Business and Finance
Uganda to grow by 6%
KAMPALA, Uganda – Finance officials here have reiterated that Uganda’s economy is expected to grow at 6 percent per annum over the medium term as investments in public infrastructure especially energy and roads are completed.
Maria Kiwanuka, the Minister Of Finance, Planning and Economic Development, speaking at a press conference last week noted that infrastructure development and maintenance is one of the priorities for the current budget.
“Following the improvement in growth performance in the financial year 2013/2014 at 4.5 percent, the economy is expected to grow at a rate of 6 percent per annum over the medium term,” she said.
Uganda is undertaking two major energy projects which will see more electricity supplied to leading sectors like manufacturing. The on-going projects are the Karuma and Isimba Hydro Electricity Projects which have financing from Exim bank of China.
Similarly major roads construction, despite corruption scandals causing some projects to stall, is underway to interlink the country and ease movement of people, agricultural raw materials and services to stimulate economic participation and growth.
This growth is being supported by relative inflation stability with the annual inflation projected to remain within single digits. The biggest undoing is turning out to be the weakening shilling against the dollar and other global currencies after it registered a10 percent depreciation from Ush2, 512 in December 2013 to Ush2, 768 in December 2014.
The Bank of Uganda Governor Emmanuel Tumusime Mutebile blamed the shilling’s skyrocketing volatility on a collection of factors including the exchange rate which had become over valued in 2013, a strong demand for foreign exchange from real sectors of the economy especially manufacturing and oil sectors, weakening of global sentiment towards emerging markets with the currencies of these markets coming under persistent depreciation and the strengthening of the dollar against the major currencies including the Euro.
Kiwanuka predicts that the average dollar/shilling exchange rate is projected to depreciate by 4.8 percent in the nominal terms this financial year compared to appreciation of 2.2 percent in the previous year. “The economy needs to intensify on the export drive in order to enhance inflows,” she advised.
Apparently the total value of exports of goods and services increased by about $300 million to $5.3 billion during the year while the total value for the imports of goods and services amounted to $7.8 billion recording a deficit of $1.7million.