Hon. Amos Lugoloobi the newly appointed Minister of State for Planning and Finance, has said over the last year the economy has remained resilient and is on a recovery path, amidst the ongoing pandemic and other shocks experienced over time.
Economic growth for this financial year is projected at 3.3%, rising from 3.0% last financial year, he said Thursday while delivering the budget speech at Kololo.
He said the economy has grown significantly over the last five years.
The size of the economy has grown from Shs. 108.5 Trillion in 2016/17 to Shs 148.3 Trillion in current prices by June 2021, equivalent to US$ 40 billion.
Excerpt of his budget speech:
12.Mr. Speaker, the Industry sector’s contribution to the economy has increased slightly from 26.0% in 2016/17 to 27.4% in 2020/21. However, manufacturing has significantly diversified into many new products such as ethanol from sugar, and casein and powdered milk from dairy. In addition, Uganda’s products now have a widespread regional presence. For instance, in the pharmaceutical industry, CIPLA Quality Chemical Industries Limited (CIPLAQCIL), now has a footprint in West and Southern Africa. In the steel industry, Roofings Limited has become a premier source of Steel and Plastic in East and Central Africa.
13.Mr. Speaker, scientific research and innovation is now transforming Uganda’s industrial base. For instance, the Kiira Automotive Industry that will produce 5,000 vehicles per year starting with Buses and Trucks is now 78% complete. Together with Luwero Industries, Kiira Motors has developed the Kayoola EVS, a premium zero-emissions City Bus with a range of 300 kilometres, before the need to recharge its batteries. Two silk processing factories in Sheema and Mukono have acquired State-of-the-Art Silk Yarn processing equipment to produce high quality silk products. The silk industry is projected to earn Uganda US$100 million annually, and will create at least 150,000 jobs by 2030. The National Research and Innovation Programme has also supported the development of Makapads – a non-irritating herbal sanitary pad, a low-cost ventilator to assist breathing for patients with respiratory conditions including COVID19, and a highly efficient Coronavirus Antibody Test Kit, among others.
- Mr. Speaker, the mining industry continues to be a major contributor to Uganda’s economy. The contribution of the Mining and Quarrying industry to GDP increased from 1.1% in 2016/17 to 2.3% in 2020/21. This development is a result of the use of online mineral licensing, the biometric registration and training of 13,000 artisanal miners, and the construction of regional mineral beneficiation centers. More mineral beneficiation centers are under construction such as the ones in Fort Portal, which is 65% complete, and Ntungamo which is 90% complete. The selection of an investor to revive the Kilembe Mines Project, under a Public-Private Partnership (PPP), has also commenced.
15.Mr. Speaker the Agricultural sector’s contribution to the economy has stagnated at around 23% over the last five years, which requires increasing the pace of industrialisation. Nonetheless, there has been increased production of agricultural commodities, including for export. For instance, Coffee production increased from 4.6 million 60-kg bags in Financial Year 2015/16 to 8.1 million bags in the Financial Year 2020/21. Over the same period, fish catches increased from 449,000 to 600,000 tonnes. Milk production has also increased from 2.1 billion to 2.6 billion litres, over the same period.
External Trade and Tourism
16.Mr. Speaker, international trade continued to flourish despite the COVID19 pandemic. Merchandize exports grew by 4.7% increasing from US$ 4.1 billion in 2019 to US$ 4.3 billion in 2020. Agricultural export values grew by 19% from US$ 1.4 billion in 2018/19 to US$ 1.8 billion in 2019/20. Happily, Uganda’s merchandise trade deficit has significantly narrowed from US$ 2,866 million in 2018/19 to US$ 2,365 million in 2019/20, a reduction of US$ 500 million in one year.
17.Coffee remains the leading agricultural export earning US$ 497.4 million in the Financial Year 2019/20. Dairy exports fetched US$ 204.5 million, while Tea exports earned US$ 71 million in Financial Year 2019/20. Fish exports earnings increased from US$ 121 million to US$ 227 million, over the same period.
18.Mr. Speaker, annual foreign exchange earnings from tourism increased from US$ 1.35 million in 2015 to US$ 1.6 billion in 2018. Annual tourist arrivals also increased from 1.3 million to 1.5 million during the same period. This is a result of the sustained investments in the development and rehabilitation of tourism infrastructure and product diversification. Unfortunately, the outbreak of COVID19 has caused a huge setback to tourism, as we all know.
19.Mr. Speaker, Foreign Direct Investment (FDI) flows to Uganda amounted to US$ 1.3 billion in 2019 increasing by 20% from US$ 1.1 billion in 2018, and Domestic Investments increased by 13% from US$ 385.3 million to US$ 433.8 million in the same period.
