Uganda’s growing economy: But is it working for ordinary Ugandans?

On paper, Uganda’s economy is stable and growing. Key indicators show promise: economic growth is steady, inflation is contained, the Ugandan Shilling is relatively strong against the dollar, and confidence among businesses is improving.

But beneath these impressive numbers lies a tougher reality—one that raises a pressing question: Is the economy working for ordinary Ugandans?

A Disconnect Between Growth and Everyday Life

Despite projections by the African Development Bank of 6–6.5% growth in FY 2024/25—driven by foreign investment and the country’s future oil production—millions of Ugandans remain trapped in poverty. President Museveni’s own remarks during his Parish Development Model (PDM) tour in Ankole laid bare this contradiction.

“They told me you made a relationship with poverty… We shall keep sending you money, but I beg you to get out of poverty,” the President said in February, expressing dismay that some people have never handled Shs1 million.

His comments came after decades of government-led poverty eradication efforts that have soaked up billions of shillings but delivered limited and uneven results—many of which are not transparently audited or evaluated.

The Micro Picture: Jobs, Prices, and Inequality

For many households, the high-level economic data feels disconnected from reality. The cost of essential goods like maize, rice, and sugar has continued to inch upwards. Even when overall inflation remains within the 5% central bank target, the pinch of higher prices is real and growing—particularly in food, fuel, and services like transport and hospitality.

Yes, business confidence is improving—April’s Business Tendency Index rose to 59.32 from 58.32 in March, and Purchasing Managers’ Index (PMI) also went up—but these gains are not evenly distributed. Most small business owners, especially in rural areas, operate in fragile environments where credit is expensive, infrastructure is poor, and markets are inconsistent.

And while interest rates on shilling-denominated loans dropped slightly—from 18.76% to 17.74%—that is still far too high for most entrepreneurs and small businesses to access credit.

Who’s Really Feeling the Growth?

Uganda’s GDP might be expanding, but growth is not inclusive. Human capital development remains weak, inequality is widening, and millions survive on subsistence farming or informal labour, where incomes are irregular and often too low to cover basic needs.

The structure of the economy—heavy on low-productivity sectors and light on value addition—means that even strong exports (which jumped by 40.6% in March) don’t always translate into jobs or income security for the average Ugandan.

Uganda’s export base is still dominated by raw commodities like coffee, cocoa, and fish. Without deeper industrialisation and a shift to processing, much of the value created still benefits foreign buyers more than local producers.

Poverty’s Roots: Structural and Institutional Failures

Uganda’s economy suffers from what economists call “structural rigidities.” Many citizens rely solely on manual labour or small patches of land, with little access to capital, technology, or modern tools. As the National Planning Authority notes, Uganda is still “moving dirt with its hands when it could be operating bulldozers.”

Adding to the burden are red tape, a punitive tax regime, delayed payments from government to contractors, and conflicting regulations—all of which frustrate private investment and drain working capital from the economy.

According to the Ministry of Finance, government arrears have tied up at least Shs13.8 trillion in private sector funds—money that could otherwise fuel business growth and employment.

Debt, Deficits, and a Fragile Buffer

The government continues to spend more than it earns. In April, it ran a fiscal deficit of Shs1.8 trillion—far above the Shs1.2 trillion projection. While some of this overspending came from delayed capital projects being rushed at year-end, it still points to fiscal indiscipline.

Uganda’s debt levels are also rising. By December 2024, the country’s external debt stood at $14.6 billion (Shs53.75 trillion), nearly matching domestic debt at $14.46 billion (Shs53.22 trillion). Meanwhile, foreign reserves have declined, from $4 billion two years ago to $3.6 billion, making the economy more vulnerable to external shocks.

A Growing Economy That Still Feels Distant

Despite improvements in trade, stable currency, and positive sentiment among large businesses, the question remains: Where is the impact for the average Ugandan? For a mother in Pader, a boda rider in Masaka, or a vegetable seller in Mbale, economic growth may be happening, but it’s not yet touching their wallets.

Until Uganda addresses its deep structural challenges—inequality, poor governance, a fragile education system, weak healthcare, corruption, and underinvestment in science and technology—economic growth will remain a story told in numbers, not in lived experiences.

As economist Fred Muhumuza puts it:

“Uganda doesn’t need more subsidies or feel-good statements. It needs smarter value chains, access to affordable capital, and institutional reforms that reward productivity and innovation.”

In short, Uganda’s economy is growing—but for many, it still isn’t working.