Uganda Needs Two Decades to Reach Middle-Income Level, Bank SaysPaul Richardson
Uganda will take two decades to achieve middle-income status based on its current economic- and population-growth rates and attaining the target any sooner would be impossible, the central bank said.
President Yoweri Museveni said in June that Uganda will become a middle-income country by 2017 and be classified as first-world within the next 50 years. To achieve that level, the government needs to adopt policies that modernize agriculture, reduce population growth and boost private sector investment rates, Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said in remarks e-mailed by the bank today.
The minimum threshold for middle-income status is gross national income per capita of $1,036. Uganda’s ratio was about half that at $510 in 2011. With the government targeting annual economic growth of 7 percent a year and the population increasing by 3.2 percent, per-capita income is estimated growing at 3.7 percent, meaning it will take 19 years for Uganda to double its real income, Tumusiime-Mutebile said.
It is “clearly not possible for Uganda to double its real income by 2017,” he said. “A more realistic target would be to reach middle-income status by the early 2030s.”
Uganda is Africa’s biggest exporter of coffee and is set to start producing oil in 2016. The economy is forecast to grow about 6 percent in the fiscal year through June and 5 percent in the medium term, Finance Minister Maria Kiwanuka said in June. The World Bank says Uganda may achieve middle-income status by 2040.
Tumusiime-Mutebile urged the government to address productivity levels in the agriculture industry that are among the lowest in the world. Farm policy in the country should focus on encouraging smallholder farmers to adopt good agricultural practices, produce more output and start to use modern farm inputs, he said.
“The combination of adopting good agricultural practices and low-input technology could enable smallholders to double their yields, which would raise farm incomes and generate marketable surpluses,” Tumusiime-Mutebile said.
The country also needs to reduce its age-dependency rate, which at more than 100 dependents per people of working age is one of the highest in the world, he said.
Private investment could be boosted by reducing the cost of doing business in Uganda by improving customs procedures, strengthening the legal system and improving power and transport infrastructure, Tumusiime-Mutebile said.