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UgandaEconomicUpdate|
December,
2023©
2023
International
Bank
for
Reconstruction
and
Development/International
DevelopmentAssociation.TheWorld
BankGroup1818H
StreetNWWashington
DC20433Telephone:202-473-1000Internet:This
work
is
a
product
of
the
staff
of
The
World
Bank
with
external
contributions.
The
findings,interpretations,
and
conclusions
expressed
in
this
work
do
not
necessarily
reflect
the
views
of
TheWorld
Bank,itsBoard
ofExecutive
Directors,
orthegovernments
they
represent.The
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Bank
does
not
guarantee
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accuracy
of
the
data
included
in
this
work.
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on
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in
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concerning
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or
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oracceptanceofsuchboundaries.Rights
and
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of
itsknowledge,
so
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work
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in
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or
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part,
for
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aslongasfullattributiontothisworkisgiven.Anyqueriesonrightsandlicenses,includingsubsidiary
rights,shouldbeaddressedtotheOfficeof
the
Publisher,
The
World
Bank,
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Street
NW,
Washington,
DC
20433,
USA;
FAX:
202-522-2422;
e-mail:pubrights@.Photocredits:DerrickSanyunitoDerrickSsenyonyi,
2022–
2023andRachelMabala(2021-2022)Design/Layout:ArtfieldGraphicsPrintedinUgandaby
ArtfieldGraphicsAdditional
material
relating
to
this
report
can
be
found
on
the
World
Bank
Uganda
website
(www./uganda).iiUgandaEconomicUpdate|
December,
2023ContentsAcronymms
and
Abbreviations....................................................................................................................................
vForeword
......................................................................................................................................................................viAcknowledgements.....................................................................................................................................................
viiExecutive
Summary.....................................................................................................................................................viiiPART
1
State
of
the
Economy
....................................................................................................................................121.1Recent
Economic
Developments...............................................................................................................................14Globaleconomicgrowthisprojectedto
remainweakin2023dueto
thelingeringeffectsofmultiplecrises..........
14Growthhasbeenbroad-based,
withrisingoutputintheagricultural,
industrial,
andservicesectors
......................
14MonetaryconditionsinUgandahaveeasedinlinewithglobaldevelopments..............................................................17Challengesaroundrevenuecollectionthreatenthefiscalconsolidation
.........................................................................17Thecurrentaccountremainedstableashigherexportrevenuesoffsetasurgeinimports.........................................
191.2
Economic
Outlook,
Risks,
and
Policy
Actions...........................................................................................................21Economicresilienceunderpinnedbytheprospectsoftheoilsector
................................................................................211.3
Summary
and
Recommendations...........................................................................................................................
23PART
2
Assessing
the
Quality,
Efficiency,
and
Effectiveness
of
Public
Spending
in
Education..................................242.1Structure
and
Governance
......................................................................................................................................
282.2
Key
Education
Outcomes
.......................................................................................................................................
302.3
Analysis
of
Public
Spending
on
Education.............................................................................................................
332.3.1Adequacy
...........................................................................................................................................................................332.3.2Efficiency
..........................................................................................................................................................................372.3.3Equity
................................................................................................................................................................................402.4
Recommendations
.................................................................................................................................................
45References...................................................................................................................................................................
47iiiUgandaEconomicUpdate|
December,
2023List
of
FiguresFigure
1:
Growthremainedrelativelystrongdespiteadverseweatherconditionsandweakminingoutput
.......................
15Figure
2:
ThePMIhasimprovedsince2022.
....................................................................................................................................17Figure
3:
Lowergoodspricesdrovethedeclineincoreinflation..................................................................................................17Figure
4:
Theongoingfiscalconsolidationisnarrowingthedeficit.
............................................................................................17Figure
5:
TheUgandanshillingappreciatedsubstantiallyduringFY2023.
................................................................................19Figure
7:
ImportcoveragefellduringFY2023...................................................................................................................................20Figure
6:
Privateinflowsandgovernmentborrowingfinancedthecurrent-accountdeficit.
..................................................20Figure
8:
TheStructureandOrganizationoftheUganda´sFormalEducationSystem..............................................................28Figure
9.
GrossEnrollmentRates,
2019(%).....................................................................................................................................30Figure
10.
