AfDB Report: Uganda Economy Improving Amid External Shocks

Uganda’s economy continued to improve in 2015, check despite external shocks, with real GDP growth projected to reach 5.1 percent in 2016, and 5.8 percent in 2017, driven by industry, services and public infrastructure investment.

This is contained in African Economic Outlook 2016 released Monday at the African Development Bank Group’s 51st Annual Meetings in Namibia.

“Uganda’s economic stance remains focused on containing inflationary pressures and on enabling growth by ensuring exchange rate stability and maximising domestic resources mobilisation,” reads part of the report.

“Uganda has made progress in reducing poverty and in enhancing gender equality and women’s empowerment.”

Uganda’s economic outlook is positive, with real GDP growth expected to reach 5.1 percent in 2016, compared to 5.3 percent in 2015, and 4.7 percent for 2014.

AfDB officials said this assumes that the government will maintain macroeconomic stability and tackle corruption.

“Growth will mainly be driven by strong performances in the industry and services sectors, and also by public infrastructure investment and other investments in priority sectors. Large infrastructure projects will boost manufacturing, as well as services, notably tourism,” the report adds.

“Rising private consumption will also drive growth. Credit expansion, which increased by 16 percent in February 2015, more than double last year’s growth rate, will boost consumption, as will higher government consumption in the run-up to elections.”

The report further indicates that investment in the energy sector will also boost growth, although the pace of growth has slowed in the past year as oil prices have fallen sharply.

The issue of new licences for further oil exploration in the greater Albertan region will boost much-needed foreign direct investment.

Generally, Africa’s economic performance held firm in 2015 amid global headwinds and regional shocks.

The continent remained the second fastest growing economic region after East Asia.

According to the report’s prudent forecast, the continent’s average growth is expected at 3.7 percent in 2016 and pick up to 4.5 percent in 2017, provided the world economy strengthens and commodity prices gradually recover.

In 2015, net financial flows to Africa were estimated at USD 208 billion, 1.8 percent lower than in 2014 due to a contraction in investment.

At USD 56 billion in 2015, however, official development assistance increased by 4 percent; and remittances remain the most stable and important single source of external finance at USD 64 billion in 2015.

Human development

Uganda’s Human Development Index (HDI) improved slightly to 0.483 in 2014, from 0.478 in 2013. This still falls below the 0.502 average for the world’s least developed countries (LDCs), and the 0.518 average for sub-Saharan Africa.

Moreover, the report showed earlier progress towards Millennium Development Goals (MDGs) for health and education has stalled, with outcomes underperforming the goals due to insufficient funding.

Nonetheless, there has been significant progress in increasing access to anti-retroviral treatment, in preventing mother-to-child HIV transmission, and in reducing the prevalence of malaria, which fell from 43 percent in 2009 to 19 percent in 2014.

Poverty fell in all regions except the Eastern region, where it increased between 2009/10 and 2012/13.

Officials said although the Northern region has witnessed a significant reduction in poverty – from 60.7 percent in 2005/06 to 43.7 percent in 2012/13 – this still remains more than twice the national average.

“Uganda has steadily improved its performance in gender equality and women’s empowerment. Nonetheless, women continue to face discrimination, particularly in their access to economic opportunities and ownership of assets.”


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