Uganda is a landlocked, independent republic that lies between the Democratic Republic of Congo and Kenya.
With a population of approximately 37 million people, Uganda is the third largest consumer market in east Africa
Since 1986, the government - with the support of foreign countries and international agencies - has acted to rehabilitate and stabilise the economy.
Political stability and security have been restored and Uganda is one of the fastest growing economies in Africa, helped by an abundance of natural resources – fertile soils, regular rainfall, small deposits of copper, gold, and other minerals, and recently discovered oil.
Uganda is also benefiting from the growing market in neighbouring countries. Uganda is part of the East African Community (EAC) which has a market of more 135 million consumers with a total GDP of $84.7 billion.
Agriculture remains the most important sector of the economy, employing more than two-thirds of the workforce, with coffee accounting for the bulk of export revenues. However, oil production in Uganda is expected to start in 2017 and set to become a main driver of economic development.
More than 100 UK companies are operating in Uganda. These include well-known companies such as Tullow Oil, Standard Chartered Bank, Barclays Bank, Unilever, Shell and British Airways.
Strengths of the Uganda market
- Stable, liberalised economy
- Strong natural resource base
- Government commitment to private sector
- Low cost workforce
- Part of two regional blocs which increases the potential consumer base
- Attractive investment policies
Challenges of the Ugandan market
While Uganda is a promising market, there are some challenges, which include:
- Relatively poor infrastructure
- Cost and availability of electricity
Uganda liberal, market-oriented economy has an impressive record of macro-economic stability. In February 2015, Fitch’s credit rating was upgraded from B to B+. Economic growth is predicted to rise from 5.4% in 2015 to 5.6% in 2016 on the back of oil-related investment and public infrastructure. However, increasing domestic borrowing will make life increasingly difficult for the private sector already facing commercial lending rates over 22%.
Oil revenues and taxes will become a larger source of government funding as oil comes on line in the next few years, although lower oil prices since 2014 and protracted negotiations and legal disputes between the Ugandan government and oil companies may prove a stumbling block to further exploration and development.
Instability in South Sudan is also risk for the Ugandan economy because Uganda is a key destination for Sudanese refugees and South Sudan is Uganda's main export partner. Unreliable power, high energy costs, inadequate transportation infrastructure, and corruption inhibit economic development and investor confidence.
During 2014 to 2015 the Uganda shilling depreciated against the dollar, and this, coupled with increased public debt, has severely impeded production, especially since Uganda imports most of its capital goods.
Agreements have been made for a 30,000 barrel per day refinery and a 1,400 km crude export pipeline to the Indian Ocean coast. This will generate many opportunities. There are also many opportunities in hydro-electric and renewable energy sources.
The education sector has undergone rapid transformation from being government-funded to private investment based. With this development Uganda is becoming a regional hub for education and knowledge.
The government spends 8.5% of GDP on health. It works closely with international organisations and agencies to ensure the development of the sector.
There is an urgent and growing need for road and power improvements. With an estimated 300,000 housing units needed per year, both commercial and residential construction is growing.