EarlyGradeReading
AssessmentResultsbyLocalLanguage,
2022..........................................................................31Figure
11.
PublicSpendingonEducationasaShareofGDP,2018orLatest
Available
Year
.......................................................33Figure
13.
PublicEducationSpendingperStudentasaShareofGDPperCapita,
Latest
Available
Year.................................33Figure
12.
PublicSpendingonEducationasaShareofTotal
GovernmentSpending,
2018orLatest
Available
Year.............33Figure
14.
PublicSpendingbyEducationLevel
................................................................................................................................34Figure
15.
PublicSpendingperStudentbyEducationLevel,
2010/11–2021/22
..........................................................................34Figure
16.
Ratio
of
Teacher
Salaries
to
Earnings
of
Similarly
Educated
Workers
by
Highest
Degree
Completed
and
AgeGroup,
2019/20.................................................................................................................................................................................35Figure
17.
Ratio
of
Teacher
Salaries
to
Earnings
of
University
Educated
Workers
by
Level
of
Instruction,
2019/20
(25-64Years
Old).........................................................................................................................................................................................35Figure
18.
CompositionofHouseholdSpendingonEducationbyLevelofEducationandType
ofSchool,
2019/20..............36Figure
19.
Learning
AdjustedYears
ofSchoolbyGDPperCapitaandEducationSpending,
2020............................................37Figure
20.
NumberofStudentsperTeacherandTotal
NumberofStudentsinGovernment-FundedPrimarySchoolsbyDis-trict,
2020/21....................................................................................................................................................................................38Figure
21.
Number
of
Students
per
Teacher
and
Total
Number
of
Students
in
Government-Funded
Secondary
Schools
byDistrict,
2020/21...............................................................................................................................................................................38Figure
23.
School
AttendanceandPovertyRatesbySubregion,
2019/20....................................................................................41Figure
22.
LorenzCurveofEducationSpendinginUganda,
2019/20............................................................................................41Figure
24.
LearningPovertyinPrimaryEducationandPovertyLevelbySubregions,
2018/2019
...........................................42Figure
25.
Per-StudentUPEGrantsandPovertyRatesbySubregion,
2020/21...........................................................................43Figure
26.
Per-StudentUSEGrantsandPovertyRatesbySubregion,
2020/21...........................................................................43Figure
2
7.
LearningPovertyinLiteracyandStudent-TeacherRatios,
PrimaryEducation,
2020..............................................44Figure
28.
LearningPovertyandper-StudentUPETransfers,
PrimaryEducation,
2020/21
.....................................................44ivUgandaEconomicUpdate|
December,
2023List
of
TablesTable1:
QuarterlyRealGDPGrowth(%).....................................................................................................................................
16Table2.
KeyFiscalIndicators(%ofGDP)...................................................................................................................................
18Table
3.
BaselineEconomicOutlook(annual%changeunlessotherwiseindicated)
.........................................................21Table4.
DistributionofSchool
AttendancebyEducationLevelandSchoolType,
2019/20(%)
.........................................29Table5.
DistributionofReasonsCitedforLeavingPrimaryEducationbyGradeandGender,
2019/20(%)......................31Table
7.
Net
AttendanceRatebyPopulationGroup,
2019/20
...................................................................................................40Acronymms
and
AbbreviationsBOUBTVETCFRBankofUgandaBusiness,
Technical
andVocational
Education
andTrainingCharter
ofFiscalResponsibilityDebt
Sustainability
AnalysisDSAECFExtended
Credit
FacilityEMISFDIEducationManagement
InformationSystemForeign
Direct
InvestmentFYFiscal
YearGDPGross
DomesticProductGoUGovernmentofUgandaIGFTRIMFIntergovernmental
FiscalTransfer
ReformsInternationalMonetaryFundLAYSMoESMoFPEDNDP
IIIPLELearning
AdjustedYears
ofSchoolingMinistryofEducation
andSportsMinistryofFinance,
Planning,
andEconomic
DevelopmentThird
NationalDevelopment
PlanPrimaryLearningExaminationResearch
Triangle
InstituteRTISPASchoolPerformanceAssessmentScience,
Technology,
EngineeringandMathematicsStudentTeacher
RatioSTEMSTRUBOSUgIFTUGXUgandaBureau
ofStatisticsUgandaIntergovernmental
FiscalTransfer
Reform
ProgramUgandanShillingUPEUniversalPrimaryEducationUSEUniversal
Secondary
EducationvUgandaEconomicUpdate|
December,
2023ForewordThe
Ugandan
economy
continues
to
recover
from
multiple
shocks
and
a
challenging
global
environment.Economic
activity
has
been
robust
due
to
strong
industrial
activity
and
improved
performance
of
the
servicessector.
