Agro-industrialisation, tourism and mineral devt to expand Uganda’s economy

KAMPALA, June 14, 2024 – Uganda’s growth strategy for the 2024/2025 financial year is anchored on agro-industrialisation, tourism development, mineral development including oil and gas, and technology and innovation, the Minister of Finance, Planning and Economic Development, Matia Kasaija has said.

“These are the anchors that are going to propel Uganda to a US$ 500 billion economy in the next one-and-a-half decades,” said Kasaija while delivering the budget speech during a plenary sitting of Parliament presided over by Speaker, Anita Among, at Kololo Ceremonial grounds on Thursday.

Kasaija explained that to achieve a US$500bln economy, government must among others, double the size of the growth domestic product[GDP] every five years and raise per capita GDP six-fold from the current US$1,146 to about US$7,000 in the financial year 2039/2040.

Another strategy, according to Kasaija is doubling the level of savings in the economy from 20 percent of GDP to 40 percent in the year 2040, as well as raising the share of exports in GDP from 12 percent in 2022 to 50 percent.

The minister however said that the growth prospects face some risks that will need to be mitigated.

“These include; climate change affecting agricultural production and infrastructure, regional and global geopolitical tensions, high interest rates which constrain access to affordable debt and fluctuations in global commodity prices,” said Kasaija.

To minismise the effects of these risks, Kasaija said that government is implementing climate change adaptation measures, exploring cheaper sources of financing including climate finance and ensuring frugality in government expenditure.

Kasaija also outlined priority areas in support of the anchor sectors to drive rapid growth of the economy which include; investing in the citizenry through education, health and water, sanitation and hygiene, which have been allocated Shs 10.204trn in the coming financial year.

Other areas are peace and security which has been allocated Shs 9.107trn, and maintenance of roads as well as rehabilitation of the metre gauge railway and construction of the standard gauge railway, allocated Shs 4.989 trillion.

Kasaija added, “Investing in wealth creation initiatives, including commercial agriculture, value addition, the Parish Development Model, Emyooga, Agriculture Credit Facility, tourism, science based research, youth skilling, export promotion programme, and GROW project, I have allocated Shs 2.641 trillion.”

He said that the guiding principles of the Shs 72.136trn 2024/2025 budget  included strengthening domestic revenue mobilisation, strengthening public finance management to ensure accountability and frugality, and avoiding misuse of public resources; and borrowing for only strategic high impact interventions.

He reiterated that domestic revenue collection is projected at Shs 31.982trn, wherein he called for reduced reliance on borrowing and external debts.

He said that as at the end of December 2023, Uganda’s debt stood at Shs 93.38trn, out of which Shs 55.37 was external debt.

“I call upon all of you colleagues and fellow Ugandans to render Uganda Revenue Authority and other revenue-collecting institutions the necessary support to mobilise the revenue required to meet its targets for financial year 2024/2025. We must raise more revenue,” said Kasaija.

He also made a reassurance that the economy has fully recovered from various shocks that have impacted it in the past four years, saying that GDP is projected to grow by 6 percent in the 2023/2024 financial year, compared to the 5.3 percent in the 2022/2023 financial year.

“As a result of this robust growth, the size of the economy is now estimated at Shs 202 trillion, up from Shs 184.3 trillion in nominal terms,” Kasaija said.

He added that it is projected that in the next financial year, Uganda’s GDP will further expand to Shs 225.5 trillion.

According to Kasaija, this growth will be driven by among other factors; increased oil and gas activities, growth in exports supported by the increase in regional trade, intra-Africa trade and harnessing existing and new partners in the Middle East and Asia.

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