Oil to grow economy by 11 percent, report shows

What you need to know:
- Ms Mukami Kariuki, the World Bank country manager for Uganda, says effective use of oil revenues to improve social protection, infrastructure, and human capital is crucial for sustained poverty alleviation.
A report by the World Bank Group Uganda has revealed that over the medium term, growth is projected to significantly accelerate to 10.8 percent in 2026 as oil production starts before returning to around six percent as the oil production plateaus.
Growth will also be driven by a recovery in tourism.
The report shows that anticipated oil revenues could help reduce poverty to 40.1 percent in 2026 from 41.3 percent in 2024.
However, the actual pace of poverty reduction will depend on how well households can manage and recover from financial shocks.
Ms Mukami Kariuki, the World Bank country manager for Uganda, says effective use of oil revenues to improve social protection, infrastructure, and human capital is crucial for sustained poverty alleviation.
Intensifying shocks and faltering momentum behind policy reform create challenges for sustaining economic growth and reducing poverty in Uganda.
The challenge of creating productive jobs for the almost one million working-age Ugandans entering the labour market every year is pressing.
Although the services sector constitutes a large share of GDP, it has created few jobs, mainly informal and low-skilled.
Two-thirds of the jobs are in the agriculture sector, which is prone to natural disasters, and climate shocks are becoming more frequent and severe, while adaptation remains limited due to low capacity.
To promote economic growth and reduce poverty over the medium term, the Ugandan economy needs to structurally transform and shift labour into more productive employment, the report notes.
Reforms should, firstly, stimulate private sector investments by reducing the cost of doing business, fostering access to finance, and promoting uptake of digital and other innovative technologies.
Secondly, the government could shift spending into social sectors and invest more in human capital, alongside measures to reduce inequality and strengthen resilience.
And, finally, the country needs to maintain prudent macroeconomic management alongside structural policies to both avoid real appreciation and loss of competitiveness once oil revenues start flowing in, and to build resilience to climate shocks.
Children born in the country today are likely to be 38 percent as productive when they grow up as they could be if they enjoyed complete education and full health.
Children who start schooling at the age of four are only expected to complete 6.8 years of school by their 18th birthday, compared to the sub-Saharan average of 8.3.
To compound matters, a child’s actual years of learning are 4.3, with 2.5 years considered “wasted” due to the poor quality of education.