The World Bank has projected Uganda’s economy to grow faster by 6.2% in FY24/25, accelerating to 7% in the medium term, driven by investments in oil and gas. This growth is slightly higher than earlier forecasts of 5.8% amidst heightened geopolitical tensions that will continue to exert upward pressure on prices, resulting in a much tighter monetary policy than anticipated six months ago.
According to the global bank’s 23rd Uganda Economic Update released in Kampala on June 27, aggregate economic growth in Sub-Saharan Africa (SSA) is expected to accelerate from 2.6% in 2023 to 3.4% in 2024, driven by growth in private consumption.
At least three of SSA’s ten largest economies Côte d’Ivoire, the Democratic Republic of the Congo, and Kenya are projected to post growth rates exceeding their long-term average. Growth is expected to accelerate in at least 70% of SSA economies during 2024.
However, sustained conflicts, particularly in Sudan, as well as new outbreaks of violence in Chad and Niger, are undermining regional stability. “The ongoing construction of an estimated US$20 billion in oil-related infrastructure in Uganda will keep economic activity strong until oil production takes off in 2025,” the report states. “However, the start of oil production in 2025 will hinge on the timely acquisition of the remaining 60% of pipeline financing, which is expected to come from external creditors.”
“The preparation of the Tilenga and Kingfisher oil-drilling project areas and investments in supportive infrastructure both within and outside the oil-producing region, including the Kabaale International Airport and the 1,400km East Africa Pipeline, will further boost construction and related activities,” the report adds.
The report further notes that while the country’s debt distress remains moderate, debt vulnerability could possibly increase due to an uncertain external outlook, environmental shocks, inconsistent reform efforts, delays in oil production, and the finite capacity of commercial banks to provide deficit financing.