Although
agricultural
production
was
affected
by
adverse
weather
conditions,
the
sector
recordedstrong
growth.
Spillovers
from
the
war
in
Ukraine
led
to
higher
food
and
fuel
prices
that
broadened
across
othergoods
andservices,
contributingtoa
surgein
inflation
in
thesecondhalf
of
2022.
Inflationbegantodeceleratein
February
2023
and
has
since
remained
below
the
Bank
of
Uganda’s
target
rate
of
5
percent
due
to
its
policyactions.
Notwithstanding
the
resilience
of
the
economy,
the
country’s
growth
trajectory
is
fragile.
Recent
globalmarketturmoil
andpotential
spillovers
from
theconflict
in
Sudanposenewpolicychallenges.Uganda
will
soon
enter
a
pivotal
stage
in
its
development
path
where
human
capital
–
the
knowledge,
skills,and
health
that
people
accumulate
throughout
their
lives
–
has
the
potential
to
be
a
central
driver
of
thecountry’s
progress.
Yet
even
as
Uganda’s
population
is
projected
toincrease
by
60
percent
in
the
next
20
years,the
country
has
been
underinvesting
in
its
human
capital.
The
World
Bank
estimates
that
at
current
levels
ofinvestment
in
human
capital,
a
child
born
in
Ugandatodaywillgrowupto
be
only
38percentasproductiveashe
or
she
could
be
with
complete
education
and
full
health.
ForUganda
to
benefit
from
a
demographic
dividend,the
country
will
need
not
only
substantial
resources
to
serve
a
larger
population,
but
it
must
further
elevateits
investments
in
social
services
to
improve
the
current
poor
levels
of
access
and
quality.
In
addition,
providingequal
access
to
human
capital
development
is
key
to
addressing
the
inequality
of
opportunities
and
makingfuture
growth
more
inclusive.This
22nd
edition
of
the
Uganda
Economic
Update
focuses
on
a
critical
component
of
Uganda’s
human
capitaldevelopment:
the
quality,
efficiency,
and
effectiveness
of
public
spending
oneducation.
Spending
oneducationhas
been
consistently
low
and
inefficient
in
Uganda,
contributing
to
inadequate
and
inequitable
access
aswell
as
poor
learning
outcomes.
Although
the
scale
of
the
challenge
may
seem
daunting,
Uganda
has
manyachievements
to
build
on:
one
of
the
first
countries
to
embrace
the
idea
of
universal
primary
education;
a
leaderin
employer-led
skills
development;
and
a
world
leader
in
its
generosity
toward
refugees,
including
in
theirhuman
development.
The
World
Bank
isreadyto
supportUganda’s
effortsto
seize
thiscriticaland
time-boundopportunity
by
investingmore,
investingsmarter,andinvesting
nowin
thefuture
productivityofitspeople.Keith
HansenCountryDirectorKenya,
Rwanda,
Somalia,
andUgandaAfricaRegionviUgandaEconomicUpdate|
December,
2023AcknowledgementsThe
Uganda
Economic
Update
(UEU)
analyses
economic
and
structural
issues
in
the
Ugandan
economyand
situates
them
in
a
long-term
domestic
and
global
context.
It
is
intended
for
a
wide
audience,
includingpolicymakers,
business
leaders,
financial-market
participants,
think
tanks,
non-governmental
organizations,and
the
community
of
analysts
and
professionals
engaged
in
the
Ugandan
economy.
The
publication
intendsto
foster
well-informed
policyanalysisanddebate
regarding
the
key
challenges
facingUganda
asit
strivestoachieveinclusive
andsustainableeconomic
growth.This
22ndeditionof
the
UEU
wasprepared
bya
team
that
included
SashanaWhyte,
Rachel
K.
Sebudde,
ShawnPowers,
Aziz
Atamanov,
and
Daniel
Lukwago
(consultant).
