President Museveni and his National Resistance Movement (NRM) government are banking on Musevenomics, an approach that combines several strategies, to drive Uganda to an upper-middle-income economy by 2040. To increase the size of the economy by tenfold to $500b by 2040, the government is relying on pillars like agro-industrialisation, tourism development, infrastructure, mineral development, including oil and gas.
To support agro-industrialisation this financial year, the government is prioritising investment in appropriate agro-processing and value addition technologies, high-quality agricultural inputs, construction of key water storage and irrigation infrastructure and diseases, pests and vector control. While presenting his 2025 State of the Nation Address in June, President Museveni disclosed that the country’s economy was projected to grow to Shs224.9 trillion by the end of June 2025. Economic growth was projected at 6.3 percent this financial year (FY), and further projected to grow at 7.0 percent in FY2025/2026. This trajectory is estimated to triple once the commercial production of oil and gas starts in 2026. With the continued implementation of the Parish Development Model (PDM), Museveni said achievements in a bid to alleviate poverty are not by accident.
‘They are due to deliberate and focused government interventions. Cumulatively, over the last 10 years, the government has injected over Shs8.03 trillion in strategic wealth creation initiatives, which have boosted economic performance,’ he noted. Yet experts have warned that unless the country integrates its new growth model with policies and investments that boost productivity growth, especially in the agriculture sector, to achieve its Fourth National Development Plan (NDP IV) and Vision 2040, all could fail.
Infrastructure
For nearly two decades, the government has prioritised infrastructure development, especially roads, railways and electricity. Just last year, President Museveni flagged off the construction of the yet-to-begin Standard Gauge Railway (SGR). Road projects like the construction of the 23.6km Yumbe-Ure road and bridge and the 69.3km Katine-Ochero road, to mention but two, are deemed noteworthy.
The World Bank Group has, regardless, warned that unless the government recognises the need to prioritise high-vulnerability geographies and sectors, besides aggressive implementation of additional targeted adaptation interventions, climate change and its associated impacts could leave quite the trail of destruction. Under the energy, transport, and digital infrastructure, the Group says climate shocks could damage Uganda’s power network, roads, and bridges if a climate-responsive approach is not considered. Besides privately run electricity generation facilities, Uganda boasts of four large hydropower plants at Nalubaale, Kiira, Isimba and Karuma, with a combined generation capacity of 1,163.2 megawatts.
This, alongside, other generation sources like Kigwabya, XsaboNkonge solar power in Mubende, among others, brings the total installed generation capacity to 2,052 megawatts. More than half of the country’s electricity transmission and distribution network is, however, exposed to landslide and flood risk. The risk road networks grapple with comes up to about 60 percent at national level.
‘Flood damage could increase annual road maintenance costs by between $13.6m (Shs46b) and $26m (Shs89b), on average, in the 2040s, with associated road delays causing 2.6-3.5 million labour hours lost, under optimistic and pessimistic general circulation models of climate change, respectively,’ the group warns.
Potent mix
Uganda seeks to expand power generation from 2,048 to 52,400 megawatts by 2040, a development that arguably requires private sector participation and improved institutional project management and procurement capacity. The Energy ministry’s power generation and transmission expansion plan for 2025-2040 envisages a largely renewable electricity generation mix. The Group says building a climate-resilient and low-carbon infrastructure system is an effective way to increase private investment and leverage international trade opportunities.
Based on A and R scoring, Uganda has put several key foundational measures in place for rapid, robust, and inclusive growth, facilitating the adaptation of people and firms, and enabling prioritisation, implementation, and progress monitoring, and needs to implement these. It is projected that by 2050, more than 40 percent of Uganda’s total population could be living in cities, with urban populations expected to grow to 42 million, 30 million more than in 2023. The spread of people across Uganda’s urban centres is, however, uneven, particularly between secondary towns and the rapidly growing metropolitan area of Kampala.
In 2021, the government promoted 10 secondary cities (Fort Portal, Arua, Gulu, Jinja, Mbarara, Mbale, Masaka, Hoima, Lira, and Soroti) as regional hubs for job creation and improved social services. It also upgraded five urban areas (Entebbe, Kabale, Moroto, Wasiko, and Nakasongolo) to cities as alternative migration destinations to Kampala. Uganda, however, has an acute housing shortage, with 66 percent of the population living in slums and informal settlements where over 70 percent of urban housing units are made from temporary materials.
‘With up to 85 percent of the city’s population living in slums and informal settlements, climate change impacts are amplified. Nearly 45,000 people are impacted every year by river flooding in Uganda, but fortunately, only around 40 education and health care facilities are inundated,’ the report says. In contrast, 10 and 50-year floods can inundate as many as 200 and 250 facilities, respectively, causing $150m (Shs512.4b) to $250m (Shs854.1b) in damage to buildings alone. Expected annual damages from inland flooding amount to more than $60m (Shs204.9b), or 0.1 percent of capital by 2050 under the SSP3-7.0 mean climate future, the Group says.
