Economy shows strong growth momentum, eyes double-digit expansion with oil boom

Uganda’s economy is maintaining an upward growth trajectory, with the government projecting faster expansion and long-term transformation fueled by oil production, mineral exploitation, and agro-industrialization.

This is according to Finance Minister Matia Kasaija, who yesterday delivered an update on the state of the economy.

The minister reported that the economy grew by 6.3% in FY 2024/25, up from 6.1% the previous year, with GDP reaching UGX 226.3 trillion (USD 61.3 billion). Per capita income also rose from USD 1,159 to USD 1,263, marking progress towards middle-income aspirations.

Macroeconomic Stability Holds

Inflation remained subdued at 3.8% in July 2025, thanks to lower food and fuel prices. The Bank of Uganda has kept the Central Bank Rate at 9.75% for 10 months, balancing price stability with growth support. The Ugandan shilling also appreciated slightly to UGX 3,586 per dollar, earning recognition from the IMF as Africa’s most stable currency.

Private sector credit rose 7.5% year-on-year to UGX 23.9 trillion, reflecting increased business activity. Similarly, the Composite Index of Economic Activity indicated steady momentum, supported by strong investor confidence and improved demand across agriculture, manufacturing, services, and construction.

Diversified Exports and Growing Foreign Inflows

Uganda’s export base continues to broaden, with manufactured products and non-traditional commodities now taking a larger share. Coffee’s contribution to total exports dropped from 75% in 1995 to just 21%, giving way to gold (39%), cocoa (6%), and base metals.

Merchandise exports surged by 64% to USD 1.15 billion in the 12 months to June 2025, outpacing import growth at 51% (USD 1.43 billion). Tourism also rebounded, generating USD 1.52 billion in earnings by March 2025, while remittances remained steady at USD 1.4 billion.

Foreign Direct Investment inflows climbed to USD 3.3 billion in 2024, largely anchored on oil and gas developments.

Revenue Performance and Social Gains

Domestic revenue collection slightly surpassed targets, with UGX 32.08 trillion mobilized in FY2024/25. The minister also highlighted improvements in social indicators: poverty reduced to 16.1%, inequality declined (Gini coefficient to 0.382), and life expectancy rose from 63.7 to 68.9 years. Uganda also graduated to lower-middle-income status in 2024, ranking 157th in the UN Human Development Index.

Future Outlook: Oil, Minerals, and Tech as Game-Changers

Looking ahead, Kasaija projected 7% GDP growth in FY2025/26, with double-digit expansion anticipated once oil production begins. Over the next 15 years, the government aims to grow the economy to USD 500 billion under a “Ten-Fold Growth Strategy,” prioritizing agro-industrialization, tourism, mineral-based industries, and science, technology, and innovation.

“Uganda’s economy remains robust, supported by stable inflation, growing economic activity, a stronger shilling and strong private sector credit growth,” Kasaija noted, adding that oil and gas will be a “game-changer” for structural transformation.

Analytical Outlook

While Uganda’s growth outlook appears promising, challenges remain. Rising imports risk widening the trade deficit, while revenue collection—though above target—still faces constraints from informality and tax compliance gaps. Furthermore, reliance on oil and minerals may expose the economy to global price volatility.

Nonetheless, the combination of stable macroeconomic fundamentals, diversification of exports, and ongoing investments in infrastructure and innovation provides a strong foundation for sustained growth. The key test will be whether government can translate this momentum into broad-based development and inclusive prosperity.