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Uganda’s National Economy Grows to shs122.7 Trillion

Patrick Luwagga by Patrick Luwagga
October 11, 2019
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Ugandans are moving closer to the middle income status, the rebased Gross Domestic Product (GDP) figures by the Uganda Bureau of Statistics (UBOS), indicate.

The data shows that the economy is bigger and is growing much faster than was initially forecast.

The new data shows that the economy is now worth sh122.7 trillion (about $33b), up from the old estimates of sh65.3 trillion (about $18b). This is an 88% change.

The change is mostly due to new data from industry, oil and gas and mining activities between the 2016/2017 and 2009/2010 financial years. The economy grew at a faster 6.5% last financial year, than the 6.1% initially forecasted.

Each Ugandan now takes home a per capita income of $833 (about sh3m) every year, up from $704 in 2009/10. However, 51% of Ugandans derive their income from the informal sector in activities, such as rentals, bodaboda riding, and other micro-businesses.

This is a reversal from 2009/2010 when Ugandans in the informal sector were the minority, at 49% of the economy. GDP is the most widely used indicator of a country’s economic performance. It is the measured monetary value of all the goods and services produced within a country’s borders in a specific time period.

Rebasing of GDP means replacing the old base year to a new, more By Samuel Sanya recent, base year from which change in the economy is computed. UBOS has made many revisions by adjusting the base from the 2009/2010 financial year, to the new 2016/2017.

“The GDP is the key statistic that indicates if the economy is stagnant, declining or growing. Frequent revisions of this economy are necessary and I urge the public to put this data to good use,” Matia Kasaija, the finance minister, said, as he launched the data at the UBOS house in Kampala, yesterday.

Changes in contribution to the economy During the new base year 2016/17, Industry registered the biggest jump in contribution to the economy of sh9.6 trillion. The sector is now worth sh28.3 trillion due to manufacturing activities, mining and quarrying, electricity supply and data improvements, especially for the oil and gas sector.

Conversely, the contribution of agriculture, forestry and fishing to the economy shrunk to 23.5% down from 24.6% due to a decreased share of food crops, livestock, especially goats, and agriculture support services. Agriculture is now worth sh25.5 trillion, an increase of sh2.9 trillion despite its lower contribution to the economy. The services sectors’ contribution to the economy also dropped to 43.5%, a 7.7% reduction.

This was due to a decreased share of contribution for trade and repairs, information and communication, financial and insurance activities, professional, scientific and technical activities, public administration, education, human health and social work activities, arts, entertainment, and recreation.

Despite the decline in contribution, the services sector remains the most valuable sector, at sh47.2 trillion. The rest of the changes in GDP were on account of taxes on products which account for 7% of the economy. Kasaija noted that the reduction of the contribution of agriculture to the economy is commonplace when countries begin to industrialize and modernize.

He said that farmers need to adopt irrigation and modern means of production that will improve productivity per farmer and per acre of land. He also noted that the government is working on several power projects which will bring down the unit cost of electricity closer to the government’s target of five US cents.

Kasaija also said the government is focused on bringing down lending rates to spur private sector activity.

Robin Kibuuka, the UBOS board chairperson, pointed out that the world has entered into a data-driven age and that the only way Uganda can keep pace is by producing the most current data, to improve the quality of policy decisions.

GDP to be rebased every five years Chris Mukiza, the UBOS executive director said international practice dictates that GDP is rebased every five years. He noted that UBOS statisticians received training from Norway to better evaluate the oil and gas sector.

Clara Mira, the IMF’s permanent representative to Uganda noted that although Uganda has a low risk of debt distress, the level of debt interest paid as a percentage of revenues was at par with countries experiencing high debt stress.

Ibrahim Kaddunabi Lubega, the Insurance Regulatory Authority (IRA) chief executive officer, said the insurance sector will continue to explore micro-insurance to increase sector penetration.

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Patrick Luwagga

Patrick Luwagga

Patrick Luwagga is the editorial director of cross-platform content for UGANDANZ. He works across the newsroom and with business partners to drive and develop ambitious editorial projects that include digital journalism, video, data research, polling, live events, and thought-leadership series that are supported by outside underwriting. As executive director, he is responsible for the creation of Political news section, prior to joining UGANDANZ, Patrick was the chief editor for the national weekly news magazine of Kasese Times. In that role, he covered several presidential elections, wrote and produced two television documentaries, and was a regular commentator on television and radio news programs. Patrick was born in Masaka and grew up in Kasese. He earned a bachelor’s degree in Journalism from Makerere University where he was a Knight Foundation journalism fellow.

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