The
team
is
grateful
to
Philip
Schuler,
Marek
Hanusch,Tamoya
Christie,
and
Shinsaku
Nomura
for
their
input
and
guidance
on
the
structure
and
messages
presentedin
the
report.
The
UEU
22
was
edited
by
Sean
Lothrop.
Pearl
Namanya
provided
logistical
support,
while
BernardTabaire
managed
the
communications
strategy
and
Karina
Acevedo
provided
invaluable
research
assistance
onthe
analysis
ofeducationexpenditures.
The
Uganda
CountryTeam
providedvaluable
feedback,
and
theoverallguidance
provided
by
Abha
Prasad
(Practice
Manager,
Macroeconomics,
Trade
and
Investment)
and
MukamiKairuki
(Country
Manager)
is
gratefully
acknowledged.
Finally,
the
team
would
like
to
thank
the
staff
of
theMinistry
of
Finance,
Planning,
and
Economic
Development
and
the
Ministry
of
Education
and
Sports
for
theircommitment
andproductive
collaboration.viiUgandaEconomicUpdate|
December,
2023Executive
SummaryUganda’seconomycontinueditsrecoveryfrommultipleexternalshocks,
despiteaturbulentglobalenvironment.Uganda’s
real
GDP
growth
rate
rose
from
4.6
percent
in
FY2022
by
the
resumption
of
gold
exports
and
a
marginal
recoveryto
5.2
percent
in
FY20231,
but
domestic
challenges
persist,
in
travel
inflows,
exports
increased
by
2.7
percentage
pointsand
external
conditions
remain
challenging.
The
services
of
GDP.
Although
spending
on
imports
fell
by
8.3
percent,
thesector
accounted
for
half
of
GDP
growth,
led
by
professional
shilling’s
real
depreciation
during
the
second
half
of
the
yearservices,
administrative
services,
and
accommodation
and
food
caused
import
costs
to
rise
by
2.4
percentage
points
of
GDP,services.
Agricultural
output
also
rose
by
4.8
percent
during
offsetting
the
sizable
growth
of
exports.
The
current-accountthe
period,
driven
by
livestock
and
fishing,
while
irregular
deficit
was
financed
mainly
through
FDI
in
the
oil
and
gasrainfall
continued
to
adversely
affect
crop
production.Growth
sector
andto
a
lesserextent
bypublic-sector
borrowing.in
the
industrial
sector
slowed
to
3.5
percent
due
to
decliningmining
and
quarrying
activity.
High-frequency
indicatorssuggest
economic
activity
will
remain
solid
through
the
endofthecalendaryear.Monetary
tightening
slowed
the
growth
of
credit
to
theprivate
sector.private-sectorcreditgrowthdeclinedto3.0percentin
FY2023.Slowing
credit
growth
primarily
reflected
the
rising
cost
ofTighter
monetary
policies
have
helped
ease
inflationary
credit,
as
thecentral
bankraised
rates
to
manage
inflationarypressure.
Influenced
both
by
global
and
domestic
factors2,
pressures.
While
lending
to
the
public
sector
risks
crowding
outheadline
inflation
rose
from
3.7
percent
in
FY2022
to
8.8
private-sector
credit
and
slowing
economic
growth,
personalpercent
in
FY2023,
well
above
the
central
bank’s
target
rate
loans
and
commercial
lending
to
the
transport,
trade,
andof
5
percent.
Rising
prices
for
nonfood
goods
contributed
mining
and
quarrying
sectors
continued
toincrease
in
FY2023.46
percent
to
the
total
increase
in
inflation
in
FY2023,
asthe
shock
of
the
external
crises
compounded
the
effects
ofadverse
weather
conditions,
while
food,
energy,
fuel,
andThe
centralgovernment’sfiscal
deficit
reached5.6percentofGDP
in
FY2023,
down
from
7.4
percent
in
the
previous
fiscalyear.
Total
central-government
revenue
rose
to
14.2
percentutility
prices
also
increased
substantially
during
the
year.of
GDP,
albeit
well
short
of
the
policy
target
of
16-18
percent.3The
inflation
rate
began
to
decline
in
February
2023
andImproved
tax
administration
pushed
tax
revenue
from
13.4reached
2.6
percent
in
November.
