Uganda’s economy is set to register an impressive growth in 2018, outstripping growth rates recorded in the last 10 years or so.
Bank of Uganda (BoU)’s Composite Index Economic Activity (CIEA) indicates stronger economic performance in the first 10 months of 2018, with an annualized growth rate of 7-8 percent.
“This is an indication that economic growth in FY 2018/19 could be higher than the previous projection of 6 percent,” Prof. Emmanuel Tumusiime-Mutebile, the BoU Governor said earlier December.
He added that the strong growth is in part supported by the accommodative monetary stance and the associated rebound in private sector credit extension, ensuing strong domestic demand conditions, multiplier effects of public infrastructure investments and improved agricultural productivity.
“The positive growth is expected to be sustained over the coming years, partly driven by public infrastructure investment,” he added.
Dr. Fred Muhumuza, an analyst and economics lecturer at Makerere University agrees with BoU, saying economic growth has been good this year partly because of the poor score last year.
“Growth recovered from about 3.9% to 6.1 percent. Agriculture was a major contributor rising from 1.6% to 3.8%. Industry grew from 3.4% to 6.1%,” Muhumuza said in an interview with Business Focus.
He added: “The outlook, though tout to be good has downside risks that can make it bad. The shilling has depreciated by a big margin, something that has worked in favor of URA import duty based revenues as traders had to pay more in shillings. We might see a slowdown in growth rate for agriculture given the late rains that have also ended early.”
However, as economists say economic growth doesn’t mean economic development, many Ugandans don’t ‘feel the growth in their pockets’.
This is due to the fact that mega infrastructural contracts are awarded to foreign companies, with about 70% of the money involved being transferred to the mother countries of these companies.
Uganda’s Local Content Laws are still wanting and unless local capacity is improved, government will continue to ‘boost growth of other countries’.
It is also important to note that 80% of URA’s revenue is generated from Kampala District alone which is less than 20% of the country’s total population.