By Faridah N Kulumba
Africa-Press – Uganda. The president of the Republic of Uganda H.E Yoweri Kaguta Museveni demanded full monetization of Uganda’s economy as a vital step for local businesses to thrive. According to Gen. Museveni, Uganda’s economy like many African countries, has never been fully monetized since colonial times. Museveni is concerned about the challenges posed by regional trade barriers, such as Kenya’s ban on Ugandan products like milk and eggs, which has led to surpluses that the local market cannot absorb. In the past few years, Uganda and Kenya have been having a cold trade war. This trade war between the two East African countries is not only a threat to economic prosperity in the involved states but also a threat to free trade in the EAC. The recent Kenyan ban on neighbouring Uganda’s product was on 13th August of this year, when the government of Kenya through the Ministry of Agriculture blocked sugar imports from the East African region and beyond.
Monetization reasons
President Museveni’s concern is that the country he’s leading now produces 5.3 billion litters of milk annually, while domestic consumption is only 800 million litters. This leaves the country with a surplus of more than 4 billion litters. In his speech, while presiding over the 5th Bi-Annual Private Sector CEO Retreat, Museveni stressed that incorporating all Ugandans into the cash economy would enhance their purchasing power. The 5th Bi-Annual Private Sector CEO Retreat, under the theme “Transforming Northern Uganda into a Commercialized Production and Logistical Hub for Exports,” was attended by over 300 business leaders, investors, and agriculturalists. The goal was to raise awareness, promote collaboration, and help transition Northern Uganda into a hub for commercial production.
Multi-faceted Approach
Recently Uganda’s Minister of Finance, Planning, and Economic Development, Matia Kasaija, presented the Budget Strategy for the Financial Year 2025/2026. This year’s budget focuses on the theme of “Full Monetization of Uganda’s Economy” through a multi-faceted approach. The strategy emphasizes accelerating commercial agriculture, fostering industrialization, and expanding both service sectors and digital transformation. Key areas of focus include enhancing market access and leveraging technological advancements to drive economic growth. This strategic direction aligns with the goals outlined in the Ruling party Manifesto and the Fourth National Development Plan (NDP IV), setting the stage for significant economic transformation. The budget aims to build on previous successes and address emerging challenges to ensure a resilient and dynamic Ugandan economy.
Strategic plan for economy growth
On 13th June 2024, President Museveni revealed that for Uganda’s economy to grow more, Ugandans needs to be competitive in the products and services they produce. According to him, Uganda’s products and services must be cheaper and of better quality than products from other countries. He said that this can be achieved by having affordable electricity which is already being worked on. The President who was in the company of the First Lady and Minister of Education and Sports, Maama Janet Museveni made the remarks today during the reading of the Shs72.136 trillion National Budget for Financial Year 2024/25 at Kololo Independence Grounds. The government of Uganda says it has already put in place low-cost money (loans) for all Ugandans who want to create wealth. These will be accessed in terms of loans.On the agriculture sector side, the Ugandan government believes that irrigation will be a strategic intervention and will as well stabilize Uganda’s economy.
Imports concern
Uganda’s economy expanded 4.6 percent in 2023, lower than the 6.3 percent registered in 2022. Despite strong performance in mining, construction, and hospitality, lower manufacturing output and contractions in food production and public administration led to the slowdown. However, President Museveni attributed the current slow economic growth to the importation of goods. Museveni explained that the export earnings this year grew by 38 percent, from USD 4 billion to USD 7 billion, and the rate of growth- 38 percent and that the major problem is everything is underutilized. Museveni says that it’s a pity that his country imports furniture, and buys dead people’s clothes from outside and so many products that the country can manufacture are still imported from abroad for example the country spends USD 800 million on imported textiles. He says that this importing is what is creating this discrepancy. The economy is bigger; USD180 billion (by Purchasing Power Parity method) but if you use the exchange rate method, it comes to USD 55 billion. But if it is solved (importation), the size of the figures will be much bigger than it is now. Uganda’s economic growth has accelerated slightly despite external shocks. GDP grew by 5.3 percent during the first quarter of FY24, supported by an oil-related construction boom and robust growth of agriculture, despite volatile weather conditions. An uptick in private investments and employment growth reinforced domestic demand deeper into the year, with sustained increases in output, new orders, and employment. While Uganda’s exports surged with increased volumes of production and improvement in terms of trade, resumption of gold trade, and recovery of tourism, imports grew stronger supported by demand from investments into the country’s oil development program, hence weakening the current account.
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