5 June 2019

Uganda: Museveni to Deliver State of Nation Address Amid Declining Economic Growth

Photo: Yoweri K Museveni/Twitter
Yoweri Museveni.

President Yoweri Museveni will Thursday give a State of Nation Address at Kampala Serena Hotel where he is expected to spell out economic progress (achievements) in the financial year 2018/19 and government plans for the 2019/20 fiscal year.

The State of the Nation address will be followed by the reading of the National Budget for the fiscal year 2019/20 on Thursday next week at the same venue.

President Museveni is likely to be disappointed with economic growth for the 2018/19 fiscal year, which registered a slight slowdown, based on the preliminary figures which were released by the Uganda Bureau of Statistics (UBOS) on Friday last week.

The economic growth 2018/19 is 0.1 percentage points lower than last year's growth, from 6.2 percent in the fiscal year 2017/2018 to 6.1 percent.

The decline in growth indicates that the economy is entering a contraction stage as a result of slower global growth rate, regional geopolitical (border tensions mainly between Uganda and Rwanda which is affecting regional trade.

UBOS preliminary figures show that the industrial sector registered a slightly lower growth rate of 5.8 per cent in 2018/19 compared to 6.1 per cent recorded for the 2017/18 fiscal year.

The services sector, which has become the leading sector of Uganda's economy contributing about 50 per cent of Uganda's Gross Domestic Product (GDP) also registered a decline.

Preliminary figures indicate that it registered a slightly lower growth rate of 7.2 per cent compared to that of 7.8 per cent observed during 2017/18 fiscal year.

Agriculture, which is the backbone of Uganda's economy, has seen its share in the GDP dropping in the recent years to 24 per cent.

Preliminary figures indicate that agriculture which consists of forestry and fishing sector, maintained the same growth rate of 3.8 per cent between the periods.

However, UBOS clarified last week that the figures are still preliminaries and that the final figures on the performance of Ugandan economy will be released in October.

The International Monetary Fund (IMF) said in its updated World Economic Outlook for 2019 that the global economy is projected to expand by 3.3 in 2019 resulting in a slower growth rate in emerging and developing economies.

The IMF says aggregate growth for Sub Saharan Africa is set to pick up from 3 per cent in 2018 to 3.5 percent in2019 and stabilise at slightly below 4 per cent over the medium term--or about 5 per cent, excluding the two major economies, Nigeria and South Africa.

The IMF says these aggregate numbers mask considerable duality in growth prospects within the region. About half of the region's countries, mostly non-resource-intensive, are expected to grow at 5 per cent or more, and see a faster rise in income per capita than the rest of the world on average over the medium term.

UBOS said this growth rate of 6.1 per cent is still good for Uganda since very few countries in the world have this growth rate of 6.1 per cent.

The Minister of Finance, Planning and Economic Development, Mr Matia Kasaija said on Wednesday that he will read the national budget for financial year 2019/20 on June 13 and provide the full details of economic performance in 2018/19 fiscal year and government programmes for the fiscal year 2019/20.

The budget for the financial year 2018/19 budget was Shs32.702 trillion compared to the next year's budget 2019/20 which has increased to Shs40.487 trillion.

Figures from the Ministry of Finance, Planning and Economic Development reveal that the Ministry of Works and Transport has been allocated Shs3.4 trillion which represents 19.8 per cent, followed by security with Shs3.6 trillion representing 11.1 per cent, Ministry of Education and Sports 3.3 trillion representing 10.3 of the total budget for financial year 2019/20.

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