ECONOMY
Uganda's economy has great potential. Endowed with significant natural resources, including ample fertile land, regular rainfall, and mineral deposits, it appeared poised for rapid economic growth and development at independence. However, chronic political instability and erratic economic management produced a record of persistent economic decline that left Uganda among the world's poorest and least-developed countries.
Since assuming power in early 1986, Museveni's government has taken important steps toward economic rehabilitation. The country's infrastructure--notably its transportation and communications systems that were destroyed by war and neglect--is being rebuilt. Recognizing the need for increased external support, Uganda negotiated a policy framework paper with the IMF and the World Bank in 1987. It subsequently began implementing economic policies designed to restore price stability and sustainable balance of payments, improve capacity utilization, rehabilitate infrastructure, restore producer incentives through proper price policies, and improve resource mobilization and allocation in the public sector. Uganda's macroeconomic policies are sound and contributed to a 7% growth rate in fiscal year 2006-2007, compared to 5.1% in FY 2005-2006. Inflation, which ran at 240% in 1987 and 42% in June 1992, was 5.1% in 2003, but bounced up to 7.7% in 2007, well above the government's annual target average of 5%, as food prices rose.
Investment as a percentage of GDP was estimated at 24% in 2006/2007 compared to 15.7% in 2002/2003. Private sector investment, largely financed by private transfers from abroad, was 20% of GDP in 2006/2007. In the same year, gross national savings as a percentage of GDP fell to an estimated 12%, from 13% the previous fiscal year. The Ugandan Government has worked with donor countries to reschedule or cancel substantial portions of the country's external debts.
Agricultural products supply nearly all of Uganda's foreign exchange earnings, with coffee (of which Uganda is Africa's second leading producer) accounting for about 19% and fish 15.5% of the country's exports in 2002. Exports of non-traditional products, including apparel, hides, skins, vanilla, vegetables, fruits, cut flowers, and fish are growing, while traditional exports such as cotton, tea, and tobacco continue to be mainstays.
Most industry is related to agriculture. The industrial sector is being rehabilitated to resume production of building and construction materials, such as cement, reinforcing rods, corrugated roofing sheets, and paint. Domestically produced consumer goods include plastics, soap, cork, beer, and soft drinks.
Uganda has about 45,000 kilometers (28,000 mi.), of roads, of which 10,000 (6,213 miles) kilometers are main roads and 35,000 kilometers (21,747 miles) are feeder roads. Only 3,000 kilometers (1,864 mi.) are paved, and most roads radiate from Kampala. The country has about 1,350 kilometers (800 mi.) of rail lines, but most of it is not currently in use. A railroad originating at Mombasa on the Indian Ocean connects with Tororo, where it branches westward to Jinja, Kampala, and Kasese and northward to Mbale, Soroti, Lira, Gulu, and Pakwach. Uganda's important road and rail links to Mombasa serve its transport needs and also those of its neighbors-Rwanda, Burundi, and parts of Congo and Sudan. An international airport is at Entebbe on the shore of Lake Victoria, some 32 kilometers (20 mi.) south of Kampala.
GDP (nominal, 2006/2007): $10.8 billion.
Inflation rate (annual headline or CPI, 2006/2007): 7.6%.
Natural resources: Copper, cobalt, limestone, phosphate, oil.
Agriculture: Cash crops--coffee, tea, cotton, tobacco, sugar cane, cut flowers, vanilla. Food crops--bananas, corn, cassava, potatoes, millet, pulses. Livestock and fisheries--beef, goat meat, milk, Nile perch, tilapia.
Industry: Processing of agricultural products (cotton ginning, coffee curing), cement production, light consumer goods, textiles.
Trade: Exports (2006/2007)--$1.5 billion: coffee, fish and fish products, tea, electricity, horticultural products, vanilla, cut flowers, remittances from abroad. Major markets--EU, Kenya, South Africa, U.K., U.S. Imports (2006/2007)--$2.5 billion: capital equipment, vehicles, petroleum, medical supplies, chemical, cereals. Major suppliers--OPEC countries, Kenya, EU, India, South Africa, China, U.S.
Fiscal year: July 1-June 30.
