Did you know an economy can grow for years without most people feeling it? It’s one of economics’ most documented phenomena, happening in Uganda right now.
To understand why, you need to probe the numbers politicians and government bureaucrats love to quote: GDP (Gross Domestic Product), the total value of everything an economy produces in a year.
On June 11, Finance Minister Henry Musasizi put growth at 10.2 percent for the 2026/27 financial year, with oil in the picture, from the current $197.1b.
In there, there was some good news: exports have grown by 204 percent in five years, to $18b. Import bill: $16.89b. Foreign reserves: $6b. Coffee: $2.46b. Inflation: 3.8 percent. Balance of payments surplus: $2.47b, the highest in 15 years. GDP growth: 6.4 percent for 2025/26.
But GDP doesn’t say who receives that value. The economy can boom at the top and freeze at the bottom, and the figure won’t tell you.
That is Uganda’s story right now, an economic problem that, as history and its own neighbourhood to the east show, eventually turns political too.
Asset holders and everyone else
Jibran Qureishi, Standard Bank Group head of Africa region’s economic research, studies what happens to ordinary people when economies grow the way Uganda’s is.
‘This is not rich versus poor,’ he says. ‘It is asset holders versus non-asset holders where stimulus benefits asset holders. Non-asset holders are left behind.’
Uganda’s own 2026/27 budget gives that distinction a face: under the large-scale farmers financing scheme, government pays the loan interest if you farm 50 acres or more; below that, the Agricultural Credit Facility charges roughly 12 percent through commercial banks.
The pattern economists recognize is that when growth comes from big capital projects like roads, oil pipelines, telecoms, manufacturing, and bank profits, it’s the owners who benefit most.
Own property, its value rises. Own shares, they pay bigger dividends. Growth finds you. But if all you own is your labour, like your time, your hands, and your skills, the picture changes.
Labour-intensive growth, the kind that creates many decent-paying jobs, has not been Uganda’s story.
Its growth has been capital-intensive instead; every performance-of-the-economy report shows oil, gas, and industrialisation leading the pack.
That is the strategy, as Ramathan Ggoobi, permanent secretary and secretary to the Treasury, described it during Budget Month.
Nearly all discretionary spending flows toward four drivers: agro-industrialisation, tourism, minerals, science and technology, plus infrastructure and security.
Labour-intensive sectors like light manufacturing, construction, retail, informal trade, transport, and hospitality aren’t on that list.
Even within agriculture, the money targets the value chain: processing, research, export markets, not the smallholder, subsistence labour, the World Bank says, which makes up 36 percent of the working-age population.
Impressive in aggregate. Softer at the level of the individual worker.
The share of everything Uganda produces that reaches workers as wages and income has been stuck at roughly 37 percent since 2009, per the International Labour Organisation.
In that span, the economy has compounded at nearly 6.9 percent a year, roughly tripling in size, yet the workers’ share never moved.
The other 63 percent flows to capital: to owners, to those with access to credit at rates the market offers people in good standing.
The World Bank’s Human Capital Index scores Uganda at 0.38, meaning a child born today grows up only 38 percent as productive as full education, and health allows, not for lack of potential, but because investment hasn’t matched the economy’s ambitions.
Many economists argue that you cannot build a tenfold economy on 38 percent of your people’s potential; that caps productivity and household spending.
The 2026/27 budget allocates Shs13.56 trillion to health, education, water, and social protection, combined. Debt service alone takes Shs33.4 trillion.
That ratio is a human capital problem in two numbers.
Education gets 7 percent of the budget. health, 6.3 percent. social protection, less than one. That allocation contradicts the government’s own framework.
Ggoobi groups education, health, and water among the ‘enablers’ growth depends on, same tier as security and infrastructure. The money, however, doesn’t follow that ranking.
The World Bank estimates 83 percent of Ugandan children cannot read and understand a simple text by age 10, even as more children enrol in school than ever before.
Uganda Bureau of Statistics (Ubos) itself has cautioned that enrollment hasn’t translated into learning, in a report released early June 2026.
This means Uganda is getting children into classrooms, but not yet getting knowledge into children.
Economists worry that a workforce that can’t read at 10 will struggle to drive an industrialisation agenda at 25.
The Finance Ministry’s data captures the formal private-sector workforce, which grew from 672,300 to 2.3 million workers between 2016/17 and 2024/25, with a median monthly salary of Shs230,000 ($62).
The problem here is that the working-age population grows by roughly two million people a year, per Ubos.
Between 80 and 90 percent of working Ugandans do so in the informal economy, with no contracts, no pensions, no collective bargaining and no savings buffer.
The World Bank estimates 36 percent of the working-age population works exclusively in subsistence agriculture, producing food to eat, not income to spend.
So, when commodity prices spike, a drought cuts harvests, or a pandemic shuts markets, these workers absorb the shock entirely, in their own bodies.
Recent shocks such as Covid’s supply disruptions, the Russia-Ukraine conflict, and the tightening cycle left scars.
