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Economy of Uganda

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Title: Economy of Uganda  
Author: World Heritage Encyclopedia
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Subject: Economy of Togo, Economy of Tanzania, Economy of Gabon, Economy of Nigeria, Economy of Mauritius
Collection: African Union Member Economies, Economy of Uganda, World Trade Organization Member Economies
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Economy of Uganda

A family in a market in Kampala.

Endowed with significant natural resources, including ample fertile land, regular rainfall, and mineral deposits, it is thought that Uganda could feed all of Africa if it was commercially farmed.[1] The economy of Uganda has great potential, and it appeared poised for rapid economic growth and development.

Chronic political instability and erratic economic management since self-rule has produced a record of persistent economic decline that has left Uganda among the world's poorest and least-developed countries. The national energy needs have historically been more than domestic energy generation, though large petroleum reserves have been found in the west.

After the turmoil of the Amin period, the country began a program of economic recovery in 1981 that received considerable foreign assistance. From mid-1984 onward, overly expansionist fiscal and monetary policies and the renewed outbreak of civil strife led to a setback in economic performance.

Contents

  • International trade and finance 1
    • Currency 1.1
  • Agriculture 2
  • Industry 3
  • Transportation and Communications 4
  • Mining & Petroleum 5
  • See also 6
  • References 7
  • External links 8

International trade and finance

Ugandan export destinations in 2006.

Since assuming power in early 1986, Museveni's government has taken important steps toward economic rehabilitation. The country's infrastructure—notably its transport and communications systems which were destroyed by war and neglect—is being rebuilt. Recognizing the need for increased external support, Uganda negotiated a policy framework paper with the IMF and the World Bank in 1987.

Uganda subsequently began implementing economic policies designed to restore price stability and sustainable balance of payments, improve capacity utilization, rehabilitate infrastructure, restore producer incentives through proper price policies, and improve resource mobilization and allocation in the public sector. These policies produced positive results. Inflation, which ran at 240% in 1987 and 42% in June 1992, was 5.4% for fiscal year 1995-96 and 7.3% in 2003.

Investment as a percentage of GDP was estimated at 20.9% in 2002 compared to 13.7% in 1999. Private sector investment, largely financed by private transfers from abroad, was 14.9% of GDP in 2002. Gross national savings as a percentage of GDP was estimated at 5.5% in 2002. The Ugandan Government has also worked with donor countries to reschedule or cancel substantial portions of the country's external debts.

Uganda is a member of the WTO.

Currency

Uganda began issuing its own currency in 1966 through the Bank of Uganda.[2] Prior to the failure of the East African Currency Board, Uganda used other countries' currency.

There have been six changes of currency since 1966, but the 1987 version has been stable. Upgrades to it have been intended to decrease counterfeiting and make the currency more useful.

Agriculture

Agricultural products supply nearly all of Uganda's foreign exchange earnings, with coffee alone (of which Uganda is Africa's leading producer) accounting for about 27% of the country's exports in 2002. Exports of apparel, hides, skins, vanilla, vegetables, fruits, cut flowers, and fish are growing, and cotton, tea, and tobacco continue to be mainstays.

Most industry is related to agriculture.

Industry

A street market in the capital, Kampala.

The industrial sector is being rehabilitated to resume production of building and construction materials, such as cement, reinforcing rods, corrugated roofing sheets, and paint. Domestically produced consumer goods include plastics, soap, cork, beer, and soft drinks. Major Cement manufacturers like 'Tororo Cement Ltd' caters to the need of building and construction material consumers across East Africa.

Transportation and Communications

Uganda has about 30,000 kilometers (18,750 mi.), of roads; some 2,800 kilometers (1,750 mi.) are paved. Most radiate from Kampala. The country has about 1,350 kilometers (800 mi.) of rail lines. A railroad originating at Mombasa on the Indian Ocean connects with Tororo, where it branches westward to Jinja, Kampala, and Kasese and northward to Mbale, Soroti, Lira, Gulu, and Pakwach. However, the only railway line still operating is the one to Kampala.

