Economy to grow by 7% in five years

Uganda’s economy will grow by 7% a year in the three to five years’ time, up from a forecast 6% in 2014, helped by investment from oil explorers and by expansion in the services sector, the finance minister said on Tuesday.

Uganda discovered oil in 2006 and expects output to start around 2017.

“We are looking at 7% in the medium term, and for us medium term is the next three to five years,” finance minister Maria Kiwanuka told Reuters in London, where she was attending a conference.

She said the economy was expected to grow by 6% in the 2014 calendar year, a figure in line with the International Monetary Fund’s forecast of 6.1% growth for the fiscal year 2014/15, which began on July 1.

“We are looking to a big increase in investment demand as oil companies are bringing in more of the equipment that they are going to need to start extracting the oil,” Kiwanuka said. “We are looking to continue the increase in services demand — manufacturing, financing and telecoms.”

Once oil starts flowing, it will make a big contribution to state revenues but will not dominate other productive sectors, she said. “The oil revenue should be, maybe, a sixth to a fifth of our economy.”

A recent fall in oil prices does not set back plans for production, in part because Uganda should be able to command a good price for products it refines locally while imported competition has to travel along long, expensive overland routes, she said.

“We are landlocked. We are 1,000 miles from the sea, so there is an inbuilt buffer against international oil prices,” she said, after oil prices tumbled from more than $110 in June to below $90 today.

Reuters