The Government has been telling Ugandans that the economy has fully recovered from the economic shocks and crises such as COVID-19.
This was first announced by Finance Minister, Matia Kasaija while reading the budget in June 2024.
“I am pleased to report that Uganda’s economy has fully recovered from various internal and external shocks that impacted performance in the past four years. GDP is projected to grow by 6 percent this financial year 2023/24 compared to 5.3 percent in FY2022/23. This year’s growth of 6 percent is even more impressive when compared to Sub-Saharan Africa’s average of 3.8 percent, and the global average of 2.9 percent projected for the year 2024,” Kasaija announced.
As a result of this robust growth, the Minister said the size of the economy is estimated at Shs202 trillion (USD 53.3 billion) up from Shs184.3 trillion (USD 48.8 billion) in nominal terms.
If Ugandans agreed to share this GDP equally, each citizen would enjoy a GDP per capita of USD 1,146 compared to USD 1,081 registered in the Financial Year 2022/23.
The improved performance of the economy is on account of higher growth in all sectors.
“Services, agriculture, and industry, are estimated to grow at 6.6 percent, 5.1 percent, and 5.8 percent, respectively, in FY2023/24. In particular, growth in the services sector has been impressive, mainly driven by strong recovery in retail and wholesale trade, tourism as well as communication and real estate activities. Growth in industry was mainly driven by manufacturing, construction and mining, while increased production of food and cash crops, as well as livestock supported growth in the agriculture sector. Agriculture’s performance, estimated to have expanded at 5.1 percent this year compared to 4.5 percent registered in FY2022/23, is attributed to streamlined implementation of the Parish Development Model (PDM); and fairly good weather conditions.”
Other factors which supported strong economic growth include; low inflation and relatively stable exchange rate which have allowed good investment planning and supported export competitiveness; increased investments in the oil and gas sector related projects, supported by Foreign Direct Investment; higher external demand for Uganda’s products including agricultural and industrial products; recovery of tourism supported by increased investment in tourism infrastructure and marketing; and peace and security for persons and their property.
On Wednesday last week, the Permanent Secretary for the Ministry of Finance and Secretary to Treasury (PSST), Ramadan Ggoobi reiterated that Uganda’s GDP grew by 6 percent last financial year 2023/24 up from an average of 4.1 percent in period between FY 2019/20 and FY2022/23.
The GDP growth had previously reduced to 3 percent.
This impressive growth was on account of higher growth in all sectors.
“The services sector grew by 6.6%, up from 5.9%, while the industry sector increased to 5.8%, up from 4.0%. The agriculture, forestry, and fishing sector saw growth of 5.1%, compared to 4.5% previously,” Ggoobi said
Despite the reported growth, many Ugandans have expressed their dissatisfaction, stating that they do not feel the impact of this development.
While economic growth is necessary, it has not been sufficient to enhance people’s well-being. This disconnect highlights the complexities of economic development and its impact on societal welfare.
Ggoobi explains that that although 6% growth is a positive move, it may not be sufficient enough to improve the quality of life of all Ugandans, adding that for quality to be realized, quantity must be achieved first.
“Some people say, why not quality. You can’t have quality where there is no quantity. It is not a good thing that you want quality food but you have only one gram of quality floor. You will die. But when you have enough quantity, that is when you think of quality. Economists, we encourage ourselves to work first on growth. Once GDP grows, most of these other things fall in place. Although there is a lack, if we sustain this growth…… We are not satisfied with 6%. We want double digit growth,” Ggoobi said.
The government has formulated an ambitious strategy aimed at increasing Uganda’s Gross Domestic Product (GDP) tenfold, from USD 50 billion in the 2023/24 fiscal year to a staggering USD 500 billion within the next decade, starting from the 2024/2025 fiscal year.
This plan hinges on four primary growth drivers. The first is agro-industrialization, which involves enhancing agricultural productivity and value addition.
The second driver is the development of tourism, leveraging Uganda’s beautiful scenery including natural and cultural assets.
The third focus is on mineral-based industrialization.
Lastly, the government is emphasizing advancements in science, technology, and innovation to foster economic growth and development. These pillars are expected to propel Uganda towards substantial economic expansion and prosperity.
“If we achieve this and I want Ugandans to support us to ensure that these areas we have identified, you invest there, we are going to support you and we grow the economy. Once the economy grow, every Ugandan will start feeling the economy,” Ggoobi said.
The PSST admits that Uganda’s economy is not well distributed.
The growth itself has not been sustained. In the past five years, Uganda has registered an average growth of 4.1%.
“That is not good growth for the economy like ours. We need to up the game and we are doing that,” said Ggoobi.
Economic growth is typically measured by indicators such as GDP, which reflects the total value of goods and services produced within a country. However, many citizens may not feel this growth in their everyday lives for several reasons. Firstly, economic growth can be unevenly distributed, benefiting certain sectors, regions, or classes disproportionately. For instance, wealth generated in urban centers or specific industries like finance or technology may not trickle down to rural areas or less-skilled workers.
Additionally, economic growth might be driven by factors that do not directly improve living standards, such as investments in infrastructure or exports. While these are important for long-term development, they may not immediately translate into higher incomes or better public services for the average citizen.
To ensure that citizens feel the benefits of economic growth, governments need to implement policies that support small and medium-sized enterprises (SMEs). These can foster more widespread economic participation and job creation.
Improving infrastructure in rural areas can also help bridge the gap between urban and rural development, ensuring that growth benefits are more evenly distributed.