A geranium farm in Kampala, Uganda

Economic situation Attractive location for business

Compared with other countries in the region, Uganda is characterised by an economy that is fairly market-oriented and liberal. The country is considered an attractive location for private sector investment. However, Uganda has not been very successful so far in attracting foreign direct investment.

Over the last ten years, the economic growth rate has varied between four and six per cent. After a significant slump during the COVID-19 pandemic, economic development has picked up again. However, there is a marked gap in prosperity between the North and the more prosperous South.

Some 70 per cent of Ugandans work in agriculture, with the majority of them only practising subsistence farming or supplying the local market. Agriculture merely accounts for 24 per cent of GDP. Nevertheless, the agricultural sector is the most important foreign exchange earner for the country. The main export has traditionally been coffee. Other export products are fish, flower cuttings, tea, cotton, tobacco, spices, fruit and vegetables, and pearls and gemstones. The country is hampered by its landlocked position: for international trade, Uganda has to rely on the transport infrastructure of neighbouring Kenya and Tanzania with their ports.

The planned oil extraction in the west of the country could boost development. The revenue could significantly reduce Uganda's dependence on external support and enable the country to reduce its high levels of public debt. The government has also made provision for the bulk of future new jobs in the raw materials sector and in supplier industries to go to local workers. However, it must be expected that commercial oil extraction will only begin in a few years' time.

As at: 28/03/2023