The Ugandan government, through the Ministry of Finance, Planning and Economic Development (MoFPED), has set a bold target to increase the size of the economy from about $50 billion in the 2023/24 Financial Year (FY) to $500 billion by 2040. This tenfold growth strategy is anchored on four primary sectors: Agro-industrialization, Tourism development, Mineral development, and Science, Technology, and Innovation, collectively referred to as the ATMS.
According to the FY 2024/25 budget speech, achieving this goal necessitates doubling GDP every five years, increasing savings, exports, and Foreign Direct Investments (FDI) inflows, and accumulating various forms of capital, including human, physical, and natural resources.
Uganda, with her rich natural resources, including minerals, fertile land, and diverse physical features and a vibrant, youthful population, has significant potential to achieve her vision of “A Transformed Ugandan Society from a Peasant to a Modern and Prosperous Country” by 2040. However, the goal of expanding Uganda’s economy tenfold is an ambitious one. While attainable, realizing this target demands thorough strategic planning, substantial investments, a deliberate and dedicated effort to address the likely bottlenecks such as the effects of climate change, low competitiveness of Uganda’s products, rising public debt, regional and global geopolitical tensions, and high youth unemployment, among other issues.
Certainly, progress has been made in Uganda’s efforts to foster growth and development. The country has achieved notable strides in maintaining peace and stability, pertinent for smooth flow of economic activity. Infrastructure development has advanced, with improvements in transportation and energy systems enhancing connectivity and facilitating economic activities. Access to education has expanded, enabling more individuals to gain skills and knowledge crucial for personal and national development.
Additionally, Uganda has fostered a stable macroeconomic environment, supporting consistent economic growth. Efforts to empower women have also gained momentum, contributing to a more inclusive and equitable society. Collectively, these achievements underscore Uganda’s commitment to creating a foundation for long-term growth and development. Despite these and more other positive developments, Uganda still faces challenges like corruption, weak private sector, high business costs, limited technological advancement, uncompetitive commodities, rising unemployment, and growing public debt, which hinder progress and thus, must be squarely addressed to realize the desired growth target.
Corruption remains a significant impediment to Uganda’s economic growth, undermining the effectiveness of government’s wealth creation programs and initiatives. When public officials engage in corrupt practices, resources intended for development are often misallocated or siphoned off, leading to inefficiencies and a lack of trust in governmental institutions. This corruption erodes the quality of public services and infrastructure projects, deterring both domestic and foreign investment. As a result, the economic benefits that could arise from well-executed development initiatives are lost, perpetuating a cycle of underdevelopment and poverty.
Uganda’s commodities struggle with competitiveness in both quality and price. High operational costs, including expensive credit and electricity, contribute to elevated prices, while limited capacity for value addition and low technological advancement result in inferior quality. These factors restrict Ugandan products’ ability to compete in local and international markets. for instance, the influx of thousands of Ugandan consumers to a newly opened Chinese supermarket in Kampala to buy extremely cheaper merchandise is a testament to the big danger of low competitiveness on local production and traders. Achieving a tenfold economic expansion, which entails a tenfold increase in production, must be accompanied by a similar rise in demand. Hence to meet this ambitious growth target, Uganda must pragmatically undertake focused initiatives to enhance her products’ competitiveness in the market, both local and foreign.
Unemployment, particularly among the growing youthful population, is a critical issue for Uganda’s economic development. Despite a youthful demographic that holds great potential for economic dynamism, the lack of sufficient job opportunities creates a pressing challenge. High levels of youth unemployment not only contribute to social instability but also inhibit economic growth by failing to fully utilize the country’s human capital. Preliminary results from the National Population and Housing Census (2024) reveal that Uganda is a young country, with 7 in 10 Ugandans below 30 years age. This therefore calls for a comprehensive growth approach that goes beyond just rapid GDP growth, but one that also entails increasing productive employment to leverage the youthful demographic dividend.
