• Uganda:
• Economy

Uganda - Economy

Overview: During the years of civil war and instability, GDP declined dramatically, falling by 14.8% a year between 1978 and 1980, and the economy declined not only in size but also in sophistication. It grew by only 2.9% p.a. 1980–90, and by 1988 it had only recovered to close to 1972 levels.

When it came to power in 1986, the National Resistance Movement inherited a dreadful legacy. It embarked on a programme of structural adjustment and during the following decade the economy grew at an average 6.5% p.a. Tight fiscal and monetary discipline has been accompanied by trade liberalisation and a programme of privatisation. By 2004 about two-thirds of some 140 public enterprises had been transferred into private hands. Strong growth was achieved with relatively low inflation (in single figures from the early 1990s), greatly reduced budget deficits and a relatively stable exchange rate. Manufacturing output grew by 12.3% p.a. 1990–2004.

However, this economic performance has not been sufficiently broad-based to raise living standards and quality of life for the majority of the people, and by 2000 the government had refocused its policy on poverty eradication.

Uganda was the first country to qualify and benefit from the Heavily Indebted Poor Countries (HIPC) initiative (in April 1998) with a debt relief of US$700 million. In 2000, Uganda qualified for further debt relief under new Enhanced HIPC initiative, ensuring a further US$1.3 billion reduction of its external debt.

The economy continued to grow at generally more than 5% p.a. in the 2000s – averaging around 6% p.a. during 2002–06 – with relatively low inflation, partly benefiting from strong agricultural production.

Trade: Exports of goods and services account for 14% of GDP and manufactured exports for 15% of total merchandise exports (2004). Coffee is the most significant export, accounting for more than one-third of export revenue. Other important exports are fish and fish products (freshwater fish), gold, cotton, tobacco and tea. Manufactured goods, machinery, transport equipment, chemicals and fuels are the major imports. Uganda’s principal export partners are Kenya, Belgium, the Netherlands and France. The main import partners are Kenya (33%), United Arab Emirates, South Africa and India.

Uganda was a member, with Kenya and United Republic of Tanzania, of the East African Community, which from 1967 had a common market and many shared services but collapsed in 1977. The three countries again embarked on developing regional co-operation in 1993, bringing about progressive harmonisation of standards and policies across a wide range of activities, and launching a new East African Community in January 2001 and East African Customs Union in January 2005.