‘Headline inflation has come down,’ Jibran says. ‘What has not come down is the cumulative price level that reshaped household purchasing patterns’, or the deeper recalibration of households that watched their margins evaporate and learned not to trust the calm that followed.
Despite years of growth, the macro numbers celebrate. The World Bank puts more than half of Ugandans, 51.5 percent as of 2024/25, barely down from 52.9 percent the year before, below the revised international poverty line of $3.00 (Shs11,056) a day.
The numbers behind the numbers
Uganda’s total budget for 2026/27 is Shs84.39 trillion with domestic revenue at 15.9 percent of GDP and debt at 53 percent, ‘sustainable,’ says the International Monetary Fund (IMF).
Of that budget, roughly 40 percent, or Shs33.4 trillion, goes straight to debt. That’s the single largest line in the budget: bigger than education, bigger than health, bigger than infrastructure.
Bank of Uganda projects debt service will eat 45.3 percent of domestic revenue by the end of this financial year.
Development economist and director of the Economic Forum at Makerere University Business School, Fred Muhumuza, notes that ‘citizens pay their taxes only to watch the bulk disappear into interest payments, not into services that would build trust and raise compliance.’
Ggoobi’s defence is a timing argument that investments like irrigation, roads, and oil infrastructure pay off after a lag, and debt covers that gap until growth catches up.
He points to the ‘moderate risk’ rating as evidence it’s working, contrasting it with the DR Congo, which he calls low-risk for avoiding borrowing, but says has no hospitals or roads to show for it.
The other fascinating line in the budget is the domestic refinancing line at Shs13.97 trillion, which means borrowing new money to repay old money.
‘The moment you get into refinancing, you are doing debt restructuring. That means you are not sustainable. If you are borrowing to pay back, you have a problem,’ Muhumuza illustrates.
Rating agencies agree on the broad picture, if not the exact notch: Fitch has Uganda at ‘B’ with a stable outlook, Moody’s at ‘B3’, SandP at ‘B-‘, all comfortably inside non-investment grade.
Then there’s Shs8.4 trillion in domestic arrears, owed to suppliers who have delivered and are waiting to be paid.
The budget allocates Shs317b to clear them. At that pace, Uganda would take roughly 26 years to settle what it already owes.
‘By the time a private sector entity qualifies to work with government, those are the ones you would want to build your economy around. And these are the ones who are suffering,’ Muhumuza puts it.
Uganda’s official lending rate, 18 percent, is for prime borrowers only. Everyone else borrows at 30 to 40 percent.
China, meanwhile, trimmed its lending rate from 2.5 to 2.4 percent, and Chinese products fill Ugandan markets.
Muhumuza notes this cannot allow Ugandan producers to compete ‘because if somebody is borrowing at 2 [percent] and you’re borrowing at 18 [percent],’ they are out of your competition league.
‘So, what is your outlook? More imports and fewer exports,’ he says.
Part of why borrowing is expensive for Uganda’s businesses is that government borrows heavily from local banks and the bond market, pushing up the price of money for everyone.
Uganda’s heavier reliance on costly domestic borrowing has widened the fiscal deficit and crowded out private investment.
What would actually change things?
Government points to its wealth-creation programmes such as the Parish Development Model (PDM), Emyooga for specialised skills groups, GROW (Generating Growth Opportunities and Productivity for Women Enterprises), as evidence that it’s trying to reach the bottom.
In intent, they are right to try. PDM has committed Shs3.6 trillion to parish-level lending since 2022, reaching over 2.63 million Ugandans, according to the Finance Ministry.
Some households have shifted from subsistence to modest commercialisation, but the evidence is uneven.
Ggoobi calls GROW’s early troubles governance issues, now resolved, expecting next year’s disbursement to double.
Auditor General Edward Akol found that GROW spent only Shs18.52b of its Shs75.1b allocation in 2023/24, a 25 percent absorption rate.
Emyooga’s own implementing agency, Microfinance Support Centre, has flagged misuse and personalisation of funds in eastern and northern Uganda.
PDM’s documented cases include ghost beneficiaries, funds spent on consumables, and political capture.
There’s a deeper problem, Muhumuza says, noting that these programmes are funded through government borrowing, which raises interest rates and squeezes the private sector, the delivery mechanism undermining the economy it’s meant to help.
‘You cannot build a ladder to the middle class with one hand while pulling it away with the other,’ he says.
His prescription is to borrow less domestically, clear the arrears urgently, and raise the income tax threshold so workers keep more of what they earn, since household consumption, at 70 percent of GDP, is the engine the whole system runs on.
‘I would have been happy to have a pay as you earn (PAYE) threshold of half a million [from the current Shs335,000]. Let those people go and consume. They will pay us consumption taxes, but let them survive. And that will boost demand, that will boost investment,’ Muhumuza notes.
If revenue doesn’t arrive and borrowing fills the gap instead, the cost of money rises further, the private sector is squeezed further, and the macro-micro gap widens further.