Overview:

The suggestions are contained in the 19th edition of the Uganda Economic Update which was released in Kampala on Thursday, 30 June 2022.

The World Bank has urged the government of Uganda to adopt social protection systems to support the vulnerable and ensure cautious monetary tightening in the face of rising inflationary pressures if it is to achieve sustainable economic recovery.

The World Bank has also urged Uganda to maintain prudent fiscal and debt management, ensure better public investment management and rationalize public expenditure to support faster, sustainable, and inclusive growth by investing strongly in human capital development.

The suggestions are contained in the 19th edition of the Uganda Economic Update which was released in Kampala on Thursday, 30 June 2022.

Speaking at the release of the report, Mukami Kariuki, the World Bank Country Manager for Uganda, said the above measures are necessary to arrest the deteriorating economic situation occasioned by Covid-19 and worsened by the global increase in commodity prices.

“Rising commodity prices and the overall increase in cost of living pose new risks to livelihoods, that had just begun recovering from the effects of COVID-19. These and other shocks are threatening to stall socio-economic transformation, thus increasing the likelihood of the people falling deeper into poverty,” she said.

 “It is therefore crucial for the Government of Uganda to adopt targeted interventions to support the vulnerable while managing debt and rising inflation,” she added.

The Uganda Economic Update, which is a biannual analysis of Uganda’s near-term macroeconomic outlook, estimates growth at 3.7 percent in 2022, which is lower than pre-COVID-19 projections of over 6 percent.

“Uganda’s gross national income per capita stood at about $840 in FY21 and has increased only marginally in the year since. Real gross domestic product grew by 4.3 percent in the first half of 2022 supported by a strong and speedy recovery of the service sector upon the opening of the leisure and entertainment industry, accommodation, and food services, as well as sustained buoyancy of the information and communications sector,” the report states.

 The report projects a 5.1 percent growth rate in FY23, 0.5 percentage point below the December 2021 forecast, increasing to about 6 percent in FY24

The economic update notes that fiscal consolidation is needed to rein in debt and to create the necessary space to respond to shocks that could hurt or stall recovery.

“This can be done through better Public Investment Management (PIM) building on important reforms that have been undertaken by the government. The benefits of these efforts are starting to show,” the report states.

Ms  Rachel Sebudde, World Bank Senior Economist and the lead author of the Uganda Economic Update.

“Notwithstanding the progress achieved in the PIM process, key challenges remain. These include low execution rates on donor and own-budget projects; long implementation delays; cost- and timeoverruns on projects; and high commitment fees in the case of non-concessional externally funded projects. Overall, the improvements around the administrative processes of the pre-investment phase of PIM are being discounted by challenges in critical areas, including project prioritization and selection, budgeting, and implementation,” the report adds.

Ms  Rachel Sebudde, World Bank Senior Economist and the lead author of the Uganda Economic Update, said “Uganda has a great opportunity to harness Public Investment Management by making sure that beyond preparing good projects, effort is also directed at ensuring that they are efficiently funded, implemented, monitored, operated, maintained, and evaluated. These steps ensure that the country can reap the maximum value of public investments.”

“Strategic capacity building for 2 government officials is crucial as it will improve the Ministries, Departments and Agencies’ effectiveness across the PIM cycle,” she added.