Uganda’s commitment to inclusive growth has taken center stage in the country’s pursuit of social cohesion, poverty reduction, economic resilience, and improved governance. Inclusive growth, as defined by the World Bank, surpasses mere economic expansion, and instead focuses on the equitable distribution of resources, opportunities, and benefits. By driving sustainable development, enhancing human capital, expanding market opportunities, and fostering social trust, inclusive growth sets the stage for a more prosperous and equitable nation.
As Uganda embraces the fiscal year 2023/24, the government’s budget is crucial in shaping the country’s path toward sustainable and equitable development. Despite facing formidable challenges including the global Covid-19 pandemic, geopolitical tensions like the Russia-Ukraine conflict, and weather-related adversities like droughts, landslides, and floods, Uganda has achieved remarkable progress. According to the latest World Bank data, Uganda has maintained an impressive average annual economic growth rate of 6.1% between 1986 and 2021. This year, the economy is projected to grow by 5.5%, surpassing last year’s 4.6% and outperforming the estimated 3.6% growth for sub-Saharan Africa in 2023.
However, Uganda still confronts persistent obstacles such as high poverty levels, regional disparities, and limited access to essential services. Notwithstanding these challenges, Uganda has made commendable strides in inclusive growth, significantly reducing the poverty rate from 56.4% in 1992/93 to 20.3% in 2019/20, as reported by the Ministry of Finance Planning and Economic Development. Nevertheless, income inequality remains a concern, with a Gini coefficient of 42.7 in 2019, as indicated by the World Bank. Furthermore, the overall unemployment rate has risen to 12% in 2021 from 8.8% in 2019/20, with a disproportionate impact on the youth, as revealed by the Uganda Bureau of Statistics (UBOS) abstract (2022). Despite improvements in literacy rates, reaching 76% in 2021/22, and increased primary school enrollment, access to quality education and healthcare continues to be problematic, particularly in rural areas.
Uganda has also achieved notable financial inclusion progress with 78% of adults having access to formal and informal financial services. However, efforts are being made to reduce the remaining 22% of the population lacking access. The budget for 2023/24 prioritizes initiatives such as the Parish Development Model, which aims to empower local communities and reach marginalized populations. Additionally, the budget emphasizes the capitalization of the Uganda Development Bank and other financing schemes.
This strategic move will facilitate the provision of affordable long-term capital and favorable interest rates to support the growth of agriculture, agro-processing, and manufacturing sectors, thereby bolstering private sector development. Recognizing the importance of small and medium enterprises and low-income groups, the budget allocated funds for the Small Business Recovery Fund, Emyooga, and the Microfinance Support Centre.
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These initiatives will provide accessible credit options to these vulnerable groups, enabling them to recover, expand their businesses, and improve their livelihoods. Moreover, SMEs and large enterprises will also benefit from the budget’s provisions through funding opportunities offered by the Uganda Development Bank. By ensuring financial support for enterprises of varying sizes, the government aims to foster a thriving business environment and create opportunities for sustained economic growth.
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The unveiling of Uganda’s fiscal year 2023/24 national budget, amounting to Ush. 52.73 trillion, signifies a crucial leap in the country’s resolve to address social and economic obstacles while fostering equal opportunities. Through strategic resource allocation and a strong focus on key sectors, this budget charts a course for sustainable development that elevates the well-being of Ugandans and establishes a robust foundation for an inclusive future. Priority areas encompass the full monetization of Uganda’s economy, including commercial agriculture, industrialization, service expansion, digital transformation, and enhanced market access.
Human capital development takes precedence, with Ushs. 8.470 trillion allocated to education and healthcare to bridge gaps and improve overall well-being. Infrastructure development, spanning railways, airports, roads, energy, and ICT, is prioritized to enhance connectivity and stimulate economic growth. The budget exemplifies a commitment to transforming the agricultural sector through agro-industrialization and inclusive measures targeting women, youth, and individuals with disabilities. Overall, this budget charts a path of inclusive growth, effectively addressing challenges, promoting equality, and paving the way for Uganda’s prosperous and inclusive society.
Bob Twinomugisha is a Senior Economist-Macroeconomics and Trade, with the Uganda Development Bank Ltd