The Economy of Uganda: Expectations, Opportunities

Omolola Lipede
20% Complete
 23-May-2018

Uganda, or the Republic of Uganda, is an Eastern Africa country. The landlocked economy has 42.82 million population. The economy is majorly an agricultural economy, coffee being its most export. Nonetheless, it has untapped reserves of both crude and natural gas. The country has been experiencing a consistent economic growth until 2014 when the country recorded a real GDP growth of 4.6%. In 2013, prior to the fall the country recorded a growth of 4.7%, in 2015, 5.7% growth was recorded but in 2016 there was another drastic fall, 2.3% was recorded and in 2017 there was an appreciable increase, the growth was 4.5%. Although, the recent growth rate did not attain the level it was before the drastic fall, yet, the economy was reported to have reduced their poverty rate. Nonetheless, the economy still have some woes to deal with, like access to electricity, improved sanitation, education, child malnutrition, etc.


Other endowments possessed by the country include; gold, copper, cobalt, fertile soil, regular rainfall and the recent discovery of oil. Since the economy is predominantly an agricultural one, agriculture is the biggest employer of labour in Uganda as, the sector absolves over 80% of the work force in the country. Prior to 2017, the sector had been a larger contributor to the country’s GDP. The GDP from Agriculture in Uganda however decreased to 3110.66 UGX billion in the fourth quarter of 2017, from 3257.83 UGX billion in the third quarter of 2017. The success was hampered as a result of underinvestment and the over reliance on crude farm tools. This reduction in the agricultural sector led to an overall decline in productivity because agriculture is the main source of raw materials for other sectors in the economy.

Uganda also has an industrial sector that contributes over 20% of the GDP and employs only 5% of the country’s population. This sector also has its own woes; the growth of the sector is impeded by high costs due to poor infrastructure, low levels of private investment, and the depreciation of the Ugandan shilling.

Uganda is a mixed economy of both private and government institutions combining to determine how it works. Both decision makers partake in the ownership, allocation and distribution of resources in the economy which is an open economy, thereby allowing imports and exports of products/services. The major exports of the nation are agricultural products while manufactured products and petroleum products are imported. There are services sectors like banking, transport, communication but they are still growing and striving to achieve maturity. The government of Uganda depends on indirect taxes as a major source of revenue.

The country faces many economic challenges. The political unrest in South Sudan has led to more refugees in the country, thereby disrupting the its major export market. The currency of the country (Uganda Shilling) has depreciated 50% against the dollar from 2015-2017. The insufficient budgetary discipline and corruption hinder economic development and reduced investors’ confidence.

The economy is yet to evolve agricultural diversification; it is still predominantly coffee and cotton, resulting to small production composition. The economy is yet to employ the methodology of adding value to their agricultural products, it still exports raw products, importing the processed ones. This is one reason the agricultural sector began to lose its stance after several decades of prosperity. The global market has moved from rudiment to value adding.

The economic structure of Uganda reveals the unhealthy reliance on majorly agriculture and its imports is more than the exports, making the balance of trade unfavourable for the economy. The imports are largely dominated by consumer goods, this indicates that Uganda is a consuming nation and not a contributing nation. The government have to employ measures that will make the economy more industrialised, there should be training of local men to carry out industrial activities. There should be economy diversification, the government should also establish import substitution industries to reduce the importation bills. The agricultural products should be promoted from raw products to high stages to add more value to the exports. The real GDP is of course an appreciable one for the economy, yet, more needs to be carried out for the it to drive into maturity.

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