Uganda has been one of Africa’s recent success stories with its groundbreaking accomplishments against HIV/AIDS and reports of robust economic growth. This economic success has been as a result of the implementation of economic reforms. Despite this, private investment has to be increased in order to ensure continued economic growth. In 2001 the country had foreign direct investments totaling US$144.7 million.
New monetary and exchange rate policy operating procedures were implemented in 2002 and have facilitated sterilisation operations and resulted in a reduction in volatility in interest and exchange rate movements.
The privatization of the Uganda Commercial Bank in 2002 and its consequent merger with an international bank contributed to the continual strengthening of the country’s banking sector. Measurements concerning bank supervision have also been strengthened. Inflation rates in 2001 were exceptionally low with an average rate of 2%.
Agriculture is one of the country’s main industry sectors and made up 31.4% of the country’s GDP in 2002 that totaled US$5.9 billion. Industry and services made up 22.7% and 45.9% of GDP respectively.
Uganda has for the last 15 years pursued economic policy reforms that has imposed fiscal discipline, restructuring public expenditure and liberalization of the economy.
These reforms come after massive setbacks that saw economic and social indicators in shambles prior to 1986.
Because of the prudent macro economic policies, Uganda has recorded an impressive economic performance over the last decade with average real rate of annual growth in GDP recorded at 6.9 percent.
Inflation has fallen from 16.1 percent in past sixteen years to an average of about 5.2 percent.
Uganda’s economic performance has earned it praise from International lenders like International Monetary Fund (IMF) and World Bank. Read Uganda’s Financial Position in the International Monetary Fund.
Despite Uganda’s record performance, Uganda with a population of 20 million is still one of the world’s poorest countries. This is despite the fact that poverty fell from 44 percent to 39 percent according to Uganda Bureau of Statistics (UBOS) report for 2001.
The country’s debt overhung has been drastically reduced under the Highly Indebted Poor Countries (HIPC) initiative. Uganda was the first country to access the original HIPC initiative in April 1998 and enhanced HIPC initiative in May 2000.
Toeradicate poverty, Uganda has initiated an economic transformation and poverty reduction strategy spelt out in the Poverty Eradication Action Plan (PEAP).
Because the economy is heavily dependent in agriculture that accounts for 44 percent GDP and employs over 80 percent of labour force, government designed a Plan for Modernisation (PMA) which is part of PEAP. It is aimed at transforming peasant farmers to agricultural sector to a commercial one.
Over half of Uganda’s economic earnings are derived from coffee exports.
The government controls on the coffee and cotton industry have been loosened to allow the farmer a larger market in which to sell his produce, and private exporters have been granted licences.
Horticulture and floriculture are receiving increased investment as air-cargo becomes a viable means of’ transport.
The government has facilitated foreign investment with attractive incentives and streamlined import and export procedures. Many expelled Asians have returned to reclaim their properties and are reinvesting in a growing economy
Uganda has substantial natural resources, including fertile soils, regular rainfall, and sizable mineral deposits of copper and cobalt. Agriculture is the most important sector of the economy, employing over 80% of the work force. Coffee is the major export crop and accounts for the bulk of export revenues. Since 1986, the government – with the support of foreign countries and international agencies – has acted to rehabilitate and stabilize the economy by undertaking currency reform, raising producer prices on export crops, increasing prices of petroleum products, and improving civil service wages. The policy changes are especially aimed at dampening inflation and boosting production and export earnings. During 1990-2001, the economy turned in a solid performance based on continued investment in the rehabilitation of infrastructure, improved incentives for production and exports, reduced inflation, gradually improved domestic security, and the return of exiled Indian-Ugandan entrepreneurs. Ongoing Ugandan involvement in the war in the Democratic Republic of the Congo, corruption within the government, and slippage in the government’s determination to press reforms raise doubts about the continuation of strong growth. In 2000, Uganda qualified for enhanced Highly Indebted Poor Countries (HIPC) debt relief worth $1.3 billion and Paris Club debt relief worth $145 million. These amounts combined with the original HIPC debt relief added up to about $2 billion. Growth for 2001 was held back because of a continued decline in the price of coffee, Uganda’s principal export.
By 2001 Uganda purchasing power parity was $29 billion. The GDP real rate growth is currently 5.1% and GDP per capita is purchasing power parity of about $1,200. Agriculture is the major economic sector at 44%, industry at 18% and services 38%. About 35% of the population is below poverty line. Household income or consumption by percentage share is lowest 10%: 4% highest 10%: 21% The Gini Index is 37 ie distribution of family income. The inflation rate of consumer prices is about 3.5%. The labour force in the country is approximately 12 million. In percentages the labour force in Uganda is composed of 82% agriculture, 5% industry 5%, and 13% in the service sector.
Uganda has several industries ie sugar, brewing, tobacco, cotton textiles, cement with an industrial growth rate of 7.1%
About 1.599 billion kWh of electricity is produced by the following sources; fossil fuel: 1% hydro: 99% other: 0% (2000) nuclear: 0%. 1.314 billion kWh is consumed locally while 174 million kWh is exported. However, 1 million kWh is imported
The major agricultural products are; coffee, tea, cotton, tobacco, cassava (tapioca), potatoes, corn, millet, pulses; beef, goat meat, milk, poultry, cut flowers and exports commodities are major these agricultural products ie coffee, fish and fish products, tea; gold, cotton, flowers, horticultural products
Uganda’s export partners over the years have majorly been Germany 12.0%, Netherlands 10.2%, US 8.7%, Spain 8.0%, Belgium 7.1. Uganda imports mainly capital equipment, vehicles, petroleum, medical supplies; cereals mainly from Kenya 43.1%, US 7.0%, India 6.8%, South Africa 6.1%, Japan 3.4%.
The country’s external debt is about $3.4 billion. However, with Economic relief of $1.4 billion and debt write off this figure is slowing reducing. The Uganda currency is the Uganda Shilling (UGX)
Exchange rates over the years have been as folows; Ugandan shillings per US dollar -1850 (June 2004), 1,738.7 (January 2002), 1,755.7 (2001), 1,644.5 (2000), 1,454.8 (1999), 1,240.2 (1998), 1,083.0 (1997)