The Ugandan economy should grow by more than six percent next year but its rate of growth is still below that of Kenya, Tanzania and Rwanda according to a new report from the World Bank.
Moreover that growth rate is dependent on the forthcoming presidential elections passing off without concern and the government being successful in its huge investment programme, the World Bank says.
The latest Ugandan Economic Update from the World Bank which was released this week says that over the next year “Uganda’s economy could continue the modest recovery and grow 0.4 percentage points faster in 2016 than in 2015.”
Part of the reason for this growth is a depreciation in the value of the Ugandan Shilling and falling global oil prices.
The report says that Uganda’s private sector “has also played a critical role buffering external shocks and sustaining credit flows while Government’s infrastructure investments in the oil industry and railway did not take off as planned.”
During the year ending June 2015, the Ugandan economy grew by 5 per cent, compared to 4.5 per cent in the previous year.
However the World Bank says that “growth remained below expectation, and was the slowest amongst regional peers such as Kenya, Tanzania and Rwanda.”
There remains uncertainty over future levels of growth because of the presidential and parliamentary elections in February 2016
The World Bank says that “both uncertainty and speculation have and will continue to impact economic variables.”
However the World Bank says that during the financial year 2015/16, “the Ugandan economy will on balance, continue to grow, the effects of the shocks notwithstanding.”
However, the forecasted overall rate of growth for the year of 5.4 per cent, will be about a half a percentage point from what had been anticipated when the government pronounced its budget strategy in June 2015.
The rate of growth is projected to accelerate to at least 6 per cent per annum into the medium term.
This outlook greatly depends on the success of the government’s huge investment program, which aims to build energy dams to increase availability and reduce cost of electricity, roads to ease connectivity; and the refinery to process oil before it is exported out of Uganda.
Crucial also will be a “tightening of monetary policy” to “minimize inflation and ensure stability.”
Land reform is also regarded as critical.
“We hope the analysis and recommendations in this new report can help government review the current policies and their implementation with an eye to improve land administration and management in Uganda,” said Diarietou Gaye, World Bank Country Director for Eritrea, Kenya, Rwanda and Uganda.
“Improved management of land can result into more efficient land use that can boost productivity while at the same time allowing people with weak land rights to benefit more from economic growth.”
Uganda’s rapidly expanding population is putting pressure on land usage, especially in urban areas. Current land policies have not supported efficient planning and development of urban areas and hence limited the pace at which the country can increase its productivity.
Approximately 20 percent of Uganda’s land is registered, which is higher than the average level of 10 percent for sub-Saharan African countries.
But despite these better than average figures, security of land tenure in Uganda remains weak due to unclear property rights and a high rate of occurrence of disputes and conflicts.
Weak systems for land managements have also constrained urban planning and raised the cost of infrastructure development in the country.
“With the fast growing urban population, Uganda needs to enforce the existing policies to promote better urban land management that will allow them to build livable cities,” said Christina Malmberg Calvo, World Bank Country Manager for Uganda.