Uganda boasts a growing market-based economy rich in natural resources, with a comparative advantage in agriculture as well as one of the largest oil reserves in the region (trade.gov 2020). Its economy is made up of the Agriculture 24.2%, Industry 25.5%, and Services 50.3% sectors, while with the estimated 1.4 billion barrels of recoverable oil, it is also projected to have an established oil industry by 2024. The Agricultural sector includes Fisheries, Animal Husbandry, Dairy, and Crop sub-sectors. While the Industrial sector includes Manufacturing, Construction, and Electricity Supply sub-sectors. The Services sector is made up of Wholesale and Retail trade, Telecommunications, Hotels and Restaurants, Healthcare, Transport and Communications and Tourism sub sectors. Additionally, Uganda has sustained economic growth at an average rate of 7% per annum (GOU 2021)
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Prior to the COVID-19 pandemic, Uganda was realizing stable gross domestic product (GDP) growth averaging 5.3% from fiscal year (FY) 2013/2014 to 2018/2019. Due to the economic impact of restrictions aimed at containing the spread of COVID-19, in June 2020, the World Bank reduced Uganda’s GDP growth projection for FY 2019/2020 from 6.5% to 3.3% as well as for FY 2020/2021 from 5.9% to 3.7%. While official statistics are not yet available, there is strong anecdotal data that the COVID-19 pandemic has caused countless business closures, a sharp increase in unemployment, and a massive loss of income. For up to date information on Uganda’s GDP please visit: https://www.worldbank.org/en/country/uganda/overview
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The Uganda Bureau of Statistics (UBOS) indicates that the industrial sector, which comprises 26% of the economy, was the primary driver of growth in FY 2018/2019, followed by the service sector, which represents 50% of GDP. The agriculture sector, which employs 70% of the population and represents 24% of GDP, grew 3% in FY 2018/2019. The agriculture sector is primarily based on subsistence or smallholder production, however, and per the United Nations Development Program (UNDP), about 36% of Uganda’s 44 million people live below the international poverty line of $1.90 per day. For more information on poverty and its implications in Uganda, please visit: https://devinit.org/resources/poverty-uganda-national-and-regional-data-and-trends/
Some of the main and most promising sectors include:
Agriculture
Uganda boasts abundant fertile soil, low-temperature variability, and two rainy seasons in most of the country, leading to a dynamic agricultural market with multiple crop harvests per year. According to the Food and Agriculture Organization (FAO), Uganda’s fertile agricultural land has the potential to feed 200 million people – more than the current 160 million EAC population. Agriculture accounted for 24% of GDP and 34% of export earnings in 2019 and employs over 70% of Uganda’s working population. Land tenure remains problematic, however, with many Ugandan farmers lacking clear land titles, hampering them from obtaining loans. Eighty percent of Uganda’s land is arable, but only 35% is under cultivation. Uganda produces a wide range of food products, including coffee, tea, sugar, livestock, fish, edible oils, cotton, tobacco, plantains, corn, beans, cassava, sweet potatoes, millet, sorghum, and groundnuts. In the case of coffee alone, of which Uganda is Africa's second-largest producer after Ethiopia, it accounted for about 17% of the country's exports in 2017, while it also earned the country US$545 million. Leading opportunities for investment include: equipment for value-added production of agricultural products, irrigation systems and their components, and provision of agriculture management services. For more information, please visit: https://www.trade.gov/country-commercial-guides/uganda-agricultural-sector
Energy
At a national level, Uganda has one of the lowest electrification rates in Africa. Only 28% of Ugandans have access to electricity, and only 10% in rural areas. The government has aggressive plans to increase these electrification rates by constructing large- and small-scale power facilities. The 183 MW Isimba hydro power station came online in March 2019, and the 600 MW Karuma hydro power station was completed in December 2020. USAID’s Power Africa program and the U.S. government’s International Development Finance Corporation provide broad support to the Ugandan energy sector. Leading opportunities for investment include: exporting renewable energy equipment and services for on-grid, off-grid, and micro-grid applications; energy transmission and distribution projects; and engineering and environmental management services. For more information, please visit: https://www.trade.gov/country-commercial-guides/uganda-energy In addition, Ulrich Rieger, one of our experts, can offer additional information and support in case of interest in the energy sector. To get in contact with him, please visit the relevant section of our database here.
Information and Communications Technology
Demand for information and communications technology (ICT) is high in Uganda. However, a difficult regulatory environment exists, including taxes on imported internet-based services and applications. Leading opportunities for investment include: building data centers; providing data security services and internet services; and exporting telecommunications hardware, fiber optic equipment, and network hardware. For more information, please visit: https://www.trade.gov/country-commercial-guides/uganda-information-and-communications-technology
Construction
Uganda’s infrastructure needs are still substantial. The government is focused on building roads, especially roads to oil-producing areas. Uganda is also currently facing an eight million unit housing shortage according to the Uganda National Planning Authority. Leading opportunities for investment include: architecture services; construction equipment sales; project management services; and environment management services. For more information, please visit: https://www.trade.gov/country-commercial-guides/uganda-construction
Healthcare
Uganda’s medical facilities remain underfunded and poorly managed, with the government dedicating 9.5% of the 2019/2020 total budget to the health sector. Uganda’s few public hospitals provide limited services. To fill the gap, several local and international investors have constructed private hospitals and dental clinics to serve wealthy and middle-class Ugandans, along with expatriates. While Uganda’s pharmaceutical industry has developed significantly over the past ten years, Uganda still imports 90% of its essential medicines and health supplies. Leading opportunities for investment include: provision of pharmaceutical, medical diagnostic, and treatment equipment; and investing in pharmaceutical facilities. For more information, please visit: https://www.trade.gov/country-commercial-guides/uganda-healthcare
Oil & Gas
Uganda has approximately 1.4 billion barrels of economically recoverable oil. French firm Total S.A., the China National Offshore Oil Corporation (CNOOC), and U.K. firm Tullow Oil hold production licenses to develop Uganda’s oil reserves. In 2018, the U.S.-led Albertine Graben Refinery Consortium (AGRC) won a $3.5 billion bid to build and operate a refinery to produce petroleum products for domestic and regional markets. Due to the remote location and waxy nature of Uganda’s oil, the Lake Albert Oil Development Project includes the construction of the East African Crude Oil Pipeline (EACOP), the world’s longest heated pipeline (1,445 km), which will transport the oil to the Tanzanian port of Tanga for export. Additionally, the government aims to build production facilities, a storage terminal, and connecting pipelines. Furthermore, the government intends to build several hundred million dollars’ worth of highway projects to the oil region, and is developing an airport in the same area. The Petroleum Authority of Uganda estimates that, combining upstream, midstream, and downstream projects, plus support services, total investment to launch Uganda’s oil sector will reach $15 – $20 billion over the next five to seven years. Leading opportunities for investment include: engineering, project management services, vocational training services, environmental hazard management services, and petroleum industry equipment exports. For more information, please visit: https://www.trade.gov/country-commercial-guides/uganda-oil-and-gas