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Uganda
POLITICAL AND ECONOMIC DATA
Structure of the economy
In 2020, Uganda experienced a historic recession of -1.4%. The main sectors affected by the pandemic are tourism, construction and agriculture. According to the World Bank, the pandemic has pushed between 1.1 and 3.2 million people into poverty, bringing the number of Ugandans living below the poverty line to between 24 and 29% of the population (compared to 21% in 2018).
In 2021, Ugandan growth, driven by the gradual reopening of the country and the resumption of consumption, would rebound to 5.1%. In 2022, the economic effects of the war in Ukraine would have little effect in terms of growth: the IMF has revised its forecast downward by 0.2 points of GDP, to 4.9%.
The low inclusiveness of growth slows down social progress. The absolute poverty rate was reduced from 56.4% in 2006 to 41.9% in 2012, and then to 41.3% in 2016. However, the country is ranked 160th out of 189 countries for HDI, and Ugandan out of three still live in a situation of extreme poverty.
Economic and fiscal policy
Public sector reforms introduced over the past two decades have greatly increased government efficiency and legal and policy frameworks have improved, notably thanks to the Public Financial Management Act of 2015.
Uganda Vision 2040, towards supporting investment
Today qualified as a low-income country, Uganda has designed a development program called “Uganda Vision 2040” whose objective is to achieve the status of a middle-income country. To achieve this objective, the government has committed to a policy of large-scale public investment in favor of infrastructure development.
Total Project in Uganda
The launch of the project to exploit the oil reserves of Lake Albert by Total should lead to significant indirect economic benefits. Direct investment of around USD 10 billion (or 26.6% of the country's GDP) could lead to a 5% increase in tax revenue during the operating period (from 2023) and the creation of jobs and infrastructure. The signing, on February 1, 2022, of the final investment decision by Total and CNOOC paves the way for the effective launch of the work
Perspectives and challenges
- Political stability and growing demographics
- Discovery of significant hydrocarbon reserves near Lake Albert: this project represents TOTAL E&P’s largest oil exploitation plan in the world
- Geopolitical tensions with the crisis in South Sudan
- “Local content” law requiring a local party to position itself on calls for tenders linked to the oil project
AGREEMENTS
Uganda has been a member of the East African Community (EAC) since 1967 alongside Burundi, Kenya, Rwanda, Tanzania and South Sudan. In 2004, the EAC endorsed the creation of a customs union and is now working towards the establishment of a common market and a single currency.
Uganda is part of the Common Market for Eastern and Southern Africa (COMESA), a free trade area that brings together 19 countries.
Uganda is also a member of the Intergovernmental Authority on Development (IGAD) which works for regional cooperation and economic integration among its member states.
An Economic Partnership Agreement (EPA) was concluded in 2016 between the European Union and the EAC to liberalize trade between the two areas. However, it has not been implemented to date (Tanzania and Burundi blocking ratification at the EAC level).
PROMISING SECTORS
Technologies and services
- Banks
- Fintech, financial services and mobile payments
- Telecommunications
- E-commerce
- Cybersecurity and digital trust
Industries and Cleantech
- Energy and renewable energies
- Water and sanitation
- Activities related to oil exploitation
- Manufacturing sector
- Mining industry
Art of living and health
- Medical equipment
- Infrastructure (hospitals, laboratories)
- Pharmaceutical products
- Care products and cosmetics
Agriculture and agri-food industries
- Food production (plantain, cassava, sweet potato, potato, sorghum, corn, tea, fish, coffee, cotton)
- Agri-food equipment (processing, packaging)
- Devices for filtration or purification of beverages
BUSINESS ENVIRONMENT
Uganda is ranked 116th in the World Bank's 2020 Doing Business business climate rankings.
The legal currency of the country is the Ugandan shilling. The reference currency for trade remains the US dollar, although the euro is increasingly accepted given its stability.
Many international tenders are financed or co-financed by multilateral development finance institutions operating in Uganda, such as the World Bank, the African Development Bank, the East African Development Bank or the French Development Agency. They provide a payment guarantee for the projects they finance, and are mainly active in the infrastructure, transport, energy, water, health and education sectors.
FOREIGN DIRECT INVESTMENTS (FDI)
According to UNCTAD data, the stock of FDI is 14.5 billion USD in 2020. FDI flows to Uganda amount to 823 million USD in 2020, a decrease of 34.6 %, after several years of significant consecutive increases (+26% on average over the previous 3 years). They represent 2.1% of the 39.8 billion USD intended for the African continent.
FDI flows entering Uganda mainly came from the Netherlands (28.3%), Mauritius (20.3%), Kenya (14.3%), Australia (8.1%) and United Kingdom (7.0%).