Uganda’s economy is booming in 2024, posting a growth rate of 6.1% up from 5.3% in 2023 and outpacing most of its East African neighbors.
This impressive performance has made Uganda one of the region’s top economic performers. But while optimism is high, major risks could threaten this momentum. Delays in oil production, rising debt, and global shocks all cast long shadows over this success.
According to a recent source from Uganda, the country’s economic growth is being fueled by a combination of major investments and expanding trade, including, Oil Sector Investment, where Uganda is edging closer to becoming an oil-producing country.
Massive infrastructure projects like the $10 billion East African Crude Oil Pipeline (EACOP) and development of the Tilenga and Kingfisher oil fields are at the heart of this transformation.
These projects, led by companies like TotalEnergies and CNOOC, have already created thousands of construction and logistics jobs and attracted significant foreign investment. While oil hasn’t started flowing yet, the build-up has been a powerful engine for growth.
Secondly is the Regional Trade Expansion, and Uganda is reaping the benefits of deeper economic ties within the East African Community (EAC) and through the African Continental Free Trade Area (AfCFTA).
The source noted that some Key exports, including, coffee, maize, gold, and dairy products are seeing rising demand in neighboring markets such as Kenya, South Sudan, Rwanda, and the Democratic Republic of Congo.
The source said that, improved cross-border infrastructure and trade agreements are helping Ugandan businesses reach more buyers.
He further explained that the people gaining from the growth, shall also include, workers: new jobs in construction, transport, and services have reduced unemployment, especially among youth.
Farmers: Rising demand for agricultural exports is lifting rural incomes.
And entrepreneurs: Improved accesses to credit and better roads are helping small and medium businesses grow.
The source added that there are some major risks ahead in Uganda, despite the progress, several challenges could derail Uganda’s economic rise, including, delays in oil production, which was expected to start flowing by 2025, but the timeline is uncertain. Environmental objections, legal disputes, and gaps in financing have slowed the EACOP pipeline and field developments.
If first oil is delayed to 2026 or later, Uganda may miss out on billions in expected revenue, which could have funded critical infrastructure and public services.
Secondly rising national debts, where Uganda’s public debt has ballooned to over $24 billion, or about 52% of GDP. A large portion of this is owed to China, used to finance roads, dams, and other infrastructure.
While some of these projects are growth-enhancing, the high cost of repayment could lead to budget cuts in essential services like healthcare and education.
Furthermore the global economic shocks, that Uganda remains vulnerable to external pressures. A slowdown in major economies, rising global interest rates, or fuel price spikes could reduce demand for Uganda’s exports and make borrowing more expensive.
Additionally, Uganda is promising future but not guaranteed, because the ingredients to become East Africa’s next economic success story. Strong growth, strategic investments, and expanding trade offer real hope. But oil delays, rising debt, and external shocks could put that future at risk.
The next two to three years will be crucial. If Uganda manages its resources well and tackles risks head-on, the current boom could lead to long-term prosperity. If not, today’s growth may fade just as quickly as it came.
