Uganda’s economy continues to show strong performance, with real GDP growth reaching 6.3% in FY2024/2025, up from 6.1% the previous year. The World Bank attributes this growth to a recovery in household consumption, increased government spending, and sustained investment growth. Broad-based expansion across agriculture, industry, and services has contributed to a projected decline in poverty, while tight monetary policy has kept inflation at 3.5%, below the central bank’s medium-term target of 5%. Despite this positive performance, fiscal pressures are mounting, with a widening deficit and rising debt servicing costs, highlighting the importance of fiscal consolidation as outlined in the FY2025/2026 budget.
The medium-term outlook for Uganda remains positive, supported by moderating spending growth following general elections, expected oil revenues starting in 2027, dynamic exports, and sustained foreign direct investment inflows. Inflation is projected to remain low, anchored by prudent monetary policies and stable commodity prices, while poverty is expected to decline further through 2026 and 2027. However, the economy faces risks from potential fiscal slippages, delays in oil sector development, reductions in overseas development assistance, and global uncertainty affecting commodity prices and financial conditions. Additionally, climate shocks and erratic rainfall pose a threat to poverty reduction, as much of the population relies on rain-fed agriculture.
Despite robust growth, economic activity remains concentrated in low-productivity, climate-vulnerable agriculture and informal employment, which offer limited income growth and mobility. The World Bank emphasizes the need for economic transformation toward higher value-added activities, with agro-industrialization identified as a key driver for industrial growth and job creation. By leveraging agriculture as a platform for industrial development, Uganda can generate employment, increase value addition, and promote inclusive growth.
The Uganda Economic Update highlights the constraints and opportunities for advancing agro-industrialization. The World Bank’s AgriConnect initiative seeks to integrate smallholders into agribusiness, transform the sector into a sustainable engine of growth, and create jobs while enhancing food security. Productive public-private partnerships are seen as essential for facilitating technology adoption, de-risking value chains, expanding service delivery, and generating employment in rural areas.
The report outlines three strategic recommendations to accelerate Uganda’s agro-industrial agenda. First, it calls for strengthening foundational infrastructure and capacity, including climate-smart agricultural technologies, irrigation systems, rural roads, energy, water, skills development, and digital solutions for agricultural services. Second, it emphasizes improving the policy and enabling environment by reforming policies, strengthening institutions, supporting cooperatives, enhancing private sector participation in seed development, de-risking the sector, increasing access to finance, and harmonizing regional trade policies. Third, it encourages mobilizing private capital and market linkages through innovative financing mechanisms, digital platforms, and trade competitiveness measures, aiming to finance entire value chains and expand access to credit via instruments such as lease-to-own guarantees, insurance, and blended finance solutions.
By implementing these measures, Uganda can harness agro-industrialization as a pathway to higher productivity, sustainable growth, and widespread employment opportunities, laying the foundation for the country’s long-term economic transformation.