Inflation
is
expected
topercent
of
GDP
to
13.7
percent,
with
increased
collections
ofcontinue
easing
due
topay-as-you-earn
tax,
taxes
on
rental
income,
and
casino
taxesprices,
especially
for
energy,
as
external
shocks
abate,
andoffsetting
a
decline
in
revenue
from
corporate
income
tax
andsupply-chain
disruptions
unwind.
The
relative
stability
of
thewithholding
tax.
Meanwhile,
total
spending
fell
from
21.5Ugandanshillingalsocontributed
to
disinflation.percent
of
GDP
to
19.9percent.
Development
spending,
much
ofStrongandsustainedinflowsofforeigndirectinvestment(FDI)
which
remains
focused
on
megaprojects,
fell
from
7.9
percenthelped
finance
a
large
current-account
deficit
of
7.9percent
of
of
GDP
to
5.8
percent.
While
part
of
this
decline
was
plannedGDP.
The
current-account
deficit
(including
grants)
remained
as
part
of
the
fiscal
consolidation
agenda,
developmentbroadly
unchanged
from
FY2022,
as
a
surge
in
imports
offset
spending
was
also
undercut
by
execution
challenges
both
inthe
recovery
of
goods
exports
and
tourism
inflows.
Driven
domestically
andexternally
financed
projects.1ThefiscalyearinUgandarunsfromJulytoJune.2
Adverseweatherconditions,
highenergyandfoodpricesandsupplyconstraints3ThistargetisdefinedintheDomesticRevenueMobilizationStrategy.viiiUgandaEconomicUpdate|
December,
2023Alady
pours
peas
for
sale
into
abasket
in
Nakasero
Market.
Derrick
Senyonyi,
2023.Outlook,
Risks,
andChallengesor
incomplete
implementation
of
structural
reforms
in
keyareas
such
as
private-sector
development
and
climate-changeadaptation
in
the
agricultural
and
tourism
sectors.
On
the
upside,rapid
disinflation
in
advanced
economies
could
lead
to
loosermonetary
policies,
easing
financial
constraints
in
global
markets.The
medium-term
outlook
remains
broadly
positive.
Medium-term
growth
prospects
hinge
on
the
anticipated
development
ofthe
oil
and
gas
sector,
which
is
expected
to
push
the
annual
GDPgrowth
rate
to
well
above
6
percent
in
the
medium
term.
Thecontinued
implementation
of
governance
and
product-marketreforms
designed
to
boost
agri-business,
encourage
trade,and
foster
private
investment
is
also
expected
to
contributeAssessingtheQuality,
Efficiency,
andEffectivenessofPublicSpendinginEducationto
medium-term
growth.The
implementation
of
the
Domestic
With
a
young
and
growing
population,
Uganda
has
a
one-timeRevenue
Mobilization
Strategy—particularly
the
reforms
to
opportunity
to
capture
a
demographic
dividend,
but
successtax
expenditures
and
value-added
taxes—will
support
fiscal
is
not
guaranteed.As
improving
economic,
health,
and
socialconsolidationon
therevenueside.
Meanwhile,
fiscal
spending
conditions
lower
first
mortality
rates
and
then
fertility
rates,aimed
at
easing
constraints
on
growth,
including
investments
in
countries
pass
through
abrief
window
in
which
the
size
of
theenergy
and
transport
infrastructure,
should
help
revive
private
working-age
population
(ages
15-64)
far
exceeds
the
dependentinvestment,
boost
agricultural
production,
and
energize
the
light
population
of
children
and
the
elderly.
During
this
demographicmanufacturingsector.transition,
a
country
can
leverage
its
changing
age
structure
toaccelerate
growth,
but
only
if
its
workers
are
able
realize
theirproductive
potential.Uganda
is
a“pre-dividend”country,meaningthat
today’s
children
will
be
the
working-age
population
duringthe
country’s
demographic
transition.
To
ensure
that
Ugandareaps
a
demographicdividend,
the
government
must
invest
inhumancapital.Risks
to
the
medium-term
outlook
are
substantial.
Key
risksinclude
a
further
deterioration
of
global
economic
conditionsdue
to
intensifying
geopolitical
tensions,
an
escalation
of
theconflict
in
the
Middle
East,
slower-than-expected
growth
inChina,
a
温馨提示
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