The World Bank has urged Uganda to shift its focus from low-productivity, climate-vulnerable agriculture to high-value-added activities in order to achieve its ambitious Ten-Fold Growth Strategy goal of reaching a $500 billion economy by 2040.
According to the 26th edition of the Uganda Economic Update, released on December 24, 2025, Uganda’s economic growth remains strong, with a real GDP growth rate of 6.3 per cent in FY2024/2025, up from 6.1 per cent the previous year.
This growth is attributed to recovery in household consumption, accelerated government spending, and continued investment growth.
Speaking on the sidelines of the report’s launch on Wednesday, Dr. Francisca Ayodeji Akala, World Bank Country Manager for Uganda, emphasised the need for Uganda to transform its economy.
“Uganda’s growth remains strong, however economic activity is currently concentrated in low-productivity and climate-vulnerable agriculture and informal jobs, which offer limited opportunities for income growth and upward mobility,” she said.
Akala stressed that agro-industrialization can be a key driver of this transformation, leveraging agriculture as a platform for industrial growth and job creation. “Transformation of the economy to higher value-added activities is needed to deliver on the country’s Ten-Fold Growth Strategy. Agro-industrialization can be a key cornerstone of this transformation, leveraging agriculture as a platform for industrial growth and job-creation,” she added.
The report notes that poverty is projected to have declined in FY2024/2025, with inflation remaining low at 3.5% due to tight monetary policy. The Bank of Uganda has maintained the policy rate at 9.75% to maintain price stability and support economic growth.
However, the World Bank warns of fiscal pressures, including a widening deficit and higher debt levels, emphasizing the need for fiscal consolidation. The report highlights that fiscal pressures have increased, with a widening deficit and higher debt levels and servicing costs, underscoring the need to return to fiscal consolidation as signaled in the country’s FY2025/2026 budget.
Risks to the outlook include possible fiscal slippages, delays in oil sector development, and climate shocks. “Climate shocks and lower than expected rainfall could increase poverty in the absence of mitigating measures because most of the poor depend on rain-fed agriculture,” the report notes.
On the upside, the report projects a positive medium-term outlook, supported by moderating spending growth, oil revenues expected to start in 2027, continued export dynamism, and sustained foreign direct investment inflows. Agro-industrialization is highlighted as a key driver of job creation, value addition, and inclusive growth.
This edition of the Uganda Economic Update focuses on identifying and addressing constraints to agro-industrialization, which has enormous potential for job creation, value addition, and inclusive growth.
The report emphasises the need for Uganda to leverage its agricultural sector to drive industrial growth and create jobs, rather than relying on low-productivity and climate-vulnerable agriculture.