Uganda’s economy has remained resilient and is on a recovery path, amidst the ongoing pandemic and other shocks experienced since beginning of 2020. Economic growth for this financial year is projected at 3.3%, rising from 3.0% last financial year. The economy has grown significantly over the last five years. The size of the economy has grown from Shs. 108.5 Trillion in 2016/17 to Shs 148.3 Trillion in current prices by June 2021, equivalent to US$ 40 billion
As the Minister of State for Economic Monitoring in the Office of the President, Iam mandated and committed to monitor, inspect and evaluate key government policies, programs, and projects and provide evidence based support for their effective implementation.” The Directorate is expected to regularly and proactively monitor, inspect, evaluate and advise the President and Cabinet on the performance of the economy with respect to implementation of economic Policies, Projects and Programs to ensure that appropriate measures are taken geared towards programme efficiency, effectiveness, economic value for money and overall economic growth and development. More specifically, the Directorate’s efforts is guided by Policy decisions made by Government to eliminate red tape and economic sabotage to promote economic growth and development. President Museveni has for long been promoting the Public Private partnership as a way to ensure social economic transformation of Uganda. Iam indeed working towards ensuring that private sector companies work towards attainment of the Uganda Vision 2040.
You need to note that household Survey reports that poverty has declined from 21.4% in 2016/17 to 20.3% in 2019/20. Poverty rates reduced in West Nile, Bunyoro, and Elgon regions, among others. However, 39% of Ugandan households are still in subsistence economy. The Household Survey also found that 68% of Ugandans work in Agriculture and 74% of Ugandans of working age are engaged in some form of employment. Formal employment has also expanded by 17% between 2016/17 and 2019/20, with the PAYE register expanding from 1.3 to 1.5 million registered taxpayers, according to the Uganda Revenue Authority.
The growth of the per capita income in our country in spite of the high rates of population growth of 3.3% per annum is remarkable and attributed to the good Leadership of President Museveni. In order to put this issue in perspective, Ugandans should be informed that between 1951 and 1961 during the colonial system, GDP per capita grew by 0.14%; between 1962 and 1970, it grew by 1.4%; between 1971 and 1980, it declined by -2.9%; and between 1982 and 1985, it grew by 0.8% and between 1986 -1995; it grew by 2.8% and between 1996-2009, it grew by 3.6%. All this in spite of the strategic bottlenecks such as shortage of electricity and high transport costs that were not yet addressed that time. Note that per capita income is GDP growth minus population growth.
To put it in a global context, between 1986 and 2015, Uganda was the 17th fastest growing economy in the world, the 4th in Africa. If we remove mineral-rich countries from the sample (because they were enjoying God’s or nature’s bounty), Uganda was 11th in the world, 1st in Africa.
The economy has grown significantly over the last five years. The size of the economy has grown from Shs. 108.5 Trillion in 2016/17 to Shs 148.3 Trillion in current prices by June 2021, equivalent to US$ 40 billion.
Uganda’s economic growth and development outlook is positive.The basis for this very positive outlook is the following:
- Industrialization to promote exports using primarily agriculture as the base; this includes industrialization along the agricultural value chain, light manufacturing and processing our minerals into finished products; and further diversification of the manufacturing sector to increase exports.
- Increasing production and productivity in the agricultural sector by investing in quality inputs, extension services, storage facilities, access to markets by improving standards and quality of agro-processing. Government is also boosting the capital base of UDB to be able to lend to agriculture as well as small scale industry. In addition, Government has been implementing targeted interventions in the Coffee Sector (Coffee Roadmap 2020), Tea and fruit processing e.g. the Soroti Fruit Factory and supporting agricultural zoning and out grower model around the nucleus farmers. We are also working on stabilizing agriculture through irrigation.
- The commencement of oil and gas production and work on the Oil Pipeline and the Refinery will be starting soon.
- Strengthening local content so that Ugandans can be integrated into wealth creation as the economy expands, including improving local production and supply capacities.
- Improving efficiency in the execution of public investment, to improve the returns on investment especially in the areas of energy, transport, agriculture, tourism, water for consumption and production, and in education.
- Harnessing the benefits of regional integration through trade and strengthening intra-African trade.