The rising stock of public debt poses a serious threat to Uganda’s economic stability and growth prospects. As the debt burden increases, a larger portion of the national budget must be allocated to debt servicing, which diverts funds from critical areas such as health, education, and infrastructure development. This fiscal pressure limits the government’s ability to invest in programs that could drive economic growth and improve living standards. Additionally, high debt levels can lead to reduced investor confidence and higher borrowing costs, creating a detrimental cycle that further impedes sustainable economic progress.
Borrowing a leaf from other countries that have achieved such a growth trajectory can offer valuable insights for Uganda. For example, the growth miracle of the eight East Asian tigers (Japan, Singapore, Taiwan, Malaysia, Korean Republic, Indonesia, China, and Hong Kong) suggests that achieving sustainable growth requires a complete package of growth “ingredients”, with an active yet cautious government hand in economic activity (Stiglitz, 1996). These countries developed an extensive network of roads, railways, airports, and energy infrastructure, which supported their industrial and economic expansion.
China’s experience demonstrates that infrastructure development and well thought industrial policies primarily focusing on developing local technological capabilities, building domestic capacity to manufacture a range of intermediate products, and boosting exports not only catalyzed economic growth but also a necessary foundation for achieving domestic and international competitiveness and long-term prosperity. Uganda’s infrastructure, though improving, still falls short. As of June 2023, the country had approximately 6,133 km of paved roads out of a total road network of 144,785 km. This limited paved road coverage restricts connectivity and economic activity, particularly in rural areas where access to markets and services is crucial for development. Continued strategic investments in infrastructure, particularly in energy and transport, will be vital to facilitating trade, attracting investment, and supporting industrial growth.
Furthermore, these nations adopted deliberate egalitarian policies that facilitated shared economic growth. Key measures included land reforms aimed at benefiting the rural poor, the establishment of industrial parks, the provision of affordable credit, and universal education with a focus on girls. To ensure the success of these initiatives, governments emphasized accountability and transparency, effectively curbing corruption and minimizing inefficiencies. As a result, these policies led to increased economic participation, higher productivity, and greater domestic demand.
Similarly, Uganda has pursued various wealth creation initiatives, such as the Parish Development Model, the Emyooga Program, and the Uganda Women Entrepreneurs Program. However, to achieve comparable economic benefits, Uganda must enhance effective governance and tackle corruption. The country’s low ranking on the 2023 Corruption Perception Index (141 out 180 countries) highlights the urgent need for a more transparent and efficient business environment to foster sustainable growth.
Botswana’s successful transition from poverty to a middle-income country by leveraging its diamond wealth provides a model for Uganda as it looks forward to oil and gas extraction and production. Botswana achieved this through effective governance, economic diversification, infrastructure development, and sound fiscal management.
In the same light, Uganda’s oil and gas sector, though still in its early stages, holds immense potential. The discovery of approximately 6.5 billion barrels of oil reserves in the Albertine region could be transformative. In addition, Projections suggest that oil production could generate $1.5-2 billion annually once fully operational, substantially contributing to GDP. However, challenges related to infrastructure, environmental concerns, global oil market volatility, and the possibility of a resource curse” “could limit optimal realization of this potential windfall.
Therefore, Uganda, with her significant oil reserves, could follow a comparable path but must address these challenges and avoid the “resource curse,” which refers to the risks of economic volatility such as the Dutch disease and corruption stemming from over-reliance on natural resources. Transparent governance, effective management of oil revenues, and reinvestment in other sectors are crucial for sustainable growth.
In conclusion, expanding Uganda’s economy tenfold is a daunting yet achievable goal. It requires a multi-faceted approach that combines strategic investments in identified key sectors (ATMS), continued strengthening of the fundamentals of growth namely, infrastructure development, technological development human capital enhancement, and sound fiscal management. Overcoming entrenched challenges such as rampant corruption, youth unemployment, and rising debt will be essential. With the right and effective policies, strong government commitment, and broad public support, Uganda can realize its economic potential and achieve not just high but also shared growth.