Uganda’s Economic Growth Remains Strong
Uganda’s economic growth remains robust, with real gross domestic product (GDP) rising to 6.3% in FY2024/2025, up from 6.1% the previous year. This impressive performance can be attributed to the recovery in household consumption, accelerated government spending, and continued investment growth.
Key Drivers of Economic Growth
The 26th edition of the Uganda Economic Update highlights broad-based growth across agriculture, industry, and services. As a result, poverty is projected to have declined in FY2024/2025. The report further shows that tight monetary policy helped keep inflation at 3.5%, below the central bank’s medium-term target of 5%.
Challenges and Risks
However, fiscal pressures have increased, with a widening deficit and higher debt levels and servicing costs. This underscores the need to return to fiscal consolidation as signaled in the country’s FY2025/2026 budget. Risks to the outlook stem from possible fiscal slippages, delays in oil sector development, further reductions in overseas development assistance, and heightened global uncertainty.
Medium-Term Outlook
The report projects a positive medium-term outlook, supported by moderating spending growth after the general elections, the accrual of oil revenues expected to start in 2027, continued export dynamism, and sustained foreign direct investment inflows. Inflation is expected to remain low, anchored by prudent monetary policy and stable commodity prices. In line with these projections, poverty is expected to further decline in 2026 and 2027.
Transformation of the Economy
Uganda’s growth remains strong, but economic activity is currently concentrated in low-productivity and climate-vulnerable agriculture and informal jobs, which offer limited opportunities for income growth and upward mobility. Transformation of the economy to higher value-added activities is needed to deliver on the country’s Ten-Fold Growth Strategy. Agro-industrialization can be a key cornerstone of this transformation, leveraging agriculture as a platform for industrial growth and job-creation.
Recommendations for Agro-Industrialization
The report makes three key recommendations to the government to smooth Uganda’s agro-industrialization path:
- Strengthen foundations and infrastructure, including developing and disseminating climate-smart agriculture technologies and innovations to increase productivity sustainably.
- Improve the policy and enabling environment by reforming policies, strengthening institutions, supporting farmer cooperatives, enabling competition among private sector players, and strengthening public institutions to deliver high-quality public goods.
- Mobilize private capital and market linkages by scaling up innovative financing, leveraging digital platforms, and enhancing trade competitiveness.
Conclusion
In conclusion, Uganda’s economic growth remains strong, with a positive medium-term outlook. However, the country needs to transform its economy to higher value-added activities to deliver on its Ten-Fold Growth Strategy. Agro-industrialization can play a key role in this transformation, but it requires careful planning and implementation. By strengthening foundations and infrastructure, improving the policy and enabling environment, and mobilizing private capital and market linkages, Uganda can unlock the potential of its agriculture sector and achieve sustainable and inclusive growth.
