Ugandan Economy Expands in Third Fiscal Quarter

Uganda’s economy expanded 0.3 percent from January to March, which is considered the nation’s third quarter of the fiscal year. The government expects 5.8 percent growth for the year, an uptick from previous growth of 5.3 percent.

Uganda’s economy expanded 0.3 percent from January to March, which is considered the nation’s third quarter of the fiscal year. The government expects 5.8 percent growth for the year, an uptick from previous growth of 5.3 percent.

This is positive news for Uganda, but growth for the quarter is short of the 0.4-percent growth seen a year ago during the same quarter. This is due to agriculture falling by 5.2 percent during the same quarter, and industries that contributed to the fall include the fishing industry, cash crops and food crops. However, Uganda saw gains in forestry and livestock.

Overall, analysts expect growth for the 2015 year to stem from private consumption, including public and private investment. The government is also spending $8 per person on healthcare, and authorities are giving pay increases to doctors who live in rural and isolated areas. The government is also pouring funds into various programs that will increase education standards and infrastructure.

Such measures are commendable, but Uganda faces larger political and economic implications going forward. For one thing, investors are nervous in the wake of next year’s elections, especially in regards to the budget. The government issued its budget for the fiscal year, which started on July 1, with officials announcing that the state will increase spending by 70 percent. Uganda also faces a 7.0-percent fiscal gap, but the government expects to use outside loans to overturn the shortfall. Experts are concerned that the spending boost will raise prices across the board. Investor concern has caused the Ugandan shilling to perform low against the dollar in recognition of government spending before the elections. The shilling underwent a similar fate in 2011, when officials increased spending before upcoming elections during that time.

Investors may not have to worry for too long, as the East African nation looks for additional strength through technology and manufacturing. Officials are looking to the automobile industry to not only expand the economy but to provide work for the country’s surging young population, notes MIT Technology Review. This is achievable through a project known as Kiira Motors Corporation, a project that is coordinated between Ugandan students at Makerere University and students at MIT. The goal is to put hybrid and electric cars on the road, and Ugandan students are researching the creation of a solar-based bus in coordination with Indian auto firm Ashok Leyland. Another goal is to attract hundreds of millions of investment dollars to establish an auto plant in Uganda.

If successful, these projects will boost the standard of living for many Ugandans by providing quality jobs. These projects will not benefit the economy in the immediate future, but it will strengthen the economy immensely over the long-term. Investor funds are crucial in driving Uganda’s growth, especially as the East African nation competes for foreign investment among other powerful emerging markets in the region, such as Rwanda and Ethiopia.