economy of Uganda, a tourist attraction and significant player in the East African Community (EAC), has been tipped for a 5 to 5.5 percent growth in the 2014/2015 financial year. This projection is well above the 4.5 percent growth recorded in the previous year. However, inflationary pressures stemming from the influx of “campaign cash” ahead of the 2016 general elections could repress this expected growth.
Given these systemic endogenous forces at play, the deciding sectors for Uganda’s continued growth this year are Agriculture, Services, Industry/Energy and Oil & Gas.
Agriculture has the greatest impact on the socioeconomic bottom line of Uganda as over 75 percent of nationals depend on it for survival. Forecasts are in favor of significant investments into its various sub-sectors this year, but this is all dependent on climate change and the extent to which it upsets the balance of things. Assuming favorable weather conditions, the average year-on-year growth rate of 3.03 percent should be maintained, thus guaranteeing internal and external demand as well as multiple revenue streams from the sale of agricultural produce. So, on one hand, agriculture can create jobs and feed the nation, but on the other, the price of food can be a determinant of the inflation rates in the country.
Services has a less socioeconomic impact than agriculture, but accounts for almost half of Uganda’s GDP. With notable increases in telecoms, trade and related business activities, this sector is poised for still greater contributions. All telecom operators are gearing up for significant infrastructure upgrades in order to differentiate themselves from the stiff competition. Other sub-sectors including tourism, real estate, financial and support services are poised for increased trading as well.
With new projects in the pipeline, activity in the industry/energy sector is expected to be bolstered this year. In the construction sub-sector, for instance, flagship projects comprising power stations will materialize in the course of the year. Although its sectoral contribution to GDP fell from 25 to 18 percent, the sector is still highly regarded as a driver of employment, higher incomes and overall value creation. Also, analysts believe the sector plays a pivotal role in Uganda’s Vision 2040 targets.
The government of Uganda plans to set up a refinery soon, this is a sure signal that the potentials of the sector will yet improve. Also, more production licenses are expected to be awarded to oil companies as the government opens up a new round of licensing for exploration activities. With all these precursors, the Lake Albert basin, which is believed to hold at least 1.2 billion barrels of crude oil, should become a hub of activity as the year progresses.
Uganda is known around the world for its tourism potentials, and within the continent, it is a shining example of how regional integration can transform a country. However, like most African economies, the challenge is to make growth inclusive and sustainable, going forward.
By Emmanuel Iruebo