Country Brief

History Country Brief last updated August 2009

Uganda is a landlocked country in East Africa with a total estimated population of about 31 million people. The country is bordered on the east by Kenya, on the north by Sudan, on the west by the Democratic Republic of the Congo, and on the south by Rwanda and Tanzania.

Uganda was declared a British Protectorate in 1860 and obtained independence from colonial rule in 1962. The current president, Mr. Yoweri Kaguta Museveni has been in power since January 1986 when the National Resistance Movement/Army (NRM/NRA) overthrew the government. Following ten years of interim administration, Presidential and Parliamentary elections were held in 1996, 2001 and 2006. The 2006 election was the first under a multi party system. New elections are scheduled for 2011.

The country has been relatively stable over the last two decades save for a civil war waged by Lord’s Resistance Army (LRA) rebels in the northern part of the country. Relative peace has now returned to the whole country and a comprehensive Peace, Recovery and Development Plan for Northern Uganda is under implementation by the Government.

Economic and Social Progress

Uganda is one of the fastest growing economies in Africa with growth averaging 7.8 percent since 2000. However, this growth has to be sustained in order for per capita income to rise beyond the current US$420. Though the country has made steady progress in recovering from the economic breakdown in the 1970s, social economic indicators show that a lot still needs to be done. Life expectancy at birth is currently around 50 years and the population growth rate of about 3.3 percent remains one of the highest in the world, and which, if not addressed, will pose serious development challenges. Uganda also has the most youthful population in the world with children below 15 years constituting more than half of the population. The country’s dependency ratio (# dependants per worker) at 1:12 is the highest in the world compared to 0.84 for Kenya, 0.85 for Tanzania, and 0.87 for sub-Saharan Africa.

The country's commitment to poverty reduction is spelled out in the Poverty Eradication Action Plan (PEAP), Uganda's Poverty Reduction Strategy Paper. With support from the World Bank and other Development Partners, the country is moving  towards  reaching a number of the  Millennium Development Goals: 

• Poverty declined rapidly from 1992 to 2006, as a result of high and broad-based economic growth. The poverty headcount dropped from 56 percent in 1992 to 31 percent in 2006. Poverty, however, remains undisputedly high in rural areas and has the highest density in Northern and Eastern Uganda. The income gap between the north and the rest of the country also remains starkly wide.
• The Government of Uganda has exhibited strong commitment to education development. Universal Primary Education (UPE) was introduced in 1997 and resulted in significant progress in expanding access to education. Enrollment at the primary level increased from 2.6 million in 1995 to 7.2 million in 2007. Net enrollment rates for primary schooling increased from 62.3 percent in 2000 to 91.4 percent of girls and 95.3 percent of boys in 2007. The gender gap (ratio of girls to boys) in primary education improved from 93 in 1992 to almost 100 percent today. However the high drop-out rate and quality of education remain a daunting challenge. In 2007, the Government also introduced Universal Secondary Education (USE) thereby expanding opportunities for those completing the primary level.
• After two decades of stagnation, key health outcomes have improved. The Infant Mortality Rate is now at 76 births per 1000 live births; Maternal Mortality Rate at 435 per 1000 live births;, and Under Five Mortality Rate is 137 births per 1000 live births. Nonetheless these improvements are too meager and the, Millennium Development Goal targets in these areas are unlikely to be met.
• The HIV/AIDS prevalence reduced dramatically from 18 percent at its peak in 1992 to around 6.4 percent where it has stagnated over the last eight years. Though this is still well below the MDG target for HIV/AIDS, recent evidence indicates that new infections are on the rise with 130,000 new infections reported in 2006. 
• Uganda’s prudent economic policies continue to generate robust growth rates. Over the last two decades, Uganda’s economy achieved impressive growth rates propelled by prudent and consistent policy reforms. Economic growth averaged close to 6.5 percent over the 1990s. Over the past 5 years to 2007/08, growth accelerated to 8.3 percent, in spite of volatility in agricultural output arising from prolonged drought conditions in many parts of the country, and the constraints to production arising from the energy crisis and high and volatile world oil prices. Whereas the global economic crisis has posed some macroeconomic management issues, growth in 2008/09 remains unmet at 7.0% in 2008/09, albeit lower than 9.5% recorded in 2007/08. In addition were the adverse effects of high and volatile world oil prices. Uganda is growing well above the average for Sub-Saharan Africa and the growth outlook is positive as long as government continues to focus on eliminating infrastructure constraints and recovery of agricultural production in Northern Uganda.

