Uganda: Economy

Since assuming power in early 1986, Museveni's government has taken important steps toward economic rehabilitation and adopted policies that have promoted rapid economic development. The country's infrastructure--notably its transportation and communications systems that were destroyed by war and neglect--is being rebuilt. Recognizing the need for increased external support, Uganda negotiated a policy framework paper with the International Monetary Fund (IMF) and the World Bank in 1987. It subsequently began implementing economic policies that resulted in a consistent pace of economic growth. Uganda was the first country to be eligible for the Heavily Indebted Poor Countries (HIPC) initiative and had virtually all of its foreign debts forgiven by the IMF, World Bank, and major donors. Growth rates in fiscal years 2008 and 2009 were 8.7% and 7.1%, respectively. Inflation increased from 7.7% in 2007 to 14.2% in 2009, well above the government's annual target average of 5%, declined dramatically in 2010 as food crop prices decreased, and increased sharply again in the first part of 2011. The Ugandan shilling depreciated by approximately 11% in the first half of 2011.

The service sector was the largest contributor to GDP in 2009 (at 48%). Manufacturing and agriculture each contributed 23%. Despite their dwindling shares of Uganda’s GDP, the agriculture and fishing sectors provide approximately 80% of employment in Uganda. Uganda is Africa's second-leading producer of coffee, which accounted for about 23% of the country's exports in 2007-2008 and 17.9% in 2009. Exports of nontraditional products, including apparel, hides, skins, vanilla, vegetables, fruits, cut flowers, and fish, are growing, while traditional exports such as cotton, tea, and tobacco continue to be mainstays.

Most industry is related to agriculture. The industrial sector has been rehabilitated and resumed production of building and construction materials, such as cement, reinforcing rods, corrugated roofing sheets, and paint. Domestically-produced consumer goods include plastics, soap, cork, beer, and soft drinks.

Oil experts estimate Uganda’s Albertine Basin has at least two billion and as many as six billion barrels of recoverable oil, positioning Uganda to become one of sub-Saharan Africa’s top oil producers and potentially doubling current government revenues within 10 years. Most of Uganda’s known oil reserves are located along Lake Albert and the D.R.C. border, in one of Africa’s most ecologically sensitive areas. Uganda and several private oil companies hope to begin small-scale production as early as 2012. Potential construction of a domestic oil refinery and export pipeline are contingent upon ongoing feasibility studies and negotiations between oil companies and the government.

Roads are the most commonly used transportation infrastructure in Uganda, accounting for more than 90% of cargo freight and passenger transportation. Uganda has about 78,100 kilometers (48,529 mi.) of roads. Only 3,000 kilometers (1,864 mi.) are paved, and most roads radiate from Kampala. The country has a 321 kilometer (200 mi.) rail network, much of which is not currently in use. Uganda's road and rail links to Mombasa serve some of the transportation needs of the neighboring countries of Rwanda, Burundi, and parts of D.R.C. and Sudan. Entebbe International Airport is on the shore of Lake Victoria, some 32 kilometers (20 mi.) south of Kampala.

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