- Improving labour productivity through skills development tailored to labour market demand.
A firm foundation for industrialization and especially manufacturing has been laid under the leadership of H.E Yoweri Kaguta Museveni. We now have the fruit industry in Teso and Luweero; Dairy industry in Ankole; Vegetable Oil industry in Kalangala; and Tea industry in Toro and the Kigezi sub-regions; etc., etc.
Government is providing financial support to tea factories in Western Uganda including Kigezi Highland Tea Co. Limited, Kayonza Growers Tea Factory and Mabale Growers Tea Factory Limited. In addition, Operation Wealth Creation (OWC) has increased the supply and distribution of tea seedlings in the region. In the North, Government has taken up a 32% stake in Atiak Sugar Factory which has a nucleus farm and an out growers scheme which will create jobs and promote agro-industrialization in this region.
Government is prioritizing investment in Industrial parks to support industrialization and create jobs. Notable progress has been made in Kapeeka Industrial Park where manufacturing of tiles and other products is already on, Kampala Industrial and Business Park where construction and provision of various utilities is ongoing, Kabaale and Mbale Industrial Parks where work is on-going, etc.
Uganda now has over 4,900 factories and more are being built allover Uganda. I call upon the companies to work towards social economic development of Uganda through employment, offering high quality products and services, paying taxes, supporting productive corporate social Responsibility, environmental protection, etc.
As regards international trade,it has continued to flourish despite the COVID19 pandemic. Merchandize exports grew by 4.7% increasing from US$ 4.1 billion in 2019 to US$ 4.3 billion in 2020. Agricultural export values grew by 19% from US$ 1.4 billion in 2018/19 to US$ 1.8 billion in 2019/20. Happily, Uganda’s merchandise trade deficit has significantly narrowed from US$ 2,866 million in 2018/19 to US$ 2,365 million in 2019/20, a reduction of US$ 500 million in one year. 17.
Coffee remains the leading agricultural export earning US$ 497.4 million in the Financial Year 2019/20. Dairy exports fetched US$ 204.5 million, while Tea exports earned US$ 71 million in Financial Year 2019/20. Fish exports earnings increased from US$ 121 million to US$ 227 million, over the same period.
Annual foreign exchange earnings from tourism increased from US$ 1.35 million in 2015 to US$ 1.6 billion in 2018. Annual tourist arrivals also increased from 1.3 million to 1.5 million during the same period. This is a result of the sustained investments in the development and rehabilitation of tourism infrastructure and product diversification.
If we can increase production per hectare of coffee as an example from the current 0.67 tonnes to 2.2 tonnes per hectare like in Brazil and Vietnam, Uganda would be earning about US$ 2 billion from unprocessed Coffee alone. At 2.2 tonnes per hectare, Uganda will produce 21 million bags of green coffee and if this coffee was roasted here (roasting alone), Uganda would fetch US$6.7billion. But if it was transformed into soluble – instant coffee, we would then generate US$16.8billion for the country. This is possible.
We just need to be better organized and focused on distribution of better seedlings, better harvesting, post-harvesting methods and storage.
The acceleration of the economic growth is partly due to the correct decision we took in 2006 of prioritizing roads and electricity, the details of which I will give later in this speech. Although full rationalization of the results of this prioritization has not been fully realized, especially in connection with lower transport costs and costs of electricity, the more awareness that there are better roads and more abundant electricity is already causing a flood of investments. Our efforts to promote regional integration and intra-Africa trade are yielding the desired benefits. Uganda now exports more to Africa than the Rest of the world, with 63% of exports to Africa in FY 2017/18 compared to only 27%, 10 years ago. Exports to Asia have increased to 18% now compared to only 13%, 10 years ago.
STRATEGIC CHALLENGES
High cost of Capital: The high cost of capital remains a major challenge to the economy as a whole. To address this challenge, Government is capitalizing Uganda Development Bank. In the financial year 2019/20, Government capitalized UDB with a total of Ushs 375 billion. On top of this, Government has guaranteed loans of USD 15 million and USD 5 million from African Development Bank (AfDB) and Exim Bank of India, respectively for SMEs.
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