Population 35,648 million
GDP 20,464 US$ billion
@rating
country
Business climate
assessment
| 2010* | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
5.9 |
6.7 |
4.2 |
5.4 |
|
Inflation (yearly average) (%)
|
9.4 |
6.5 |
23.4 |
10 |
|
Budget balance (% GDP)**
|
-7.4 |
-9.5 |
-6.5 |
-8 |
|
Current account balance (% GDP)
|
-12 |
-13 |
-15 |
-13 |
|
Public debt (% GDP)
|
24.6 |
32.9 |
32.2 |
35.2 |
| (e) Estimate (f) Forecast * fiscal year : from July to June ** grants excluded |
||||
STRENGTHS
- Self-sufficient in food
- Diversification: agriculture, fishing, mining
- Hydroelectric and hydrocarbon potential
- Tourist attractions: Victoria and Albert Lakes, wildlife
- International financial support
WEAKNESSES
- Inadequate infrastructure, particularly regarding energy and irrigation
- Precarious political and security environment: Congo, South Sudan …
- Social and political tensions
- Widespread corruption
Risk assessment
Growth sustained by domestic demand
Growth will remain strong in 2013. Domestic consumption will remain the most important driver, supported chiefly by the rise in disposable income thanks to a slowdown in inflation. The start of operations at the Bujagali hydro-electric power station (October 2012) will improve the energy supply and boost economic activity, which has been handicapped by frequent power failures. The construction sector will benefit from infrastructure projects (oil installations), while those of transport, telecommunications and services (50% of GDP) will remain buoyant. Investment in the oil sector will increase but exploitation of the recently discovered fields in the Lake Albert region will not start before 2017.
Inflation, which peaked at 30% in October 2011, slowed distinctly in 2012 due to interest rate hikes by the Central bank in late 2011 and the favourable development of food prices (27% of the Ugandan consumer price index). The easing of the price of these products and of those of energy will enable this trend to continue in 2013. The shilling’s exchange rate is expected to remain volatile in 2013 but the stabilisation of inflation will limit downward pressures.
The fiscal balance remains negative, despite spending control, and the current account deficit persists
2012 was marked by a tightening of fiscal policy allowing the deficit to be cut. The public investment programme, which was not fully implemented in 2012, will resume in 2013 in favour of infrastructure projects (transport, energy) and education. Containment of current spending is expected to continue. Tax collection is still inadequate because of a vast informal sector and weak legislation. The deficit will increase slightly and foreign government aid will remain an important source of finance for Uganda, whose debt (essentially soft loans) will grow.
The high level of the current account deficit results from the trade imbalance. Despite diversification efforts, exports remain dominated by traditional products (coffee, cotton), while imports consist mainly of foodstuffs, manufactured products and oil. Although the European Union is still its main partner (26% of exports), Uganda has redirected its trade to the regional market, which is expected to enable it to sustain its exports in 2013, provided that the political and social difficulties of its neighbours (Sudan, Kenya, Ruanda) do not affect their trade relations. Good coffee harvests will offset the fall in prices. But the substantial need for capital goods and high oil prices will contribute to the maintenance of a trade deficit that the remittances from Ugandans abroad will not be enough to offset. The flow of aid and foreign investments (particularly FDIs in the energy sector) will cover part of the current account deficit, but will not prevent an increase in foreign debt.
Weakened political and security context
President Museveni and his political party, the National Resistance Movement, in power since 1986, won the February 2011 elections with a good majority against an opposition weakened by divisions. Social protests have multiplied since the elections, sparked by the fall in the standard of living. The violent repression of demonstrations at the beginning of 2012 has strengthened popular discontent. The promise of oil wealth is heightening political tensions and the Ugandan’s anxieties concerning the distribution of the expected revenues.
Externally, the country’s landlocked situation makes good relations with its neighbours indispensable, particularly Kenya and Tanzania, which give it access to the sea. But the security situation remains precarious on the frontiers with the Congo and Sudan.
Deficient governance and a business environment which struggles to improve
Despite the undertaking of reforms, Uganda suffers from a lack of effective institutions capable of watching over compliance with legal and regulatory standards. Standards of governance are mediocre according to World Bank indicators, which rank Uganda 138th for government effectiveness and 123rd for rule of law. Uganda also suffers from a high level of corruption. The government was especially accused of a lack of transparency in the allocation of recent oil concessions.
