Agriculture
The agricultural sector is important to the Ugandan economy in that it employs approximately 69% of the population and contributes about 26% to the GDP in 2015.
The sector has the potential to transform the economy of Uganda in general and that of specific sectors such as manufacturing and services. The government has increased allocations to the agricultural sector in the 2016/17 budget to UGX 832.42 billion representing a 65% increase.
The main agricultural crops include coffee, grains, sugarcane, cotton and tea. The government identifies agriculture as a vital contributory growth sector capable of reducing poverty and stimulating economic growth.
Developments going forward will focus on increasing production and productivity, improving household food security, increasing farmers’ income and increasing the value of exports.
Industrialisation / manufacturing
In Uganda, manufacturing is dominated by Micro, Small and Medium Enterprises (MSME) contributing approximately 20% of GDP, generating over 80% of manufactured output and accounts for approximately 90% of the entire Private Sector.
The government through the National Development Plan has come up with a MSME policy that aims to tackle challenges facing the sector such as lack of information, standardization and product certification, legal and institutional challenges.
Priority actions that will create a competitive export oriented industrial sector, improve competitiveness and market access for Uganda’s goods and services include the establishment of industrial and business parks. This will create jobs and add value to locally available raw materials. Infrastructure and utilities have also benefited from the setting up of industrial parks roads, waterways and power lines being built to investors requirements.
Banking
The effects of an aggressive monetary policy adopted in 2015 by the Government of Uganda (GoU) have been felt within the commercial banking sector. After maintaining the Central Bank Rate (CBR) at 11 percent from June 2014, the Bank of Uganda (BoU) increased the CBR to 17% in October 2015. Interest rates increased in line with this and this is expected to have a negative impact on asset quality and uptake of private sector credit.
According to Business Monitor International (BMI) the sector is adequately capitalised and much better able to withstand credit shocks thanks to regulatory measures taken in recent years by BoU.
There is a risk of crowding out of the private sector as commercial banks are more likely to lend to the government during periods of high interest rates.
Healthcare and Pharmaceuticals
In the 2015/16 fiscal year, priority was on the reduction in morbidity and mortality rates from causes of ill health and premature death, and narrowing disparities in access to health services. This was via improving quality access to health by constructing and equipping hospitals and health centers.
The health sector received UGX 1,270.8 billion during this fiscal year a reduction of UGX 6 billion from the previous year. According to BMI, this still remains below the Abuja Declaration target of 15% of total government expenditure.
The government relies on aid from donors to fund the healthcare sector with 40% of healthcare spending funded from external sources.
In 2014, local pharmaceutical manufacturers received government approval to be protected from foreign competition in order to expand the population’s access to medicines. This will lead to a reduction in Uganda’s extreme import reliance and has the potential to expand the population’s access to lower-value medicines.
Rail
Under the railway sector, the Ugandan Government in collaboration with other Partner states within the East African region is undertaking efforts to revitalize the railway transport system. Government will fast track the construction of the Standard Gauge Railway (SGR) throughout Uganda.
In 2016, construction is scheduled to start on the 1,614km standard gauge railway (SGR) line in Uganda, which aims to connect the country with its East African neighbours Rwanda, Kenya, the Democratic Republic of Congo and South Sudan. Also known as the Southern Corridor Railway, 90% of the project will be funded by the Export-Import Bank of China, with the USD3.2 billion construction to be undertaken by China Harbour Engineering Company. It will stretch from western Uganda’s Kasese district via Kampala, to the border town of Malaba, to meet Kenya’s own SGR (under construction and due for completion in 2017). It is due for completion in 2018.
Airport
In August 2015, the Ugandan parliament approved a loan of nearly USD 325 million from the China Exim Bank to upgrade Entebbe International Airport. Parliament approved the loan’s initial tranche of USD 200 million to cover first phase of the project, on condition the remaining loan amount of USD125 million will come in FY2018/19 for the second phase of the project. Work is expected to start in June 2016.
