Henry Musasizi, the Minister of State for Finance (General Duties)
Uganda’s economic outlook is positive and optimistic, the Ministry of Finance, Planning and Economic Development. has said.
Henry Ariganyira Musasizi, the Minister of State for Finance, Planning and Economic Development (General Duties) made the revelation recently while updating the country on the Ministry’s progress in implementing the 2021-2026 NRM manifesto commitments.
He said the economy has remained resilient and has fully recovered from a myriad of internal and external shocks. Musasizi said that the economy is projected to get back to Uganda’s steady-state growth potential of between 6.4 and 7 percent over the medium term.
In nominal terms, he added that projections show that the size of the economy will expand to Shs 204.9 trillion (equivalent to USD 55 billion) by the end of the FY 2024/25, rising from Shs 184.3 trillion in FY 2023/24 (equivalent to US$ 49.4 billion).
It is projected that in this current financial year, 2024/25, Uganda’s GDP will further expand to Shs 225.5 trillion (equivalent to USD 60 billion), said Musasizi.
These numbers, he said, exclude the anticipated oil and gas revenues as well as the planned interventions to grow the economy tenfold.
He said the growth will be driven by: increased oil and gas activities as we move towards first oil production in FY2025/26; Growth in exports, supported by the increase in regional trade in the EAC and COMESA, intra-Africa trade, harnessing existing and new trading partners in the Middle East and Asia; Increase in tourism activities supported by investment in tourism infrastructure, and effective implementation of Meetings, Incentives, Conferences and Events (MICE) program; Agro-industrialization and light manufacturing supported by access to affordable credit through Uganda Development Bank (UDB), Uganda Development Cooperation (UDC); The Parish Development Model, Small Business Recovery Fund, Emyooga, the Presidential Industrial Hubs for Youths entrepreneurs, and programs to support growth and productivity of women enterprises; Private investment growth supported by Foreign Direct Investment, remittances, tourism receipts and a stable macroeconomic environment; Continued investment in industrial parks, construction and maintenance of roads and bridges; Rehabilitation of the meter gauge railway and commencement of the SGR, Expansion of ICT infrastructure, and provision of affordable electricity; The implementation of the interventions to accelerate economic growth through productivity improvement and value addition to our abundant raw materials in the anchor sectors of agro-industrialization; tourism; oil and gas, mineral development and Science, technology and innovation (STI) will increase the average economic growth rate to 8% over the medium term.
However, he warned that future growth faces risks that will need to be mitigated.
These, he said, include climate change affecting agricultural production and infrastructure, regional and global geopolitical tensions, high interest rates which constrain access to international capital markets at affordable cost, and unexpected fluctuations in global commodity prices.
So, to minimize the effects of these risks, Musasizi said that the government is exploring adaptation measures, sources of financing including climate finance, and ensuring frugality in Government expenditure.
Musasizi said that Uganda’s economic outlook is positive and optimistic.
“We he made giant steps in our endeavor to improve the quality of life for all Ugandans. We have built a firm foundation to steer the economy for social transformation and economic take-off into self-sustaining growth,” said Musasizi.
According to Musasizi, “This is an impressive journey to our destiny and while it might be replete with challenges, it is full of hope and promise.”
“We shall definitely achieve our manifesto objectives. Over the years, the wananchi have believed in us, trusted in us, and subsequently renewed this mandate to enable NRM to make steady progress in taking Uganda to modernity through job creation and inclusive development,” added Musasizi.
Musasizi said that in the period of implementation, the Government has managed the economy in a challenging environment occasioned by several economic shocks including; COVID-19 pandemic, high inflation, fiscal constraints, Ebola, drought and the impact of Russia-Ukraine conflict.
“These have led to rising interest rates, imported inflation, capital outflows from developing markets to developed markets such as North America and Europe, slower than the projected economic growth, and lower export demand. These notwithstanding, our economy has remained resilient and is on a recovery path,” said Musasizi.
Economic Growth
Musasizi said that Uganda’s economy has fully recovered from various shocks both internal and external, that have impacted it in the past four years, GDP is projected to have grown by 6% in FY2024/25 compared to 5.2% in FY2023/2024.
As a result of this robust growth, the minister said that the size of the economy is now estimated at Shs 205 trillion (USD 55 billion) up from Shs 184.3 Trillion (US$ 49.4 billion) in nominal terms. If Ugandans agreed to share this GDP equally, he said that each citizen would enjoy a GDP per capita of USD 1,146 compared to USD 1,093 registered last FY2022/23.
“The improved performance of the economy is on account of higher growth in all sectors; services, agricultural and industry estimated at 6.4 percent, 4.7 percent, and 6.0 percent, respectively, in FY2023/24,” said Musasizi.
Other factors which supported strong economic growth include:
i) Low inflation and relatively stable exchange rate which have allowed good investment planning and supported export competitiveness.
ii) Increased investments in the oil and gas sector related projects, supported by Foreign Direct Investment (FDI).
iii) Peace and security for persons and their property.
iv) Higher external demand for Uganda’s products including agricultural and industrial products.
v) Recovery of tourism supported by increased investment in tourism infrastructure.
Inflation
Musasizi said that inflation has remained subdued with annual headline inflation declining to 2.9% by end of October 2024. This was attributed to good harvests of food crops, declining pump prices and the Central Bank’s monetary policy stance.
Employment
Musasizi noted that latest reports indicate that the direct beneficiaries of the Presidential Initiative on Jobs and Wealth Creation (Emyooga) reached 2,237,402 in December 2023. In the past one year alone, he said that Emyooga created 378,640 new direct jobs. This was about 40,000 new jobs created. On another front, so far, 1,164,698 households have received PDM funds worth UGX 1.126 trillion by 20th May, 2024, the Minister said.
Musasizi said that the government is also boosting formal jobs and related livelihoods through a number of project-funded interventions.
“Notable among these is the GROW and INVITE Projects. The GROW Program is expected to directly benefit over 8,000 female-owned enterprises, 280,000 female entrepreneurs and 1.6 million indirect beneficiaries. Another 200,000 new jobs are expected to be created from new investments through the Investment for Industrial Transformation and Employment (INVITE) project,” the minister said.
Challenges
During the execution of Government programmes to implement the Manifesto commitments, Musasizi said tha the following challenges caused various setbacks, notably:
-Low awareness among the population has constrained uptake of various benefits in Government programmes
-Negative attitude of the public on seed Funds provided by Government
-Financial constraints that has resulted into Government’s failure to capitalise the Housing Finance Bank and extend water supply to Kashari Agricultural Park during this Budget cycle as well.
