Economic activity stalled during the latter part of FY20 due to a domestic lockdown for over four months, border closures for all but essential cargo, and the spillover effects of disruptions to global demand and supply chains. This resulted in a sharp contraction in public investment and deceleration in private consumption, hitting the industrial and service sectors hard, particularly the informal service sector. That could lead to more severe social and economic impacts and amplify external and fiscal imbalances.
Finally, heightened uncertainty in the post election period and weather shocks could further exacerbate the risks. Prior to the COVID outbreak, structural transformation was driving a decline in poverty, despite a slowdown in average economic growth over the last decade.
The transformation was characterized by a reduction in the total workforce employed in agriculture and a take-off in industrial production, largely in agro-processing. Notwithstanding shifts to higher productivity jobs, per capita real GDP growth decelerated to 1. Following the COVID shock, there have been widespread firm closures, permanent layoffs in industry and services, a rapid slowdown of activity particularly in the urban informal sector, and a movement of labor back to farming.
To keep up with growth in the labor force, the economy needs to create at least , jobs per year, which far exceeds the 75, jobs that are currently created each year. Raising incomes further will also require improving productivity in agriculture and opportunities for absorbing excess labor into more productive employment in industry and services. A child who starts schooling at the age of 4 is only expected to complete 6.
However, actual years of learning are 4. Only 95 out of children born in Uganda survive to age 5. Beyond disrupting the economy, the COVID pandemic risks rolling back the recent gains in health and human capital development if effective prevention and control measures do not continue to be implemented rapidly and at scale. While its open-door refugee policy is one of the most progressive in the world, with refugees enjoying access to social services, land and jobs, the continued influx — coupled with limited resources — is placing tremendous pressure on existing amenities and straining the delivery of services in host communities.
The CPF has been prepared in close collaboration with the government, and is informed by consultations with civil society, private sector, academia, development partners, and the public. It recognizes the dynamic between rural and urban development where, in the short run, poverty reduction will come from rural areas. The focus in the medium-term will shift toward urbanization and the creation of jobs for a rapidly growing labor force.
The investment portfolio in Uganda is primarily financed by the International Development Association IDA , which provides interest-free credits and grants on concessional terms, attracting only an administrative service charge of 0.
Loan repayments are stretched over 38 years, including a six-year grace period. Due to this lack of social security, 35 percent of Ugandans rely on their life savings and 25 percent rely on their family.
This makes falling back into poverty highly likely for a majority of people. Diseases are another cause of poverty in Uganda. Infant and child mortality rates remain high, with deaths per 1, births. Families in Uganda are often large. With the lack of finances and resources, larger families are highly likely to fall below the poverty line.
Agriculture contributed to 79 percent of poverty reduction in Uganda between and , but there is still much room for improvement.
Through Opportunity, Millie was connected to a local Farmer Support Agent, Barbra, who has helped train Millie in techniques including how to properly prune her coffee trees and how to prevent wilt. Barbra also helped Millie apply for a loan, which she used to buy young coffee trees to expand her farm. She has invested in growing banana trees, too, to support herself and her family in the off-season. When you sign up to receive email from Opportunity International, we'll keep you informed with updates, news, and stories from our work around the world.
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