Uganda's vital link to the port of Mombasa is now mainly by road, which serves its transport needs and also those of its neighbors-Rwanda, Burundi, and parts of Congo and South Sudan. An international airport is at Entebbe on the shore of Lake Victoria, some 32 kilometers (20 mi.) south of Kampala.

The Uganda Communications Commission (UCC) regulates communications, primarily "delivered through an enabled private sector."[3]

Mining & Petroleum

Uganda's predominant mineral occurrences are: Gold, Tungsten, Tin, Beryl and Tantalite in the south; Tungsten, Clay and Granite between latitude zero and two degrees north; and Gold, Mica, Copper, Limestone and Iron in the north.[4]

Uganda will host its first biggest international mining conference in the first week of October as the country tries to revive the industry to its full potential. The Uganda Chamber of Mines and Petroleum (UCMP), the body that links investors to government departments, will hold the Mineral Wealth Conference from 1st - 2 October, drawing participants from East Africa and beyond.[5]

In late 2012, the government of Uganda was taken to court over value added tax that it placed on goods and services purchased by a foreign oil company operating in the country, Tullow Oil.[6] The court case will be heard at an international court based in the United States and could have serious ramifications for Uganda if lost; Uganda’s membership at the World Bank depends on its maintenance of “multi-lateral investments treaties and associated guarantees”. There is also a possibility that the country could be sanctioned by the World Bank if found in breach of trade and investment agreements signed bilaterally with the United Kingdom.[6]

The Ugandan government insists that Tullow cannot claim taxes on supplies as recoverable costs before oil production starts.[7] Sources from within the government reveal that the main concern at present is the manner in which millions of dollars have been lost in the past decade, money that could allegedly have stayed in Uganda for investment in the public sector; a Global Financial Integrity report recently revealed that illicit money flows from Uganda between 2001 and 2012 totalled $680 million.[7]

Tullow Oil is being represented in the court case by Kampala Associated Advocates, whose founder is Elly Kurahanga, the President of Tullow Uganda.[6] A partner at Kampala Associated Advocates, Peter Kabatsi, was also Uganda’s solicitor general between 1990 and 2002, and he has denied claims that he negotiated contracts with foreign oil firms during his time in this role.[6]

The Ugandan government has yet to see any result from another tax dispute involving the Canadian oil firm Tullow Oil and British company Heritage Oil; this dispute dates back to Heritage Oil’s sale of rights to two oil blocks in Uganda’s Lake Albert region to Tullow Oil in July 2010.[8] Uganda claims that Heritage Oil owes USD435 million in capital gains tax arising from this sale, a claim that Heritage is currently disputing in a London-based court.[8]

The Tullow Oil refinery that cost $1.5 billion has been put on hold due to governmental complications.[9][10]

See also

General:

References

  1. ^ Aid and other dirty business by Giles Bolton. Page 24. ISBN 978-0-09-191435-6
  2. ^ History of the Currency Bank of Uganda,2007
  3. ^ Uganda Communications Commission
  4. ^ Mineral Occurrences, Department of Geological Survey and Mines of Uganda
  5. ^ (28 August 2012)The Observer (Uganda)Moses Mugalu, "Mining conference to attract investors",
  6. ^ a b c d Tullow sues government in new tax dispute,  
  7. ^ a b Company Profile,  
  8. ^ a b Tullow Oil sues Heritage over unpaid Ugandan tax bill,  
  9. ^ http://www.thisismoney.co.uk/money/markets/article-2269052/Sunday-newspaper-share-tips-Dogs-Footsie-AstraZeneca-Tullow-Oil.html?ito=feeds-newsxml
  10. ^ http://www.thesundaytimes.co.uk/sto/business/Industry/article1202100.ece

External links

  • Uganda Ministry of Finance, Planning and Economic Development
  • Uganda Investment Authority; Sector analysis reports available
  • Economy of Uganda at DMOZ
  • The Uganda Business Index
  • Uganda Business Directory
  • Uganda latest trade data on ITC Trade Map
  • Google Earth map of the oil and gas infrastructure in Uganda
  • World Bank Uganda Trade Summary Statistics
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