Services drove majority of Uganda 6.3% economy growth last financial year — Finance ministry

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Uganda’s economy grew by 6.3% last financial year (FY2024/25), driven by government initiatives such as the Parish Development Model (PDM).

Finance ministry’s deputy secretary to the treasury, Patrick Ocailap, while briefing journalists on the Quarter Two expenditure releases for FY 2025/26, said the growth performance demonstrates the country’s sustained economic expansion amid a difficult global environment characterised by tight financial conditions and persistent geopolitical tensions that have disrupted global supply chains in recent years.

He noted that the economy grew by 6.3% in FY 2024/25, up from 6.1% in FY 2023/24, and that the size of the economy in nominal terms increased to shillings 227.88 trillion in FY 2024/25 from shillings 203.71 trillion in FY earlier.

In terms of sector contribution to gross domestic product (GDP), Ocailap said the services sector emerges as the biggest contributor to GDP, with a share of 42.1 percent in the FY 2024/2025 compared to 43.1 percent in 2023/2024.

He further projected that real gross GDP growth will reach 7% in FY 2025/26 and remain above 7% in the medium term, signalling a positive outlook for the economy.

Out of the shillings 72.38 trillion for FY 2025/26, 20.18 trillion was released in Q1, sh18.43 trillion released in Q2, resulting in a cumulative release of sh38.61 trillion, which is 53.4% of the approved budget.

According to the expenditure limits for the second quarter of FY 2025/26, 7.07 trillion has been set aside for debt and treasury operations; 2.132 trillion to cater for wages and salaries across government; 339 billion for pension and gratuity; Parliament 223.64 billion and Judiciary 64.06 billion.

CSOs call for transparency, accountability

Civil society organisations (CSOs) noted the economic progress but also highlighted the need for transparency and accountability in the budget process.

Meanwhile, the executive director of the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda, Jane Nalunga, emphasised that people should be informed of the allocations so that they are able to know where the money has gone and for what purpose.

Nalunga also underscored the importance of aligning expenditure with the National Development Plan (NDP) priorities, especially in areas of production and value addition.

On his part, Julius Mukunda, executive director of the Civil Society Budget Advocacy Group (CSBAG), pointed to long-standing weaknesses in fiscal management.

“This persistent trend highlights underlying issues of poor budgeting and fiscal indiscipline, despite the government’s consistent efforts to incrementally enhance the wage bill and address the previous resource gap. There’s an urgent need for stricter enforcement of budgetary compliance and improved financial planning at all levels to ensure salary, pension and gratuity obligations are met within approved allocations,” Mukunda said.

Inflation, exchange rate

In the first quarter of FY2025/26, annual headline inflation averaged 3.8 percent, supported by prudent monetary policy, a stable exchange rate, and improved domestic food supplies.

According to the ministry, the outlook remains favourable, with core inflation expected to stay within the 5 percent policy target, backed by resilient exchange rate conditions, better domestic food supply, and stable global commodity prices.

However, risks persist from potential adverse weather, global supply chain disruptions, and renewed depreciation pressures on the shilling, according to the ministry’s analysis.

On a monthly basis, annual headline inflation slightly rose to 4.0% in September 2025 from 3.8% in August 2025.

This, according to the ministry, was mainly due to increased food prices depicted by a rise in annual food crops and related items inflation, which jumped from 3.0% in August 2025 to 7.4% in September 2025.

Looking ahead, Ocailap said they project that the economy remains well-positioned for sustained growth, underpinned by ongoing government initiatives, strengthening regional and global recovery, and a diversified production base that supports resilience and long-term development.

Real GDP growth is projected at 7 percent in FY2025/26 and above 7 percent in the medium term.