For decades, Uganda's economy suffered from devastating economic policies and instability, leaving Uganda as one of the world's poorest countries. The country has commenced economic reforms and growth has been robust. In 2008, Uganda recorded 7% growth despite the global downturn and regional instability.
Uganda has substantial natural resources, including fertile soils, regular rainfall, and sizable mineral deposits of copper and cobalt. The country has largely untapped reserves of both crude oil and natural gas. While agriculture accounted for 56% of the economy in 1986, with coffee as its main export, it has now been surpassed by the services sector, which accounted for 52% of percent GDP in 2007. In the 1950s the British Colonial regime encouraged some 500,000 subsistence farmers to join co-operatives. Since 1986, the government (with the support of foreign countries and international agencies) has acted to rehabilitate an economy devastated during the regime of Idi Amin and the subsequent civil war. Inflation ran at 240% in 1987 and 42% in June 1992, and was 5.1% in 2003.
Between 1990 and 2001, the economy grew because of continued investment in the rehabilitation of infrastructure, improved incentives for production and exports, reduced inflation and gradually improved domestic security. Ugandan involvement in the war in the Democratic Republic of the Congo, corruption within the government, and slippage in the government's determination to press reforms raise doubts about the continuation of strong growth.
In 2000, Uganda was included in the Heavily Indebted Poor Countries (HIPC) debt relief initiative worth $1.3 billion and Paris Club debt relief worth $145 million. These amounts combined with the original HIPC debt relief added up to about $2 billion. In 2006 the Ugandan Government successfully paid all their debts to the Paris Club, which meant that it was no longer in the (HIPC) list. Growth for 2001–2002 was solid despite continued decline in the price of coffee, Uganda's principal export. According to IMF statistics, in 2004 Uganda's GDP per capita reached $300, a much higher level than in the 1980s but still at half the Sub-Saharan African average income of $600 per year. Total GDP crossed the 8 billion dollar mark in the same year.
Economic growth has not always led to poverty reduction. Despite an average annual growth of 2.5% between 2000 and 2003, poverty levels increased by 3.8% during that time. This has highlighted the importance of avoiding jobless growth and is part of the rising awareness in development circles of the need for equitable growth not just in Uganda, but across the developing world.
With the Uganda securities exchanges established in 1996, several equities have been listed. The Government has used the stock market as an avenue for privatisation. All Government treasury issues are listed on the securities exchange. The Capital Markets Authority has licensed 18 brokers, asset managers and investment advisors including names like: African Alliance Investment Bank, Baroda Capital Markets Uganda Limited, Crane Financial Services Uganda Limited, Crested Stocks and Securities Limited, Dyer & Blair Investment Bank, Equity Stock Brokers Uganda Limited, Renaissance Capital Investment Bank and UAP Financial Services Limited. As one of the ways of increasing formal domestic savings, pension sector reform is the centre of attention (2007).
Uganda traditionally depends on Kenya for access to the Indian Ocean port of Mombasa. Recently, efforts have intensified to establish a second access route to the sea via the lakeside ports of Bukasa in Uganda, and Musoma in Tanzania, connected by railway to Arusha in the Tanzanian interior and to the port of Tanga on the Indian Ocean. Uganda is a member of the East African Community and a potential member of the planned East African Federation.
Uganda has a large diaspora – residing mainly in the United States and the United Kingdom. This diaspora has contributed enormously to Uganda’s economic growth through remittances and other investments (especially property). According to the World Bank, in 2010/2011 Uganda got $694 million in remittances from Ugandans abroad, the highest foreign exchange earner for the country. Uganda also serves as an economic hub for a number of neighbouring countries like the Democratic Republic of Congo, South Sudan and Rwanda.
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Famous quotes containing the word economy:
“The aim of the laborer should be, not to get his living, to get a good job, but to perform well a certain work; and, even in a pecuniary sense, it would be economy for a town to pay its laborers so well that they would not feel that they were working for low ends, as for a livelihood merely, but for scientific, or even moral ends. Do not hire a man who does your work for money, but him who does it for love of it.”
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