In 2016, growth is subdued at 5%. Tight lending conditions and lower investment are to blame. These are due to uncertainty associated with the presidential election, which was held in February.
Thanks to a rise in infrastructure investment - both public and private - the construction sector is set to be a fundamental growth driver in 2017 and 2018. This also applies to the power sector. Eight power generation projects, two of which are Chinese-funded, are slated to be commissioned in 2017-18. EH expects growth to jump to 5.5% in 2017 and 6.0% in 2018, finally bringing Uganda closer to faster growing regional peers (see chart 1).
Meanwhile, the low oil price has been a blessing and a curse. In the short-term, it eased Uganda’s external deficit. Yet the long-term returns of the Lake Albert oil discovery, which has already attracted substantial foreign investment flows, will fall short of expectations.