High building density compounds the urban heat island effect, increasing energy consumption (as people rely on air-conditioning to combat heat) and GHG emissions, as well as the risk of heat-related illnesses and chronic conditions. ‘Disregard for the natural landscape when building roads and housing development destabilises the terrain, and can result in landslides when climate events occur,’ the group notes.
Agro-industrialisation
Candidate Museveni has anchored his re-election bid on the two planks of protecting the gains made during his nearly four-decade-long rule and taking a qualitative leap as Uganda’s oil plans gain traction. An oil refinery is scheduled to begin operations in the fourth quarter of 2029 or the first quarter of 2030, according to Michael Nkambo Mugerwa, the General Manager of Uganda Refinery Holding Company. With construction set for late 2025, the $4b (Shs13.6 trillion) refinery is expected to fuel growth and enhance exports.
The World Bank, on its part, says landscape management measures are vital for resilience to climate risks and lowering greenhouse gas emissions. They will also safeguard nature-based tourism, a key growth sector in Uganda. The NRM party is deeply interested in growth. Should it win the people’s mandate during the 2026 polls, the party promises to double the size of the economy between 2026 and 2031 by transforming livelihoods and turning every adult Ugandan into a producer of goods and services for sale and focus on generating more gainful jobs, expanding wealth creation opportunities and empowering Uganda to take charge of its economic destiny.
‘The overall goal is full monetisation of the economy through commercialisation of agriculture, investing in manufacturing, investing in young people’s talents, among others. For these objectives to be realised, the NRM will continue to prioritise macroeconomic stability and lower the cost of doing business by bringing down the cost of electricity, Internet, transport and capital,’ the party’s manifesto reads in part. According to candidate Museveni, the NRM’s onslaught on the subsistence economy has resulted in reducing the number of Ugandans ‘working only for the stomach’. ‘Households in subsistence in the different parts of the country reduced to 33 percent in 2024 from 69 percent in 2014. The target is to fully monetise all Ugandans.’
To stop over-reliance on rain-fed agriculture and stabilise agriculture, the government is currently constructing three major irrigation facilities. It has also prioritised investment in water for production and irrigation by investing in seven large-scale irrigation schemes. In the past few years, it has also claimed to have constructed more than 4,300 micro-scale irrigation facilities and 5,251 small and medium-scale irrigation schemes in 135 districts across the country, benefiting thousands of smallholder farmers. Besides constructing valley tanks to address water shortage in the cattle corridors across the country, it also promised to build valley dams.
The World Bank, however, notes that climate change-induced soil erosion is expected to compound this volatility, with additional yield decreases ranging from 0 to 12 percent, with relative negative impacts on crop production concentrated in the north and northeast. To counter the impact, the lender’s report suggests that the government will need to expand climate-compatible irrigation to moderate volatile yields, noting that in some regions, expanding irrigation will result in unmet irrigation demands.
‘At the farm level, expanding irrigation and improving soil quality can help counter expected increases in crop yield variability due to climate change. Between 2022 and 2050, crop yields could fluctuate between -12 per cent and +12.5 per cent, compared to the baseline,’ the report reads. ‘It will also need to develop and operationalise a plan that details infrastructure needs, establishes community-based management of irrigation schemes, controls water abstraction, monitors compliance, and promotes micro-irrigation,’ it adds.
Whereas Uganda’s economic transformation hinges on trade opportunities with the African Continental Free Trade Area alone, estimated to deliver up to $2.5b (Shs8.5 trillion) export boost by 2035, this, it says, will require significant improvements in energy, transport, and digital systems.
Musevenomics
On September 2, the government, during the annual ambassadors’ conference in Gulu City, unveiled its new flagship programme, the Economic and Commercial Diplomacy Strategy (ECDS). It is born out of a 2016 presidential directive to the Ministry Foreign Affairs (MFA) to cause all the country’s foreign missions and embassies to embrace and pursue economic and commercial diplomacy. At the launch, meanwhile, the Senior Presidential Advisor on Defence and Security, Gen Caleb Akwandanaho, alias Salim Saleh, challenged Uganda’s ambassadors and high commissions to synchronise the operational strategies with the vision of President Museveni, to boost their success.
Gen Saleh said the country has so far shifted from sector-based to programme-based planning, adding that the embassies need to urgently adjust. In ‘Musevenomics,’ President Museveni emphasises a deliberate social-economic transformation in which he seeks to rid the country of the peasantry of our society and become a middle-class money economy.