Bank of Uganda says Drought has affected the country’s Economy.

Drought Struck Uganda

By Nangayi Guyson –

Kampala, Uganda – Prolonged drought that has hit Uganda in the previous years has affected the country’s economy. The Bank of Uganda has said.

Governor Emmanuel Tumusiime-Mutebile told reporters last week that the economy has performed worse than the last financial year where it grew by 4.8 per cent.

“Given the weak economic performance in the first two quarters of the current financial year, the projected GDP growth of 4.5 per cent in 2016/17 is unlikely to be achieved,” Mutebile said.

Over the past two decades, Uganda has seen a remarkable turnaround in economic performance, with growth averaging about 7.7% a year over the 1995–2014 periods. Equally impressive has been the sharp decline in poverty rates, which fell about 15% points over this period. Improved macro-economic management and economic reforms contributed to the country’s strong growth performance. This growth has been known to be private sector led with increase in commercial activities stemming from the liberalization of the economy in the early 1990s.

But the recent prolonged drought will make Ugandans who largely depend on agriculture continue to experience a financial Crisis in the next years.

A report by Uganda National Meteorological Authority says more than half of Uganda was  hit by an exceptional drought and the  current drought conditions are the worst in the country’s history.

The government’s January 1st-10th January forecast indicated ‘very hot temperatures with average maximum temperatures ranging from 26.4 to 36.3 degrees centigrade,” with Nebbi district recording as high as 38.5 degrees centigrade.

BOU deputy governor Dr Louis Kasekende said the economic recovery would have been faster if there were swift changes in the way people are farming to use improved methods.

Outside agriculture, the signs of a poor economy are seen in all corners. Key retailer businesses have started has shutting down.

There is another indicator: a drop in the importation of raw materials and capital goods. Capital goods, such as machines which are needed in production, account for 70 per cent of Uganda’s imports.

Dr Adam Mugume, the BOU executive director Research, said the low imports, have caused trade deficit, measured by the goods imported vis-à-vis exported, reduced by 13 per cent. Exports performed a little better, with coffee receipts going up, owing to improved international prices. Gold from the region re-exported via Uganda also grew.

The value of exports less imports, plus the money Uganda earned from abroad, plus donor funds, sometimes known as the current account, improved. This is reflected in the drop of the current account deficit, which reduced by 32 per cent between November 2016 and February 2017. Personal “transfer inflows associated with the festive season and the start of the new school term” were big contributors to this drop.

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