Uganda is poised for higher growth rates - economist

Kampala. Ugandans feeling an increment of returns are getting fewer as production and demand have reduced.
The result has been a growth rate of 3.9 per cent in 2016/17, which was far lower than expected.
Since 2013, the growth out-turn has been much lower than expected, leading some to describe it as a “bad economy.”
However, there seems to be level optimism that higher growth rates will return to Uganda.

“Uganda’s track record for growth remains strong. For us, the long-term factors for higher growth have not changed, which is what we see. As opposed to focusing on the current slow growth, the prospects for higher growth are going to be boosted by investment limiting barriers,” explained Mr Arthur Kamp, the chief economist at the Sanlam Group, on the sidelines of a Sanlam Uganda breakfast on the Ugandan economy.
This projection is informed by the possible returns from the infrastructure projects that the government is pursuing.
The International Monetary Fund projection is that the Ugandan economy could return to rates of 5.5 per cent in 2017/18 anchored on infrastructure projects meant to prepare Uganda for oil production.

According to Mr Kamp, there is going to be renewed appetite for Foreign Direct Investment in Uganda.
He did, however, point out that the major challenge for developing countries is the decision on debt accumulation.
Uganda’s public debt is expected to peak at 44 per cent of GDP at 2020/21 and then thereafter start declining. The current level is estimated at 34 per cent of GDP. Mr Kamp explained that external debt will at some point have to reduce as domestic revenues grow.
“It is all about that money being spent efficiently. For Uganda, the government to ensure sustainable debt levels, the real interest rate on the debt should be lower than the growth rate in the economy,” he added.

According to former finance minister Maria Kiwanuka, dividends of the infrastructure investments - built using borrowed money - will be visible if the private sector makes use of them.
“We, in the private sector, have to make that infrastructure work for us because that is what the government does – facilitate business. What is lacking in Uganda are commercial banks taking the lead in financing the private sector at affordable rates,” she said.
Concerns have been previously raised by the World Bank that government is getting a negative return on investment for the infrastructure projects it has completed.

Growth trends
The growth rate trends Uganda has experienced in the recent past
2014/15 – 5 per cent
2015/16 – 4.8 per cent
2016/17 – 3.9 per cent
2017/18 – 5.5 per cent (projection).

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