(More data:  World Development Indicators)

Key Challenges

In the short term, infrastructure gaps, internal budgetary pressures, high population growth, exogenous shocks, as well as the recovery cost following a return to peace in the North will continue to limit the prospects for faster growth. Moreover, the government’s fiscal strategy adopted to address infrastructure constraints needs to overcome implementation problems that have delayed absorption of budget resources, and to remove wastage and inefficiencies to get more value-for-money.

The Government's Poverty Reduction Strategy

The Bank and other development partners fully endorse Uganda's poverty reduction agenda defined in the Poverty Eradication Action Plan (PEAP). First formulated in 1997, the Government is currently implementing the third version of the PEAP (2004/05 – 2007/08). More information on the revised PEAP (including the final document) can be accessed at Uganda’s Ministry of Finance, Planning and Economic Development website: http://www.finance.go.ug

The PEAP is currently being revised into a 5-year National Development Plan (NDP) which is projected to be launched by close of 2009. The NDP will present overall policy objectives and the development framework for the country including poverty eradication and rural development strategies. The proposed theme for NDP is Growth and Employment for Prosperity. Being developed under the National Planning Authority, the NDP’s proposed development objectives will focus on economic growth, which will cover:

• Primary growth drivers (agriculture, minerals, trade, industry, tourism, etc.)
• Secondary growth drivers (elements that link to primary growth drivers to ensure effective delivery e.g. infrastructure –transport, energy, water, ICT; health and education)
• Services (sectors serving these drivers, e.g. peace and security, judiciary etc).

More information about the National Development Plan can be found at the National Planning Authority website: http://www.npa.ugor the Ministry of Finance, Planning and Economic Development website: http://www.finance.go.ug/peap/dev_plan.html

World Bank Group Engagement

The World Bank's country program in Uganda was the first to provide direct budget financing to the Government through a series of Poverty Reduction Support Credits (PRSCs) to implement a far-reaching reform agenda based on the PEAP. The first PRSC (US$150 million) was approved in 2001 and focused on measures to improve public service delivery and address cross cutting public sector issues. The sixth PRSC (US$125 million) was approved in April 2007 and focused on economic growth. The seventh PRSC (US$200 million) was approved in May 2008 to cover the financial years 2007/08 and 2008/09. PRSC7 is the third and final annual budget support operation that supports Uganda’s third PEAP and the transition to the National Development Plan 2009/10-2013/14. PRSC 8 is expected to be the first in a series of three operations to support the NDP.

Since 2006, the World Bank's assistance to Uganda has been anchored in the Uganda Joint Assistance Strategy (UJAS), a joint development partner strategy fully aligned with the Government's PEAP. UJAS partners consist of the African Development Bank, Austria, Belgium, Denmark, the European Commission, Germany, Ireland, the Netherlands, Norway, Sweden, the UK, and the World Bank.

In light of the expiry of the PEAP and the emergence of the NDP, the World Bank and other development partners are currently deliberating how to align their assistance framework with the NDP. The objective is for the assistance framework to maximize the effectiveness of development assistance to Uganda, while taking into account transaction costs for both the Government and development partners.

The International Finance Corporation’s(IFC) portfolio includes investments in infrastructure (electricity), privatization, and financial sector. Uganda became a member of the Multilateral Investment Guarantee Agency(MIGA) in 1992.

The World Bank Institute (WBI)offers training on education, decentralization and public finance, and various themes related to poverty reduction, largely through the Global Distance Learning Center (launched in 2000).

There is close interaction with the International Monetary Fund (IMF) on the macroeconomic program.

Debt Relief

In April 1998, Uganda was the first country to benefit from debt relief under the  Heavily Indebted Poor Country (HIPC) Initiativeand reached the Completion Point under the Enhanced HIPC Initiative in February 2000. Uganda received US$ 3.6 billion to cancel 100% of the debt to the World Bank under the  Multilateral Debt Relief Initiative (MDRI), approved by the World Bank Board on March 28, 2006. In view of the low level of domestic savings, sustaining growth has required that Uganda still accesses external financing, both through grants and loans. Consequently, Uganda’s debt stock has increased to 20% of GDP by June 2009. With prudent debt management and a positive growth dividend, debt is expected to remain sustainable. To minimize the risk to low level of debt distress, Uganda needs to choose its investments carefully to ensure value for money, while upholding appropriate structural policies to support private sector development.