The Independent Uganda: You get the Truth we Pay the Price
The World Bank projects that poverty will keep falling through 2026 and 2027, extending a trend that resumed as growth picked up
Kampala, Uganda | THE INDEPENDENT | Uganda is positioning itself for another phase of strong economic expansion as policymakers seek to lock in recent gains while tightening the public purse and accelerating reforms in agriculture, a sector seen as critical to long-term growth.
The economy expanded by an estimated 6.3% in the 2024/25 financial year, up from 6.1% a year earlier, according to the World Bank’s new Uganda Economic Update: Cultivating Prosperity Through Agro-Industrialisation. Growth is expected to remain above 6% over the medium term, supported by resilient domestic demand, steady investment and improving external balances.
Household consumption is forecast to strengthen further as inflation stays low and incomes recover, while public investment and private sector activity are expected to continue underpinning output. Agriculture, industry and services are all set to contribute, helped by sustained food production, a gradual expansion in manufacturing and a continued rebound in tourism.
Poverty on decline
The World Bank projects that poverty will keep falling through 2026 and 2027, extending a trend that resumed as growth picked up. But officials face a narrowing margin for error as fiscal pressures intensify. Budget deficits are expected to shrink only gradually, while debt-servicing costs will remain elevated in the near term, increasing the urgency of fiscal consolidation.
Uganda’s 2025/26 budget signals a shift toward tighter spending control and stronger domestic revenue mobilisation, with a greater share of resources earmarked for education, health and infrastructure. The strategy aims to preserve growth while restoring fiscal buffers that have been eroded by higher spending and rising interest costs.
Over the medium term, fiscal and external balances are expected to improve as election-related expenditures fade, exports remain robust and foreign direct investment stays resilient. A more significant boost could come later in the decade, when oil revenues are projected to start flowing from 2027, easing financing constraints if managed prudently.
Inflation is expected to remain contained, anchored by cautious monetary policy and relatively stable global commodity prices. That outlook should support business confidence and investment planning, reinforcing Uganda’s growth trajectory.
Key obstacles
Risks remain skewed to the downside. Delays in oil sector development, slippage on fiscal reforms or a sharper-than-expected tightening in global financial conditions could weigh on growth. A further decline in external development financing would also limit policy flexibility.
Climate risks are an increasingly important concern. More frequent droughts, floods and pest outbreaks threaten agricultural output and rural incomes, leaving growth and poverty reduction vulnerable to weather shocks in an economy where most of the poor depend on rain-fed farming.
That vulnerability is shaping Uganda’s push toward agro-industrialization, which policymakers see as the next engine of expansion. Agriculture remains the country’s largest employer and a key source of exports, but productivity lags behind regional peers, limiting its contribution to income growth.
The World Bank says closing that gap will require faster adoption of modern inputs, climate-smart technologies and irrigation, alongside sustained investment in rural roads, energy and digital connectivity. Stronger institutions and clearer policies are also needed to crowd in private capital and improve coordination across the sector.
Access to finance is likely to remain a binding constraint unless new instruments gain scale. Officials and development partners are expected to expand blended finance, insurance and value-chain lending, using digital platforms to lower risks and costs.
Uganda’s outlook, then, is one of measured optimism. Growth is set to stay strong and inflation low, with poverty on a downward path. Whether those gains endure will depend on the government’s ability to deliver fiscal discipline and turn agro-industrial ambitions into investable opportunities.
