Uganda’s economic growth is expected to accelerate to above 6% in 2024 as the Bank of Uganda (BOU) eases monetary policy and the government relies mainly on revenue collection and spending efficiencies to cut the deficit.
According to the World Bank’s Global Economic Prospects report published in January 2024, Uganda’s recovery in tourism, combined with the government’s export diversification and agro-industrialization efforts, plus investments to support the export of crude oil, will boost growth further.
Agriculture, industry, and services, which are the major sectors of Uganda’s economy, have weathered the recent successive shocks of COVID-19 and the Russia-Ukraine war to push growth in gross domestic product (GDP) to 5.3% during the financial year 2023, compared to 4.7% the year before.
Despite global growth being expected to slow to 2.4% in 2024 due to tight monetary policies, restrictive credit conditions, and anaemic global trade and investment, Uganda will still grow above the sub-Saharan African average growth, which is projected to increase to 3.8% in 2024 and 4.1% in 2025 as country-specific factors weighing on growth gradually ease.
The report further highlights that accelerated growth may reduce poverty (measured at the $2.15/day international poverty line) in Uganda from 41.7% in 2023 to 40.7% by 2025.
However, the World Bank says that ahead of a possible transition into an oil producer in 2025, the Ugandan economy needs to structurally transform and shift labour into more productive employment to reinvigorate economic activity and reduce poverty, adding that the private sector must drive this transformation and diversification.
It cautions that Uganda’s growth model of debt-financed public spending—which has emphasised physical infrastructure—has crowded out private sector investment and is not sustainable, suggesting that a more appropriate role for the state is to build human capital, facilitate private investment and job creation, and pursue measures to reduce inequality and strengthen resilience.
