Uganda’s economic growth remains strong, with real gross domestic product (GDP) rising to 6.3 percent in FY2024/2025, up from 6.1 percent the previous year. A new World Bank report attributes this performance to a recovery in household consumption, accelerated government spending, and continued investment growth.
The 26th edition of the Uganda Economic Update, published today, notes broad-based growth across agriculture, industry, and services. As a result, poverty is projected to have declined in FY2024/2025.
The report also shows that tight monetary policy helped keep inflation at 3.5 percent, below the central bank’s medium-term target of 5 percent. However, fiscal pressures have increased, with a widening deficit and higher debt levels and servicing costs, underscoring the need to return to fiscal consolidation as signaled in the country’s FY2025/2026 budget.
The report projects a positive medium-term outlook, supported by moderating spending growth after the general elections, the accrual of oil revenues expected to begin in 2027, continued export dynamism, and sustained foreign direct investment inflows.
Inflation is expected to remain low, anchored by prudent monetary policy and stable commodity prices. In line with these projections, poverty is expected to further decline in 2026 and 2027.
Risks to the outlook include possible fiscal slippages, delays in oil sector development, further reductions in overseas development assistance, and heightened global uncertainty, which could affect commodity prices and global financial conditions. In addition, climate shocks and lower-than-expected rainfall could increase poverty in the absence of mitigating measures, as most of the poor depend on rain-fed agriculture.
“Uganda’s growth remains strong; however, economic activity is currently concentrated in low-productivity and climate-vulnerable agriculture and informal jobs, which offer limited opportunities for income growth and upward mobility,” said Francisca Ayodeji Akala, World Bank Country Manager for Uganda.
“Transforming the economy toward higher value-added activities is needed to deliver on the country’s Ten-Fold Growth Strategy. Agro-industrialization can be a key cornerstone of this transformation, leveraging agriculture as a platform for industrial growth and job creation.”Ayodeji said.
This edition of the Uganda Economic Update focuses on identifying and addressing constraints to agro-industrialization, which has enormous potential for job creation, value addition, and inclusive growth.
“The building blocks to pursue the agro-industrial agenda in Uganda are consistent with the World Bank’s AgriConnect initiative, which aims to integrate smallholders into agribusiness and transform the sector into an engine of sustainable growth, job creation, and food security,” said Armine Juergenliemk, Senior Agricultural Economist and co-author of the Uganda Economic Update.
“This initiative opens opportunities for productive public–private partnerships to facilitate technology adoption, de-risk value chains, expand service delivery, and ultimately create more jobs in agriculture and the rural economy.”said Juergenliemk.
The report recommends that, to smooth Uganda’s agro-industrialization path, the government should strengthen foundations and infrastructure by developing and disseminating climate-smart agricultural technologies and innovations to sustainably increase productivity; investing in irrigation to build agro-climatic resilience; establishing co-located infrastructure such as rural roads, energy, and water; developing skills; and enabling digital solutions for the delivery of agricultural services.
The World Bank also urges improvements in the policy and enabling environment by reforming policies, strengthening institutions, supporting farmer cooperatives, enabling competition among private sector players, and enhancing public institutions’ capacity to deliver high-quality public goods.
Policy reforms should aim to improve private sector participation in seed development (especially multiplication), strengthen the public sector’s role in seed certification, de-risk the sector, increase access to finance, and harmonize policies at the regional level to remove trade barriers.
The report further emphasizes the need to mobilize private capital and strengthen market linkages by scaling up innovative financing, leveraging digital platforms, and enhancing trade competitiveness. Private capital mobilization should focus on developing instruments for whole-of-value-chain financing and expanding access to finance through innovative tools such as lease-to-own guarantees, insurance, and blended finance.
