By George Mangula
President Yoweri Museveni has assured Ugandans that the economy of the country continues to grow at acceptable rates and that between 1986 and 2015, it grew at an annual average rate of 6.92% while per capita income grew at an annual average rate of 3.6% over the same period.
“No European country, not even the USA (except West Germany between 1950 and 1980 which did 3.8%) has grown its per capita income at the same rate as Uganda over a period of three decades. Only East Asian Tigers sustained per capita income growth of 5.6% during their intense period of transformation between 1960 and 1990,” he said Thursday while delivering State of the Nation Address (SONA) at the Serena International Conference Centre in Kampala.
“The growth of the per capita income at such high rate was in spite of the high rates of population growth of 3.3% per annum. In order to put this issue in perspective, Ugandans should be informed that between 1951 and 1961 during the colonial system, GDP per capita grew by 0.14%; between 1962 and 1970, it grew by 1.4%; between 1971 and 1980, it declined by -2.9%; and between 1982 and 1985, it grew by 0.8% and between 1986 -1995; it grew by 2.8% and between 1996-2009, it grew by 3.6%. All this in spite of the strategic bottlenecks such as shortage of electricity and high transport costs that were not yet addressed that time. Note that per capita income is GDP growth minus population growth,” he said.
He said between 1986 and 2015, Uganda was the 17th fastest growing economy in the world, the 4th in Africa. “If we remove mineral-rich countries from the sample (because they were enjoying God’s or nature’s bounty), Uganda was 11th in the world, 1st in Africa,” he said.
The president said the achievement was the more impressive because Uganda was in civil war from 1986 to 2005. He said the country is surrounded by Sudan to the north, which was in civil war for the first 20 years of Uganda’s growth (1986 to 2005). To the west is DR Congo, which has been in civil war between 1996 to now. To the south is Rwanda, which was in civil war between 1990 and 1994. To the east is Kenya, which was stagnating economically between 1986 and 2002.
Performance of the Economy
The size of the economy, he said, is Shs 109.738 trillion in financiqal year 2018/19 equivalent of USD 29.5 billion. “The income per person is now equivalent to US$ 800. Although this is below the level required to the attainment of the Middle Income Status, the renewed impetus of the economy and the large economic base being created will catapult the economy to prosperity within a short period in the future,” he said.
By the Purchasing Power Parity (PPP) method of computing GDP, the economy now stands at US$88.6billions which translates into US$2,400 per capita, said Museveni.
“If this method was used, Uganda would already be a middle income country. However, we are not going to use short cuts. We shall use the export promotion and import – substitution routes to storm across the medium income barrier, not just the purchasing power route on account of our low cost of living advantage, but by the exchange route method. It is now within reach,” he said.
Expanding the Economic Base
The president said Uganda’s economic growth and development outlook was positive, with the economy projected to grow at, at least, 7 percent in the medium term, “but could even be higher given that we have now sorted out the key constraints to growth. The basis for this very positive outlook is the following;
Industrialization to promote exports using primarily agriculture as the base; this includes industrialization along the agricultural value chain, light manufacturing and processing our minerals into finished products; and further diversification of the manufacturing sector to increase exports.
Increasing production and productivity in the agricultural sector by investing in quality inputs, extension services, storage facilities, access to markets by improving standards and quality of agro-processing. Government is also boosting the capital base of UDB to be able to lend to agriculture as well as small scale industry. In addition, Government is implementing targeted interventions in the Coffee Sector (Coffee Roadmap 2020), Tea and fruit processing e.g. the Soroti Fruit Factory and supporting agricultural zoning and out grower model around the nucleus farmers. We are also working on stabilizing agriculture through irrigation.
The commencement of oil and gas production and work on the Oil Pipeline and the Refinery will be starting soon.
Strengthening local content so that Ugandans can be integrated into wealth creation as the economy expands, including improving local production and supply capacities.
Improving efficiency in the execution of public investment, to improve the returns on investment especially in the areas of energy, transport, agriculture, tourism, water for consumption and production, and in education.
Harnessing the benefits of regional integration through trade and strengthening intra-African trade.
Improving labour productivity through skills development tailored to labour market demand.”
Therefore, a firm foundation for industrialization and especially manufacturing has been laid. We now have the fruit industry in Teso and Luweero; Dairy industry in Ankole; Vegetable Oil industry in Kalangala; and Tea industry in Toro and the Kigezi sub-regions; etc., etc. Government is providing financial support to tea factories in Western Uganda including Kigezi Highland Tea Co. Limited, Kayonza Growers Tea Factory and Mabale Growers Tea Factory Limited.
He said Operation Wealth Creation (OWC) has increased the supply and distribution of tea seedlings in the region. In the North, Government has taken up a 32% stake in Atiak Sugar Factory which has a nucleus farm and an outgrowers scheme which will create jobs and promote agro-industrialization in this region.
Developing Industrial parks
Government, he said, is prioritizing investment in Industrial parks to support industrialization and create jobs. Notable progress has been made in Kapeeka Industrial Park where manufacturing of tiles and other products is already on, Kampala Industrial and Business Park where construction and provision of various utilities is soon starting, Kabaale and Mbale Industrial Parks where work is on-going.
So far, he said, there are 284 new factories already in the Industrial Park at Namanve; 11 in Luzira industrial and Business Park; 10 in Bweyogerere industrial estate; 8 in Jinja industrial and Business Park; 10 in Soroti industrial and Business Park; 16 in Kasese industrial and Business Park; and 42 in Mbarara SME Park. “The total factories in Uganda are today 4, 900,” he said.