The World Bank Group Uganda has forecast a substantial acceleration in Uganda’s economic growth, projecting a rise to 10.8% by 2026, driven primarily by the commencement of oil production and a rebound in tourism. However, this growth is expected to level off at around 6% in subsequent years as oil production stabilizes. The report further highlights that the anticipated oil revenues could lead to a slight reduction in poverty levels, with rates expected to drop from 41.3% in 2024 to 40.1% by 2026. Still, the pace of poverty alleviation will heavily depend on how well households recover from financial shocks.
Ms. Mukami Kariuki, the World Bank’s Country Manager for Uganda, emphasized the need for prudent management of oil revenues to ensure sustainable growth and poverty reduction. She underlined that prioritizing investments in social protection, infrastructure development, and human capital is critical for long-term development. However, Ms. Kariuki noted that intensifying economic shocks and stalled policy reforms pose significant challenges to Uganda’s ability to sustain economic growth.
Uganda faces an urgent need to create productive jobs for the nearly one million young people entering the labor market annually. The services sector, while contributing significantly to the country’s GDP, has created few jobs, most of which are low-skilled and informal. Meanwhile, the agriculture sector, which employs two-thirds of the population, remains highly vulnerable to climate shocks and natural disasters. Limited capacity for climate adaptation has left the sector ill-prepared to address the increasing frequency and severity of these challenges.
The World Bank report calls for structural transformation in Uganda’s economy to drive growth and reduce poverty. This transformation includes fostering private sector investment by lowering the cost of doing business, enhancing access to finance, and adopting innovative technologies. It also highlights the need to shift government spending toward social sectors such as education and healthcare to strengthen human capital and reduce inequality. Additionally, maintaining prudent macroeconomic policies will be essential to avoid a loss of competitiveness once oil revenues start flowing.
Uganda’s education sector also faces significant challenges. Children born today are expected to complete only 6.8 years of schooling by age 18, compared to the sub-Saharan average of 8.3 years. Of these, 2.5 years are effectively wasted due to the poor quality of education.
To fully capitalize on its economic potential, Uganda must not only focus on managing oil revenues effectively but also address long-standing issues such as inequality, climate resilience, and the quality of education to ensure inclusive and sustained growth.
