods, especially those needed for the country's hydrocarbon projects. Public debt increased to 49.1%, mainly due to interest on domestic debt, which will continue to weigh on public finances in the coming years. Still, the debt-to-GDP ratio should remain stable in 2022 and 2023, at around 50.2% and 49.3%, respectively. Inflation slightly decrease to 2.2% in 2021, but it is expected to double in 2022, and reach 5% - a trend that should continue in 2023, when the inflation rate is expected to reach 6.2%. To mitigate the effect of the pandemic, the World Bank has provided the country with USD 300 million, which has been essential in Uganda's economic recovery following the crisis. In 2021, recovery has strengthened throughout the country, underpinned by improved business and trading conditions as COVID-19 restrictions eased.

Uganda has surpassed the Millennium Development Goal (MDG) of halving poverty by 2015, but the poverty rate has recently increased. According to the World Bank, one in five people lives in extreme poverty and about a third live on less than USD 1.90 / day . These rates have been heightened by the pandemic, and added to the 8.7 million people living below the poverty line in Uganda. The crisis effect has been worsened by heavy rains, flooding, and a locust invasion that has impacted agricultural production. In 2021, the unemployment rate in the country was at 2.3% (ILO Estimate). However, this figure does not reflect reality since a significant part of the population work in the informal sector.

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 37.5242.9648.3552.4057.69
GDP (Constant Prices, Annual % Change) -1.46.74.45.96.0
GDP per Capita (USD) 9101111
General Government Gross Debt (in % of GDP) 46.351.852.251.351.0
Inflation Rate (%) 2.82.26.46.45.7
Current Account (billions USD) -3.55-3.58-3.88-5.36-6.54
Current Account (in % of GDP) -9.5-8.3-8.0-10.2-11.3

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Uganda has considerable natural resources, including fertile soils, regular rainfall, significant reserves of recoverable oil, and small deposits of copper, gold, cobalt, limestone, and other minerals. Agriculture is one of the most important sectors of the economy, employing 72.1% of the work force and accounting for 23.9% of the GDP. Following job losses and closure of small businesses brought on by the pandemic, many Ugandans turned to agriculture to manage and survive the crisis, which further strained natural resources that were already under pressure from Uganda's rapid population growth, urbanisation, and industrialisation.

The country’s industrial sector is small and is dependent on imported inputs such as refined oil and heavy equipment. A number of supply-side constraints, including insufficient infrastructure, lack of modern technology and corruption hamper productivity. The sector contributes to 26.4% of GDP, but employs only 6.5% of the workforce. The most important sectors are the processing of agricultural products, the manufacture of light consumer goods and textiles, and the production of beverages, electricity, and cement. Most industries are small, local firms with limited manufacturing added value, while the larger industries in the country are predominantly foreign owned. In 2021, the industry sector began to show signs of recovery following the decline in industrial activity brought on by the pandemic.

The services sector in Uganda represents 42.8% of GDP and employs 21.3% of the active population; however it is detached from primary sectors like agriculture and manufacturing, thus lacking the ability to spur economic growth. The ICT sector is one of Uganda’s fastest-growing sectors, recording double-digit growth over the last few years, largely driven by the telecommunications sector. In 2021, increased domestic demand boosted the services sector following the negative impacts that were felt throughout the sector during the initial phases of the pandemic.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 72.1 6.5 21.4
Value Added (in % of GDP) 24.0 26.2 43.0
Value Added (Annual % Change) 4.8 2.2 2.9

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
58,6/100
World Rank:
106
Regional Rank:
14

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
Official list of ministries
Ministry of Finance, Planning and Economic Development
Ministry of Agriculture, Animal Industry and Fisheries
Ministry of Energy and Mineral Development
Ministry of Commerce, Industry and Cooperatives
Ministry of Water and the Environment
Ministry of Tourism, Wildlife and Antiquities
Statistical Office
Uganda Bureau of Statistics – UBOS
Central Bank
Bank of Uganda
Stock Exchange
Uganda Securities Exchange (USE)
Economic Portals
Financial Times
Uganda Business News
 

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Latest Update: November 2022