Kampala, Uganda | THE INDEPENDENT | The World Bank spells a gloomy picture of Uganda’s economy this year, urging the government to mind its spending plans and increase the domestic revenue mobilization.
The 16th Uganda Economic Update shows that Uganda’s economy will contract by 1 percent in the calendar year 2020, down from about 7 percent that was posted for the year 2019.
The report mainly attributes this to the drastic fall in tourism revenues especially between March and September when there was a ban on international travel and restrictions on domestic travel as a result of the Covid-19 lockdown.
According to the report, the performance of the economy will also be affected by the decline in remittances that are estimated to have fallen by more than half, while the foreign direct investments for the year dropped from US$ 1.25 to US$ 950 million.
With the global economy projected to continue contracting, the Bank expects that more than 90% of the world’s economies will have experienced a recession by the end of the year. This will have lagging effects on remittances, FDIs, tourism and export revenues to countries like Uganda.
The Bank also says Uganda should hope that oil prices continue to rise so that it encourages oil investors in the industry to make investment decisions towards the commercial development of oil and gas.
World Bank Senior Economist, Richard Walker says the discovery of a vaccine against Covid 19 will help tame the economic decline, but they remain worried over the high borrowing rates, the possible effects of the general elections and poor budget management.
The 16th report under the theme: “Investing in Uganda’s Youth” reviews the adequacy of Uganda’s policies on alleviating the plight of the youth in the country.
The report is of the view that as the government invests in the human resource capital mainly in health and education sectors, the resources aimed at immediate creation of jobs should be focused on agriculture and innovation, saying agriculture is recovering faster.
Tony Thompson, the World Bank country manager warns that Uganda must prudently invest its declining resources to ensure a balanced economic growth.
However, the chairperson of the Uganda Women Entrepreneurs Association Ltd, UMEAL, Angela Bageine says the importance of agriculture to the economy is being affected by the education sector which has steadily abandoned teaching it at lower levels.
While the report hails Uganda’s expansion of the educational opportunities for the youth, including investing in structures, there is an immediate need to invest in the quality of education so that the graduates can be employed.
Diana Sekaggya, the education specialist at the World Bank Office in Uganda says that even the productivity of those in employment is relatively low due to the lack of adequate education.
The National Planning Authority Director for Development Planning, Asuman Guloba says Uganda’s youth structure is very complex and multiple approaches are needed to tackle the youth employment and education question.