World Bank tells Uganda to invest more in people to achieve growth targets

KAMPALA | The World Bank has urged Uganda to significantly increase investment in education and healthcare, warning that inadequate spending on human capital could undermine the country’s ambition of growing into a $500 billion economy.

Launching the new Uganda Country Partnership Framework (CPF) and Public Finance Review (PFR) in Kampala yesterday, the World Bank Country Director for Uganda, Kenya, Rwanda and Somalia, Mr Qimiao Fan, said Uganda’s Tenfold Growth Strategy will require a major shift in public spending towards developing a healthier and more skilled workforce.

The lender recommends more than tripling public expenditure on human capital while increasing investment in education and health to improve productivity and support private sector growth.

“The Public Finance Review proposes a human capital compact which involves more than tripling human capital spending and rebalancing investment in public health and education,” Mr Fan said.

The recommendation comes as the government has allocated Shs13.5 trillion, about 16 percent of the 2026/27 national budget, to the Human Capital Development programme. By comparison, debt servicing will consume Shs33 trillion.

According to the World Bank, a child born in Uganda today is expected to realise only 39 percent of his or her productive potential because of gaps in education, healthcare and nutrition.

The lender also cautioned that Uganda should not expect oil revenues alone to transform the economy.

Mr Fan said commercial oil production would generate significant additional revenue but would not provide the fiscal space required to finance all the country’s development priorities.

“The question after the oil era will not be how big Uganda’s economy became, but what permanent productive human and physical capital the country built with those resources,” he said.

The Public Finance Review also identifies inefficiencies in government spending as a major obstacle to economic growth.

According to the report, about one-third of public investment in infrastructure is lost because of poor planning, project delays and inadequate maintenance.

“Currently, 33 percent of every shilling invested in infrastructure is lost in poor planning, project delays and weak maintenance,” Mr Fan said.

The World Bank said improving the efficiency of public investment would free up resources for productive sectors and strengthen the country’s competitiveness.

It also urged government to broaden the tax base rather than increase tax rates, improve procurement systems, reduce domestic borrowing and reprioritise expenditure towards investments that create jobs and support private enterprise.

The report recommends shifting public spending in agriculture, tourism, mining, including oil and gas, and science, technology and innovation away from subsidies to individual firms and towards public goods that lower the cost of doing business.

The recommendations form part of the World Bank’s new 10-year Country Partnership Framework, which seeks to mobilise $3.8 billion in public and private investment to support Uganda’s economic transformation.

Finance Minister Henry Musasizi said the government was implementing reforms to strengthen fiscal management, improve domestic revenue mobilisation and ensure prudent management of future oil revenues.

He said the reforms are intended to support the country’s target of expanding the economy to $500 billion while maintaining fiscal discipline and promoting private sector-led growth.