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Uganda's Economic Performance: A Comparative Look at EAC Peers in 2024

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Uganda's Economic Performance: A Comparative Look at EAC Peers in 2024
East African Community

Uganda's post-pandemic economic journey has garnered attention as it balances growth prospects against challenges like inflation, debt, and global geopolitical pressures.

When compared to its East African Community (EAC) counterparts, Uganda's economic narrative reveals a blend of resilience and unrealized potential.

Projected to grow at approximately 6% in 2024, Uganda's economy is on a stable recovery path but falls short of the regional average. Neighboring countries, such as Kenya, Tanzania, and Rwanda, are demonstrating stronger momentum.

  • Kenya: Buoyed by a thriving agricultural sector and expanding services industry, Kenya is set to grow by 6.3%.
  • Tanzania: With mining and manufacturing driving growth, Tanzania expects a 6.8% increase in GDP.
  • Rwanda: Government-led reforms and infrastructure investments position Rwanda as a regional leader with a projected 7% growth.

While Uganda has made strides in construction and services, its reliance on agriculture and sluggish industrialization limits its competitiveness.

Delayed infrastructure projects further hinder its economic acceleration compared to its more diversified peers.

Inflation and Debt: Regional Challenges, Local Impact

Inflation remains a pressing issue across East Africa, with Uganda's rate settling at 6.5% by mid-2024. Although this marks an improvement, it still exceeds rates in Kenya (4%), Tanzania, and Rwanda (both under 5%). Rising food and fuel prices have strained Ugandan households, and supply chain disruptions continue to exacerbate the situation.

Uganda’s public debt, at 50% of GDP, while lower than Kenya's 70%, raises sustainability concerns.

In contrast, Rwanda and Tanzania maintain more manageable debt levels, benefiting from prudent fiscal policies and strategic resource allocation. Uganda's fiscal discipline remains a work in progress, posing challenges for long-term growth.

Infrastructure and Investment: Unlocking Potential

Uganda’s infrastructure investments in roads, energy, and telecommunications are central to its Vision 2040. However, slow implementation and governance issues have impeded progress, leaving it lagging behind its neighbors.

  • Kenya: Mombasa Port, expansive road networks, and the Standard Gauge Railway underscore its role as a trade gateway.
  • Tanzania: State-driven infrastructure projects are positioning it as a regional manufacturing hub.
  • Rwanda: Strategic investments in ICT and transport have attracted startups and foreign direct investment (FDI).

While Uganda has vast potential, converting this into competitive advantage requires enhanced governance, policy coherence, and execution efficiency.

Agriculture: Strength with Vulnerabilities

Agriculture remains Uganda's cornerstone, employing over 70% of the population. However, reliance on outdated methods and vulnerability to climate change curtail its productivity. Limited investment in value-added processing keeps export revenues lower than Kenya and Tanzania, which boast advanced agri-processing industries.

Rwanda’s innovative agricultural practices highlight a model Uganda could emulate, leveraging government support and market linkages to enhance resilience and profitability. Strengthening value chains and adopting climate-smart techniques are critical for Uganda's agricultural transformation.

The Road Ahead: Diversification and Reform

For Uganda to sustain its growth and close the gap with its peers, diversification is paramount. Investments in manufacturing, ICT, and tourism can reduce dependence on agriculture and amplify economic gains.

Aggressive reforms to attract FDI, coupled with improvements in governance and fiscal management, are essential. Enhancing infrastructure readiness and fostering public-private partnerships will also accelerate development.

Conclusion

Uganda’s economic performance in 2024 underscores a promising yet challenging landscape. While its growth trajectory is positive, it must address structural barriers and act swiftly to unlock its full potential. Competing effectively within the dynamic EAC region will require bold strategies, strategic investments, and relentless focus on reforms. Only then can Uganda solidify its place as a formidable regional economic powerhouse.

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