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Not yet time for Uganda’s lower-middle-income status

World Bank urges a more gender inclusive recovery at latest economic update

Kampala, Uganda | ISAAC KHISA | Uganda’s growth is expected to be between 3.5% and 4.0% in Fiscal Year (FY) 22 and about 5.5% in FY23; both projections are about one percentage lower than the June 2021 forecast, according to the latest edition of the Uganda Economic Update (UEU).

The economic recovery in FY21 tapered off in early FY22 mainly due to the more severe second COVID-19 wave in mid-2021 and the related lockdown measures.

The 18th Uganda Economic Update dubbed ‘Putting Women at the Center of Uganda’s Economic Revival’ says that although growth rebounded since the start of the COVID-19 crisis – driven by a pick-up in private consumption and investment, and a recovery in exports – the country is still likely to face a stop-start recovery until there is wider coverage of the COVID-19 vaccine.

“To ensure an inclusive economic recovery, faster deployment and widespread coverage of the vaccine is critical,” said Mukami Kariuki, World Bank Country Manager for Uganda.It is encouraging to note that in January 2022, schools will be opened; and support to micro, small and medium enterprises has been prioritized to stimulate job creation. Staying the course will require sustained prudent and transparent fiscal and debt management.”

The update notes that there has been a rise in poverty and household vulnerabilities, widening of inequalities, and a significant threat looms to human capital development, especially in the education sector where schools have been fully or partially closed for a large part of the last two years.

“Even with higher growth prospects, per capita GDP will remain well below the target of the Third National Development Plan, meaning Uganda will now take longer to become a lower-middle-income country,” said Richard Walker, Senior Economist, and co-author of the UEU. “Significant uncertainty remains on the evolution of COVID-19; weather shocks are a perennial threat; while lower revenues, spending pressures and adjustments to the government’s debt profile could jeopardize Uganda’s hard-earned macroeconomic stability.”

On the upside, commodity prices have recovered, digital technologies and the digital economy continue to support new ways of operating and doing business, and the potential for Ugandan women to drive the recovery is enormous, but only if they have fair and equal opportunities to reach their full potential.

The UEU’s special focus this year is on women’s economic empowerment, which is essential to an integrated response to shorter-term recovery needs and longer-term actions that will address deeper gender inequalities and foster more inclusive and sustainable growth.

Jennifer Solotaroff, Senior Social Development Specialist, and co-author of the UEU said Uganda’s economic recovery will be faster, stronger, and more sustainable if it brings more women into the center of profitable economic activity.

Not investing in women deprives households and the economy of the contributions they would make and slows its transition out of agriculture,” she said.

Keep girls in schools and ease unpaid care work

The update urges Uganda to keep girls in school; invest in interventions to ease women’s unpaid care work responsibilities; create more time for women’s wage employment or entrepreneurship; pass and enforce laws protecting gender-equal rights for heirs and descendants to inherit land and other family assets; improve financial literacy among women, increase women’s access to formal financial services; meet women’s demand for more credit by passing laws prohibiting gender discrimination in access to credit; and promote alternative methods to establish women’s creditworthiness.

The benefits of investing in women’s marketable job skills and growth-oriented entrepreneurship will accrue not only to women, but to their households and, by extension, the whole of Ugandan society.

Commenting on the update, Betty Amongi, the Minister for Gender, Labour and Social Development said the government is committed to empowering the women and the vulnerable population to ensure that they contribute towards economic development.

She said the government is considering new fund in which money will be channeled to the district using the parish development model with which nearly 40% of it will go directly to women and youth.

Currently, the government is running various initiatives including the Uganda Women Entrepreneurship Fund, Youth Livelihood Fund and the Social Assistance Grants for Empowerment (SAGE) Programme.

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