Uganda is far from middle income status - World Bank

The president said the economy has been trammeled by multiple disasters including drought, floods, locusts, Covid-19, and global inflation, but this did not stop it from growing from strength to strength.

“In spite of all these, the Ugandan economy, by the budget time in the next few days, will be standing at US$ 45.7billion by the exchange rate method and at USD 131.6 billion by the PPP method. This means that the GDP per capita is now $1046. You remember, the entrance point for the lower-middle-income status, is USD 1036. We have now passed that figure. Congratulations,” he said.

Museveni added that to be declared a middle-income country, Uganda will need to sustain this for two to three consecutive years.

“I am confident, we shall over-perform, in achieving that,” he stated.

However, the World Bank estimated that despite the economic growth, the population also grew at about the same rate, leaving the per capita income stagnant.

“Overall growth for FY22 is estimated at 3.7 percent – below the pre-COVID-19 projections of over 6 percent, leaving Uganda’s per capita income estimated at about US$850, well below lower-middle-income threshold of US$1,045 per person,” said the World Bank’s 19th State of the Economy Update.

The World Bank says Uganda will not attain middle-income status unless the economy grows a little faster than the current rate, which is slightly lower than that projected in the December 2021 update.

Mukami Kariuki, World Bank Country Manager for Uganda, said in light of the challenges slowing down the economy it is crucial the government adopt targeted interventions to support the vulnerable while managing debt and rising inflation.

She noted that oil and gas can help the economy grow, but that this will only be the case if the economy remains diversified, with particular focus on the agriculture sector.

“Policymakers face new uncertainties and challenges that must be managed cautiously, given the tradeoffs between rising inflation and supporting the recovery. With the lower growth than the pre-pandemic projections, the gap between the actual per capita income and the NDP III target has widened and the time for Uganda to reach the lower-middle-income target elongated,” says the report.

According to the global lender, Uganda would have attained lower-middle-income status already if the strong growth rates of (between 6 and 10 percent) posted between 2001 and 2011 had been maintained.

At that time, the gap to lower middle income reduced to just 17 percent from 76 percent recorded in 1994, but since 2011, it has been between 19 and 26 percent as economic growth slowed down while population growth rates keeping climbing skyward.