Since the late 1980s, the government has pursued a series of stabilization and pro-market structural reforms, resulting in a sustained period of high growth and poverty reduction during 1987-2010.
Real gross domestic product (GDP) growth averaged 7.3% between 2000 and 2010, placing Uganda amongst the fastest growing economies in the world. Due to rapid population growth, however, the increase in per capita income was just above 3% per year.
In the past decade, the country has witnessed more economic volatility, and GDP growth has slowed to an average of about 5%. As the economy becomes more resilient and election-related uncertainties recede, economic growth is expected to accelerate to about 5.5% in FY17, and average 6-7% in FY18-20. In the short term, large public sector infrastructure projects will continue to be the main driver of economic activity as the economy.
The country’s economic growth faces a number of risks, key among them, failure of the planned heavy public investment program. Other notable risks include a larger global economic disturbance than has been projected and regional instability especially in South Sudan and the Democratic Republic of Congo, as well as unanticipated weather and climate related changes. Moreover, a further slow-down in the Chinese economy could adversely impact Uganda’s planned investments in infrastructure. Other macroeconomic vulnerabilities include currency depreciation, inflation, and high interest rates.
Following the end of the armed conflict in 1986, the ruling National Resistance Movement (NRM) led by President Museveni introduced a number of structural reforms and investments, which led to a sustained period of high growth and poverty reduction between 1987-2010.
With ambitious public sector reforms introduced the past two decades, the last three years have seen an improvement in government effectiveness. At the same time, voice and accountability, which improved between 2003 and 2008, have declined. The policy and legal frameworks continue to improve, notably through the Public Financial Management Act (2015), albeit implementation gaps in key areas of procurement and anti-corruption remain. Strategies, guidelines and programs are generally sound, but weaknesses in applying sanctions and public service effectiveness constrain implementation and service delivery.
President Museveni was re-elected in February, 2016, for another five-year term. The election was the most contested in Uganda’s history with high voter turnout at 67.6%, up from 59.3% in 2011. As in 2011, election observers reported irregularities, and incidents of intimidation and harassment, as well as restrictions to freedom of speech, and unequal access to resources and the media.
Uganda surpassed the Millennium Development Goals (MDGs) target on halving poverty by 2015, and made significant progress in reducing the population that suffers from hunger, promoting gender equality and empowering women. According to the Uganda Poverty Assessment, the proportion of the population living in extreme poverty ($1.90 a day) fell from 62.2% in 2002/03 to 33.2% in 2012/13, representing the second fastest reduction in poverty in Sub-Saharan Africa. Using the national poverty line ($1.25 a day), the incidence of poverty declined from 56.4%in 1993 to 19.7% in 2013. Poverty reduction was mainly driven by agriculture, urbanization, and education.
Despite progress, poverty and vulnerability remain in the Northern and Eastern regions, which account for 84% of those living beneath the national poverty line. For every three Ugandans who get out of poverty, two fall back in, demonstrating the fragile gains in the country’s poverty success.
Uganda has one of the world’s youngest populations, half of them under the age of 15 years. The fertility rate is estimated at 5.7 children per woman (2015), and with a 3.3% population growth the dependency ratio is high with significant consequences for national development.
Persistent gender inequality, including challenges related to preventing gender-based violence (GBV), have continued to impact women’s decision making, access to social services and economic opportunities.
Uganda is now hosting around 750,000 South Sudanese refugees, according to an October update from the UN Refugee Agency (UNHCR). This is putting a strain on host communities, with local government authorities and agencies unable to cope or provide basic and essential services.
Last Updated: Dec 08, 2016