Poverty Reduction in Uganda

Topics: Economic growth, Poverty, Economics Pages: 9 (2938 words) Published: November 22, 2012
Name: Nguyen, Thi Hai Yen
Student ID: 2012470037
Subject: Special topic in international development: African economics and politic

Topic: Uganda – The bright in poverty reduction for other Sub – Saharan African countries

Uganda is a landlocked and relative small country in East Africa. After independence in 1962, Uganda experienced a decade of relative political and economic stability before 15 years struggling under the power of Idi Amin who lead the country to conflict and reduced country to a failed state and a collapsed economy. It stopped by 1986, when Yoweri Museveni took power brought a period of sustained economic and political renewal to Uganda. Uganda is a relative rich of natural resources including fertile soils, regular rainfall, small deposits of copper, gold, and other minerals, and recently discovered oil. Just like other African countries, export of Uganda heavily depends on coffee with 63 per cent of total export revenues of the country. Uganda has been a bright point in Sub – Saharan Africa by being the first country in the region to embark on liberalization and pro-market policies in the late 1980s. Thanks to the right policies, the government has maintained a stable macroeconomic environment and sustained private sector-oriented reforms that graduated Uganda into a mature reformer in 2006. GDP growth accelerated from an average of 6.5 per cent per year in the 1990s to over 7 per cent during the 2000s. Together with the sustained economic growth in the past two decade, Uganda enabled substantial poverty reduction and some progress towards Millennium Development Goals (MDG). Although other MDGs such as achieving universal primary education, reducing child mortality rates, improving maternal health, combating HIV/AIDS, malaria, and other diseases have been slow, the first goal of poverty reduction has been achieved successfully in Uganda. In 2009/2010, Uganda surpassed the 2015 MDG of halving the 56.4 per cent poverty rate recorded in 1992/1993 to 24.5 per cent. However, in 2011, at a per capita income at 500 USD or 1300 USD in PPP, ranked 203 in the world, Uganda remains a very poor country and far from the middle income status it aspires to achieve in one generation. This paper therefore reviews the economic background of Uganda; examines the trends and patterns of poverty; the government strategies to reduce poverty and concludes with challenges in sustaining the poverty reduction achievement and policy recommendations.

Economic background
Table 1. Sectoral contributions to GDP and Growth Rates in Uganda (from 2001-2010)

As can be seen from table 1, Uganda remained high growth rate during the period from 2001-2009 with 7.9 per cent in average before cool down by 5.8 per cent in 2010 and 4.3 per cent in 2011 because of the reduce of demand from the main export markets of Uganda, especially the USA and European countries since the world recession.. In terms of structure, Ugandan economy has a modern structure in which GDP is attributed largest from the services sector, follow by the industrial sector and least by the agricultural sector. However, in fact, agriculture is the main sector of the economy, employing over 82 per cent of the work force even it contributed only 22 per cent of GDP (2011). The budget deficit has improved by reducing gradually from 10.2 per cent of GDP on average during 2000 - 2004 to 7.9 per cent of GDP on average during 2005-2008 and reached 5.9 per cent of GDP in 2011. Uganda remained high domestic investment rate at 23.9 per cent of GDP, thus kept the national debt rate at a safety rate compare to other countries. However, after a decade remained one digit number of inflation, the consumer prices in the country became worse in 2011 at 18.7 per cent in 2011. Economic development has been made as the most important priority of Ugandan government and the economic policy is focusing on the private sector, attracting foreign direct investment, improving...
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