Incomes, Poverty and Employment
20.Mr. Speaker, Uganda’s per capita income is increasing steadily. In Financial Year 2015/16 it was US$ 808 and is projected to increase to US$ 932 in Financial Year 2020/21. We expect to achieve middle-income of US$ 1,039 within the third year of NDPIII implementation. The key reasons why we did not attain a middle-income status by 2020 are;
(i) lower than expected productivity, especially in agriculture;
(ii) inefficiencies in public investments resulting in less-than-optimal returns; and
(iii) the shocks from natural disasters, especially in the last two years.
21.Mr. Speaker, the recently concluded Household Survey reports that poverty has declined from 21.4% in 2016/17 to 20.3% in 2019/20. Poverty rates reduced in West Nile, Bunyoro, and Elgon regions, among others. However, 39% of Ugandan households are still in subsistence economy.
22.Mr. Speaker, the Household Survey also found that 68% of Ugandans work in Agriculture and 74% of Ugandans of working age are engaged in some form of employment. Formal employment has also expanded by 17% between 2016/17 and 2019/20, with the PAYE register expanding from 1.3 to 1.5 million registered taxpayers, according to the Uganda Revenue Authority.
- In order to empower youth and women to increase self-employment and incomes, 247,700 youth have been financed with Shs. 165 billion to implement 21,000 projects under the Youth Livelihoods programme. A further 166,300 women in 13,800 groups have received funding for projects.
The externalization of labour has enabled 16,750 persons get employment in the Middle East over the last year, and remit approximately US$ 9 million per month.
24.Mr. Speaker, infrastructure is an important facilitator for economic growth and socio-economic development. Significant progress has been recorded as follows:-
Mr. Speaker, in transport infrastructure development, the total national paved road network has increased by 41% from 3,800 kilometres in 2016 to 5,400 kilometres today. 11 inland water vessels are operational with the commissioning of the Buwama and the Sigulu Ferry services. With respect to air transport, the upgrade of Entebbe International Airport is almost complete with 96% of works at the cargo complex done. Kabaale International Airport in Hoima now stands at 55.6% complete. To revive railway transport, rehabilitation of the Tororo-Gulu Meter Gauge Railway (MGR) has commenced, and 79% of the land for the construction of the Standard Gauge Railway (SGR) has been acquired. In addition, locomotives are being procured to further support Uganda Railways.
Mr. Speaker, national electricity access today stands at 51% of which, 24% is on-grid and 27% off-grid. With the implementation of the free Electricity Connections Policy (ECP), 152,500 households have been connected to the grid. Power generation capacity has increased by 38% from 925 megawatts in 2016 to 1,274 megawatts in 2020. The completion of the Karuma hydropower plant which is 98% complete, and several minihydropower plants such as Aswa, Nyagak and Muzizi will further increase this capacity.
27.Digitization: Mr. Speaker, internet access now stands at 52% with 21 million people using the internet. Active mobile money subscriptions are 23 million served by 235,800 mobile money agents. High-speed optical fibre cable covers 3,900 kilometers. In addition, new industries have been established in the assembly of computers, mobile phones and accessories, and the development of knowledge-based ICT solutions. The ICT Innovation Fund established in 2017 has funded the local development of 115 applications many of which are in use in Government and the Private Sector. These include the Academic Information Management System (AIMS) and the eGovernment procurement solutions.
Human Capital Development
28.Mr. Speaker, the quality of life of Ugandans has improved over the last five years. Life expectancy has increased from the lowest level of 44 years in 1998 to 63 years currently. Literacy rates have improved to 76% of the population. In addition, the following progress has been recorded:-
i. 5.4 million home study books were distributed to private and public primary and secondary schools to support continuity of learning during the COVID19 pandemic;
ii. 270 teachers were trained in Early Grade reading methods for preprimary schooling, as part of the Early Childhood Development curriculum rollout this year; and 14,350 teachers were trained to provide psycho-social support arising from CoVID19;
iii. Construction of 117 seed secondary schools was completed and 64 community secondary schools at sub-counties were grant-aided;
iv. Safe water coverage in rural and urban areas is estimated at 68% and 71% respectively. Consequently, 48,000 villages, representing 70% of all villages, have at least a source of water. In urban water supply, National Water and Sewerage Corporation (NWSC) has extended
954 Kilometres of water mains and 49,000 new customers have been connected. In addition, 1,506 Public Stand posts have been installed, which serve an estimated 300,000 people; and
v. Access to healthcare as measured by the proportion of people within a 5-kilometre radius of a health facility now stands at 91%. In terms of functionality, 81% of Health Centre IVs offer caesarean section while 51% offer both caesarean section and blood transfusion. The state-ofart Entebbe Paediatric Surgery Hospital has been completed and all National and Regional Referral Hospitals have been equipped with Intensive Care Unit (ICU) beds and Oxygen plant.