According to recent reports by the World Bank Group, Uganda is considered one of the fastest growing economies in Africa, with its economy showing significant growth and positioning it among the top developing economies globally. This growth is attributed to factors like investments in the oil sector, favorable weather conditions, Security despite being in a volatile region, government initiatives to expand infrastructure and efforts to diversify exports and promote agro-industrialization.
Despite ongoing global challenges and geopolitical tensions, economic activ¬ity in Uganda has remained robust. According to a new World Bank report, real gross domestic product (GDP) grew by 6.1% in fiscal year 2023/2024 on top of 5.3% growth registered a year before. This growth has been broad-based with significant contributions from the service sector, particularly tourism, as well as the industrial sector including manufacturing and construction.
The 24th edition of the Uganda Economic Update shows that headline inflation in Uganda has decreased considerably. It dropped to 3.2% on average in fiscal year 2023/2024 from 8.8% in the previous fiscal year, remaining below the central bank target of 5%. The decline was driven by the fading impact of some global economic shocks, including significant reduction in global food and energy prices. This was further supported by a tight monetary policy along with continued fiscal consolidation and a stable foreign exchange rate regime. This trend places Uganda among the East African countries with the lowest inflation rates over the past fiscal year.
The economic update projects GDP to grow modestly to 6.2% in the fiscal year 2024/2025. If oil production begins on schedule and reaches peak production of 230,000 barrels per day, it will significantly boost growth in the medium term.
“Therefore, increasing efforts to raise more revenue domestically remains important because it will enhance Uganda’s ability to spend on priority infrastructure such as transport and energy as well on social sectors,” said Saadia Refaqat, World Bank Senior Economist and lead author of the Uganda Economic Update.
Uganda has sustained impressive economic growth driven by agriculture, social services, and a growing industrial sector. With a population exceeding 45 million, Uganda has a youthful workforce that presents opportunities for growth but also challenges in terms of employment generation.
The launch of projects like the Kampala Flyover Project Phase 1 is expected to further boost the economy by allowing locals to engage more in commercial activities and production. This project will alleviate traffic congestion leading to key commercial areas such as the city center, Mukwano Industrial Area, Old Industrial Area roads, and agricultural produce markets like Nakasero Market, Owino Market, and Nakawa.
