Uganda's Economic Revival: Highlights from the 2024/25 Budget Speech
By John Kusolo
Uganda's Minister of Finance, Planning and Economic Development, Hon. Matia Kasaijja, delivered an optimistic budget speech for the fiscal year 2024/25, marking a period of significant economic recovery and growth. After several years of internal and external challenges, Uganda's economy is not only rebounding but also outperforming regional and global growth averages.
Robust Economic Growth
Kasaijja highlighted that Uganda's GDP is projected to grow by 6% in FY2024/25, up from 5.3% in FY2023/24. This growth rate surpasses Sub-Saharan Africa's average of 3.8% and the global average of 2.9% for 2024. The economy's nominal size has expanded to UGX 202 trillion (USD 53.3 billion), compared to UGX 184.3 trillion (USD 48.8 billion) the previous year. This translates to a GDP per capita increase from USD 1,081 to USD 1,146.
Sectoral Growth and Drivers of Recovery
The impressive economic performance is driven by significant growth across all sectors. The services sector leads with an estimated growth of 6.6%, fueled by a resurgence in retail and wholesale trade, tourism, communication, and real estate activities. The industry sector is expected to grow by 5.8%, driven by manufacturing, construction, and mining. The agriculture sector, benefiting from increased production of food and cash crops as well as livestock, is projected to grow by 5.1%.
The Minister attributed the growth in agriculture to the effective implementation of the Parish Development Model (PDM) and favorable weather conditions. Meanwhile, the services sector's robust performance is linked to the recovery in tourism, which has been bolstered by investments in infrastructure and marketing.
Key Factors Supporting Economic Growth
Several factors have been instrumental in supporting Uganda's strong economic growth:
Low Inflation and Stable Exchange Rates: These have facilitated sound investment planning and bolstered export competitiveness.
Increased Investments in Oil and Gas: Significant foreign direct investment in oil and gas projects has contributed to economic growth.
Higher External Demand: Uganda has seen increased demand for its agricultural and industrial products abroad.
Tourism Recovery: Enhanced investment in tourism infrastructure and marketing has revitalized this crucial sector.
Peace and Security: Continued peace and security have created a conducive environment for economic activities.
Transition from Least Developed Country Status
In March 2024, Uganda met the criteria to graduate from the Least Developed Countries (LDCs) category and moved to the medium human development category. This milestone reflects sustained improvements in health, education, and overall living standards, achieved even before the anticipated earnings from oil exports starting in FY2025/26.
Focus on Inclusive Growth
The budget is designed to uplift various segments of society, particularly those still in the subsistence economy. Kasaijja urged Ugandans to leverage the Parish Development Model (PDM) and other wealth creation funds to transition into the money economy through commercial agriculture, industry, services, or ICT.
Private Sector and Youth Opportunities
The budget is anchored on a tenfold growth strategy, presenting myriad opportunities for the private sector. It aims to enhance the business environment through macroeconomic stability, improved infrastructure, affordable capital for value addition and export, and reliable electricity. Regional markets are expanding, and barriers to market access are being dismantled, creating favorable conditions for wealth creation.
For the youth, the budget offers opportunities to acquire skills, access finance, innovate, and develop new products. The creative industry will also receive support, opening doors for young talents to escape unemployment and achieve productivity.
Support for Women, Vulnerable Populations, and Uniformed Personnel
The budget allocates funds to improve women's health, ensure safe childbirth, provide immunizations, and facilitate access to clean water and education. Support for small businesses owned by women is also emphasized. For the elderly, persons with disabilities, and other vulnerable groups, the budget provides social safety nets to protect against poverty and enable a decent standard of living.
Uniformed personnel, particularly those at the rank of Captain and below, are set to benefit from a pay enhancement. The Minister acknowledged their contribution to national security and encouraged continued service to the nation.
In closing, Minister Kasaijja called on all Ugandans to embrace the President's message of active economic participation. By producing goods or services for sale, Ugandans can collectively contribute to creating a larger economic pie, fostering greater national prosperity. This budget, dedicated to wealth creators, aims to build a resilient and inclusive economy, setting Uganda on a path to sustainable development.
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