Uganda's Economy Shows Resilience with Projected Growth Amidst Sectoral Expansions

Per capita income in Uganda reached approximately $980 in FY22/23, positioning the country closer to the lower-middle-income threshold.

Uganda's economy has demonstrated resilience amidst multiple challenges, with the latest World Bank report projecting a robust growth trajectory driven by various sectors. According to the 23rd edition of the Uganda Economic Update (UEU) released today, the country's real gross domestic product (GDP) is estimated to have accelerated from 5.3% in FY22/23 to 6% in FY23/24.

Key drivers of this expansion include heightened activity in oil-related construction and growth in the mining and quarrying sector, fueled by rising gold prices and improved conditions for artisanal mining within Uganda. The report highlights that low inflation, recovering real income, and increased employment have bolstered consumption, while private investment has remained resilient despite challenging financial conditions both domestically and globally.

Per capita income in Uganda reached approximately $980 in FY22/23, positioning the country closer to the lower-middle-income threshold. Looking ahead, the UEU forecasts GDP growth to reach 6.2% in FY24/25, with expectations of exceeding 7% in the medium term, largely attributed to continued investments in the oil and gas sector.

Rachel K. Sebudde, World Bank Senior Economist and lead author of the UEU, emphasized the potential impact of robust coffee and gold exports in the upcoming year, alongside the transformative effects of oil exports on Uganda's trade profile. She noted ongoing government initiatives such as the Parish Development Model and infrastructure improvements, coupled with efforts to promote tourism and agro-industrialization, which are expected to drive export diversification and sustain economic momentum.

Despite these positive projections, the report identifies several risks that could impact Uganda's growth trajectory. These include global economic uncertainties stemming from geopolitical tensions, inflationary pressures, and potential delays in major infrastructure projects. Additionally, fluctuations in foreign direct investment and donor financing dynamics ahead of the 2026 election pose further challenges.

To navigate these challenges effectively, the UEU recommends strengthening expenditure rules to manage shocks and facilitate Uganda's transition to an oil-exporting economy. It underscores the urgent need to increase social spending, particularly in healthcare, to foster equitable and sustainable growth. Highlighting current disparities, the report points out that Uganda allocates a smaller share of public spending to health compared to regional peers, which could hinder progress towards achieving health-related Sustainable Development Goals.

Mukami Kariuki, World Bank Country Manager for Uganda, emphasized the importance of enhancing health sector investments to build human capital effectively. Despite Uganda's efficient resource utilization in health services relative to its peers, there is a pressing need for increased funding and efficiency gains to harness demographic dividends and improve overall health outcomes.

In conclusion, the UEU calls for targeted investments in primary healthcare, enhancements in health workforce productivity, and improvements in the quality and accessibility of health services. These measures are pivotal to strengthening Uganda's resilience, advancing economic growth, and ensuring sustainable development for all its citizens.