The World Bank in Uganda

Uganda’s growth is estimated to reach 6.0% in FY24 from 5.3% in FY23, despite global economic instability, geopolitical tensions, and regional conflicts. Growth is supported by favorable weather conditions, investments in the oil sector, and progress on implementation of the Parish Development Model (PDM). The first phase of the PDM – the new government strategy – established and fully capitalized 10,585 savings and credit cooperatives in FY23 and disbursed UGX877 billion (about $239 million) in loans to 880,000 households. The industrial sector (25% of the economy) remained the top contributor to growth, followed by services (44% of the economy). Thanks to an oil-related construction boom, Foreign Direct Investment (FDI) reached $2.3 billion during the first nine months of FY24.

Headline inflation declined to 3.2% on average in FY24 from 8.8% in FY23 and is below the target of 5.0%. This is due to declining food prices, monetary policy tightening, targeted fiscal consolidation, and relative stability in the exchange rate. Prices of food crops grew by only 3.3% in FY24 compared to 22.7% in FY23. Consistent with decreasing food inflation, a household phone survey in March 2024 showed a reduction in households affected by food price increases to 46% from 73% the previous year. Nonetheless, food insecurity remains a significant issue, particularly for the most vulnerable. Poverty projections for 2024 show that 4 out of 10 Ugandans are poor as measured by the $2.15/day international poverty line.

Growth is accelerating, supported by agriculture and services, and the outlook for FY25 is improving to 6.2%. Over the medium term, growth is projected to significantly accelerate to 10.8% in FY26 as oil production starts, and later return to around 6% as the oil production plateaus. Growth will also be driven by a recovery in tourism.

Anticipated oil revenues could help reduce poverty to 40.1% in 2026 from 41.3% in 2024. However, the actual pace of poverty reduction will depend on how well households can manage and recover from financial shocks. Effective use of oil revenues to improve social protection, infrastructure, and human capital is crucial for sustained poverty alleviation.

Development Challenges
Intensifying shocks and faltering momentum behind policy reform create challenges for sustaining economic growth and reducing poverty in Uganda. The challenge of creating productive jobs for the almost one million working-age Ugandans entering the labor market every year is pressing. Although the services sector constitutes a large share of GDP, it has created few jobs, mainly informal and low-skilled. Two-thirds of the jobs are in the agriculture sector, which is prone to natural disasters, and climate shocks are becoming more frequent and severe, while adaptation remains limited due to low capacity.

To promote economic growth and reduce poverty over the medium term, the Ugandan economy needs to structurally transform and shift labor into more productive employment. First, reforms should stimulate private sector investments by reducing the cost of doing business, fostering access to finance, and promoting uptake of digital and other innovative technologies. Second, the government could shift spending into social sectors and invest more in human capital, alongside measures to reduce inequality and strengthen resilience. Finally, Uganda needs to maintain prudent macroeconomic management alongside structural policies to both avoid real appreciation and loss of competitiveness once oil revenues start flowing in, and to build resilience to climate shocks.

Human Capital
Uganda’s Human Capital Index is low. Children born in Uganda today are likely to be 38% as productive when they grow up as they could be if they enjoyed complete education and full health. Children who start schooling at the age of four years are only expected to complete 6.8 years of school by their 18^th birthday, compared to the Sub-Saharan average of 8.3. However, a child’s actual years of learning are 4.3, with 2.5 years considered “wasted” due to the poor quality of education.

Last Updated: Oct 11, 2024

A Country Partnership Framework (CPF) is the tool that guides the World Bank Group's (WBG) support to a member country such as Uganda. A new CPF to support Uganda’s vision of a society transformed from a peasant economy to a modern and prosperous country by 2040 will soon be prepared by the WBG in collaboration with the Government of Uganda and in consultation with civil society, private sector, academia, development partners, and the public.

The investment portfolio in Uganda is financed by the International Development Association (IDA), which provides interest-free credits on concessional terms, attracting no interest charges and a commitment charge of up to 0.5% on the undisbursed amount and grants. The commitment charge is decided annually by the IDA Board of Directors. For the fiscal year that started July 1, 2023, the Board set the rate at 0%. Effective July 1, 2022, any new IDA loans have a duration of 50 years, including a 10-year grace period.

 As of October 3, 2024, the World Bank’s portfolio of IDA-financed credits and grants stood at $4.2 billion in commitments, comprising 17 national projects. The portfolio is complemented by trust fund resources (currently standing at $76.2 million contributed by eight donors - UK Aid; Ireland; The Netherlands; Embassy of Sweden; KfW; Embassy of Ireland; the European Union; Bill and Melinda Gates Foundation -through an in-country Multi-Donor Trust Fund), knowledge products, and technical assistance and is spread across various sectors (see pie chart below). The energy and extractives sector dominates the portfolio with a share of 16%, followed by urban at 13%. The portfolio also includes $666 million (92% in grants) from the Window for Host Communities and Refugees focused on supporting the implementation of Uganda’s integrative refugee policies. This is development support for host communities and refugees.

