July 21, 2017[caption id="attachment_20707" align="alignnone" width="400"] Construction worker in Uganda (photo: James Akena/Reuters/Newscom)[/caption]
After two decades of steady growth, Uganda’s economy has slowed, and life for Ugandans is not improving fast enough.
Drought in the Horn of Africa, regional conflict, and slow credit growth have contributed to this decline, with per capita growth falling to ½ percent from an average of 5 percent for the past 20 years.
In this podcast, the IMF’s Mission Chief for Uganda, Axel Schimmelpfennig, says that some strategic infrastructure investment, better debt management, and tapping into Uganda's new-found oil reserves could help turn the economy around.
“In our estimates the revenues could range on an annual basis from about ½ percent GDP initially to about 4 percent at peak production, he says. “The challenge that many oil producers face is to manage this well.”
Schimmelpfennig says the government is planning to start oil production in 2020, and reap the benefits for almost 30 years.
Schimmelpfennig adds that the Ugandan government is focused on the efficiency of its public investment. “By picking the right projects, making sure they are prepared the right way and executed properly, at the end of the day, infrastructure investment can give Uganda high growth,” he says.
In the meantime, Schimmelpfennig says, the government has plans to increase revenue collection. The IMF has been helping the country improve its tax collection including that of international companies doing business in Uganda.
“It’s a global phenomenon, actually—companies can choose the way they structure their businesses—if they want to pay taxes in Uganda or somewhere else. So, you want to make sure that companies pay taxes for the activities in your country.”