Uganda’s economic outlook

Uganda’s economy grew by 5.2 per cent in the twelve months to June, revised from an initial estimate of 5.3 per cent, marking the fastest growth in four years. However, this growth is still 1.2 per cent below pre-Covid-19 pandemic levels. To delve deeper into the factors contributing to this growth and the challenges ahead, Professor Augustus Nuwagaba, International Consultant On Economic Transformation, Reev Consult International, joined CNBC Africa for an exclusive interview. Nuwagaba highlighted that Uganda's economy is largely agrarian, with agriculture serving as the main employer for about 70 per cent of the workforce. Despite this, the services sector has been the primary driver of economic growth, contributing approximately 23.3 per cent to GDP. The services sector faced significant setbacks due to the impact of the Covid-19 pandemic, with key industries like tourism, hospitality, and transportation suffering major disruptions, leading to a decline in overall economic growth. However, there has been a notable rebound in the services sector post-pandemic, with signs of recovery in other sectors like industry. Although the agricultural sector has shown a decline due to low productivity, Nuwagaba remains optimistic about the economy's ability to reach pre-pandemic growth levels. Looking ahead, external challenges such as geopolitical tensions and supply chain disruptions pose risks to Uganda's economic recovery. Nuwagaba expressed concerns about recent statements from the U.S. discouraging investors from doing business in Uganda, noting that such actions could have adverse effects on the economy. He emphasized the critical role of multilateral institutions like the World Bank in supporting Uganda's economy, particularly in sectors like healthcare. The potential withdrawal of funding from the World Bank, particularly in the health sector, could have significant implications for Uganda's ability to address critical healthcare needs. Nuwagaba called for dialogue and negotiation between the government and the World Bank to address the concerns and ensure continued financial support for essential sectors. The interview underscored the need for strategic planning and collaboration to navigate the challenges ahead and sustain Uganda's economic growth trajectory.