Last Updated: Oct 17, 2024

Social Sustainability and Inclusion
Under the Uganda Development Response to Displacement Impacts Project, 3,295,419 refugees and refugee-hosting community members gained access to social and economic services and infrastructure through more than 6,000 project activities. This is an addition of nearly 478,000 beneficiaries in the last several months. The project has also increased interaction and smoothed relationships between refugees and host communities, relieved pressure of refugees on host community facilities, and addressed perceptions of inequitable service provision.

Subnational Government Capacity
Uganda Intergovernmental Fiscal Transfers is a governance project with many facets, including supporting local governments in effective delivery of social services. Recent results include:

• Under education, 105 seed secondary schools built and operational with minimum staffing of at least 16 out of the 32 staff required. Construction of another 150 schools is underway.
• Under health, out of the 371 health centers to be upgraded/constructed, 239 are complete, with the rest under construction, in addition to two regional blood banks.
• Under the water sector, 418 tap stands/public stand posts have been constructed up from an annual average of 106 taps. As such, 485,700 people now have safe, clean water, with additional service restored to serve 32,700 persons who are using the rehabilitated point sources, including extension of water to 21 health centers and 28 schools constructed under the program. More than 1,320 farmers have received microscale irrigation equipment and been trained in operation and maintenance in the 40 phase one districts.
• Across the board, key management information systems have been rolled out to support decision-making and resource allocation. These are the Teacher Effectiveness and Learners Achievement System and e-Inspection to address absenteeism in schools; Water and Environment MIS; and Electronic Medical Records System.

Health
Achievements of the Uganda Reproductive Maternal and Child Health Services Improvement Project include:

• The government leveraged the project to scale up results-based financing (RBF—linking funding to predefined results) nationally covering 131 of the 135 districts and 1,426 health facilities using national public finance management systems. Consequently, RBF principles were mainstreamed into the government’s own primary healthcare grant system from July 2023 with support from a sister program—Uganda Intergovernmental Fiscal Transfers.
• Training of health workers in much-needed but short-in-supply areas. Some 1,650 students were trained in various disciplines including emergency medicine, critical care nursing, imaging, anesthesiology, cold chain management, biomedical engineering, and intensive care nursing. Additionally, 4,600 health workers across 730 health facilities received clinical mentorship in maternal, neonatal, and child healthcare disciplines.

Uganda COVID-19 Response and Emergency Preparedness Project (UCREPP) delivered the following results:

• Supported the national response to the fifth outbreak of Ebola virus disease (EVD) leading to its containment in a record 69 days by early 2023, preventing further spread and minimizing the impact on public health.
• Trained 411 healthcare workers in emergency care response and critical care in refugee-hosting districts and regional referral hospitals. Further trained 19,800 community health workers in 20 districts and 2 cities and 144 community health extension workers.
• Purchase of 44 ambulances to support emergency medical services; and construction of three ambulance call-and-dispatch centers is ongoing.   

Agriculture and Nutrition
The Agriculture Cluster Development Project:

• Enabled more than 450,000 farm households to access and use improved agro-inputs such as tarpaulins and fertilizer resulting in concomitant increases in on-farm yields. Yields of all five selected commodities (rice, maize, cassava, beans, coffee) increased, with rice and Robusta coffee exceeding the target.

The Uganda Multi-Sectoral Food Security and Nutrition Project results:

• Enhanced knowledge on good nutrition resulting in improved household nutrition and incomes for 1.55 million direct project beneficiaries in 15 participating districts. For example, the percentage of children aged 6–23 months in households with minimum dietary diversity increased from 45.9% at baseline to 51.78% against the target of 51.63%. This work is being considered for scaling to address food and nutrition insecurity more broadly.

Urban
The Uganda Support to Municipal Infrastructure Development Program—Additional Financing (USMID) results include:

A majority of infrastructure projects in tens of cities and municipalities –74.8 km of urban roads tarred, lit streets, smooth pavements/walkways, improved drainage, greenings—are either completed or are expected to be finalized by June 2024 when the project closes. The program has transformed the look of urban centers and facilitated business in the entire country.

Water
The Integrated Water Management and Development Project‘s support has resulted in 5,000 households outside the capital Kampala receiving water services, a number expected to increase to about 20,000. 

Last Updated: Oct 11, 2024

The World Bank Group works closely with other development partners, including the United Nations, for a more coordinated approach to development support in Uganda. The World Bank is the co-chair of the Local Development Partners Group (LDPG). The Bank also supports the LDPG secretariat and website through its Multi-Donor Trust Fund. Backed by the LDPG technical working groups, and in close consultation with Government of Uganda (GoU) counterparts, partners work together to align support with national priorities set out in the five-year Third National Development Plan of Vision 2040, whose goal is to transform Ugandan society from a peasant to a modern and prosperous country by 2040. They hold joint LDPG-GoU meetings to ensure a continuation of the partnership dialogue and to maximize support through better coordination.

The LDPG’s technical working groups are organized around sectors such as agriculture, energy, climate change, and gender. More recently, a development partners' group on inclusion and non-discrimination was formed in response to changes in some areas of Uganda’s legal framework. It is co-led by the World Bank and the Office of the United Nations Resident Coordinator.

Last Updated: Oct 11, 2024