UGANDA
Economy
Agriculture is the mainstay of the economy, accounting for 42% of GDP, although its share of GDP has been falling for several years, having peaked at 73% in 1977. Almost half of agricultural output comes from the subsistence sector. Community - or government - services account for about 15% of GDP, followed by commerce with about 13% and manufacturing at 9%. During the colonial period manufacturing was neglected in favour of agriculture. The instability of the 1970s and 1980s further hampered any development of this sector, but since the mid- 1990s growth of this sector has been encouraging.
Since the late 1980s there has been an impressive about turn from the economic decline and stagnation which started in the early 1970s. Strict monetary discipline and substantial donor support have been central to the macroeconomic achievements. Poverty reduction strategies introduced in the late 1990s have been very successful, the incidence of poverty being reduced from 56% in 1992 to 35% in 2000. Debt burden is growing, and the economy is still heavily dependent on coffee for its exports. Prospects for Uganda's economic recovery are dependent on continued growth and diversification in the agricultural sector.
Since the late 1980s there has been an impressive about turn from the economic decline and stagnation which started in the early 1970s. Strict monetary discipline and substantial donor support have been central to the macroeconomic achievements. Poverty reduction strategies introduced in the late 1990s have been very successful, the incidence of poverty being reduced from 56% in 1992 to 35% in 2000. Debt burden is growing, and the economy is still heavily dependent on coffee for its exports. Prospects for Uganda's economic recovery are dependent on continued growth and diversification in the agricultural sector.
Labour market and unemployment
The workforce is around 10 million, and it is estimated it will rise to 13 million by 2010. The average annual growth rate of the labour force was 2.5 per cent between 1980 and 1997, and is estimated to be 2.2 per cent for the period 1997-2010.
Agriculture, forestry & fishing
Agriculture is the most important sector of the economy. In 1999/2000 it accounted for about 42% of GDP and for the bulk of exports. The sector employs around 80% of the labour force. Some 2.5m smallholders working less than 2ha of land produce the bulk of the output, food crops having replaced traditional export crops as the principal cash earners for rural families. Food production has increased substantially over the past decade mainly because of the expansion in area under crops; it is now the primary activity and represents 65% of agricultural GDP. Coffee is the main cash crop, providing around 40% of export earnings. Rehabilitation of coffee holdings has been the main stimulus to economic growth in recent years, and will be further strengthened now that Uganda has become the first African exporter of organic Arabica coffee, a niche market which commands higher prices. Cotton, once an important cash crop, is being revived in some eastern areas, and production has been boosted by reforms in agricultural pricing and marketing regimes. Liberalization is contributing to the revival of tea, which is grown on large estates and family farms. There has an impressive increase in sugar production since the late eighties, following almost complete collapse in the early 1980s. Tobacco is widely grown in the north-west. The natural environment is conducive to pastoralism, smallholders and pastoralists owning 90% of the cattle. More recently there has been a strong recovery of commercial dairy farming. The Plan for the Modernisation of Agriculture, key to government policy, was presented in the 2001/02 budget.
Uganda's 7,5m ha of forest and woodland are an important source of energy. The need for stricter regulation and management has been recognized in the light of indiscriminate exploitation and the depletion of resources.
With some 20% of land area covered by water, fishing meets a high proportion of people's protein needs. Production has recently increased rapidly, exports now earning more than the traditional tea and cotton industries.
Mining
There has not been a mineralogical survey, and the economic significance of deposits is unknown, although Uganda is believed to be rich in mineral resourcses. Cobalt is mined at Kasese, and vermiculite in the south-west. The discovery in early 2001 of commercial traces of oil in a remote area south of Lake Albert has given rise to considerable optimism. If proved to be well founded, the find would be of enormous economic significance, although the costs of developing the project would be enormous.
Despite this, in 2000 mineral exports brought in about US$66m in foreign exchange, a 46% increase over the previous year. Around 80% of this came from gold exports; cobalt and wolfram ore brought in the balance. This dramatic increase, in the face of the absence of mineral wealth and especially gold deposits, is the result of the mass-scale looting and systematic exploitation of the mineral resources of the Democratic Republic of Congo.
Industry and manufacturing
The industrial sector's contribution to GDP was 8.2 per cent in 1998, and employed 4 per cent of the workforce. Most manufacturing is based on the processing of agricultural commodities, including cotton, coffee, sugar, and food crops. Small-scale manufacturing is dominated by the clothing industry. The industrial sector saw marked declines between the early 1970's and late 1980's, but in the five years to 1998 production has grown by an average of 18% per year. The small size of the domestic economy, the import-dependent nature of the sector, lack of foreign exchange, inadequate infrastructure and a lack of skilled manpower hamper further growth and progress.
Tourism
During the 1960s tourism was the third most important earner of foreign exchange, but by the early 1980s the industry had all but ceased to operate. Since the mid-1990s tourism has been one of the fastest-growing sectors of the economy, a response to the markedly improved internal political situation, liberalization of the economy and improved tourist amenities.
Government finance and fiscal policy
In 1986 when Museveni came to power the government adopted an IMF-backed economic reform plan, directed towards achieving a consistently realistic exchange rate, reducing government expenditure, instigating trade liberalisation measures and reforming the civil service. Between 1987 and 1996 there was steady progress on macroeconomic stabilisation, largely eradicating gross distortions resulting from the instability of the 1970s and 1980s. Backed by the revival of the market economy and commercial agriculture, economic strategy is now directed toward ensuring rapid economic growth and the eradication of poverty. The strategy is supported by the IMF and bilateral donors under the 3-year US$2.2bn Poverty Reduction and Growth Facility (PRGF) - old structural adjustment facility - which was pledged in December 1998. A comprehensive poverty reduction strategy, the modernisation of agriculture, and ways of improving growth form the main thrust of the 2001/2002 budget.
Foreign Aid and Donors
Substantial injections of foreign aid have been critical to the remarkable economic recovery achieved since 1986, with aid going into infrastructure, productive resources, new development projects and short-term balance of payment support. Most multilateral aid has come from the World Bank’s IDA, while the main bilateral donors have been European countries. In 1996 the World Bank/IMF launched the HIPC (Heavily Indebted Poor Country (HIPC) Initiative to provide debt relief totalling US$660m. An enhanced debt-relief formula, which will more than double the mount of relief was granted in May 2000.
Most of Uganda's external debt has been inherited from the regimes of Idi Amin and Milton Obote. By 1999 foreign debt had risen to about US$4.1bn, representing 64% of GNP and more than 52% of the value of exports of goods and services.
Regional and International economic grouping/alliance:
- African Union
- Common Market for Eastern and Southern Africa (Comesa)
- East African Co-operation (EAC)
- Inter-governmental Authority on Development (IGAD)
- The Lomé Convention
- EU-ACP convention
