V.

Economy

The Ugandan economy has been based on small, African-owned farms since precolonial days. Uganda’s economy collapsed during the Idi Amin regime in the 1970s. In 1972 Amin expelled the country’s Asian population, which controlled most of the commerce, and distributed their businesses and property to corrupt and incompetent managers. From 1972 to 1988 the economy declined about 33 percent. The economy rebounded under President Yoweri Museveni, growing an average of 6.6 percent annually in the period 2005. But it took until the late 1990s for the country to recover the production levels achieved before Amin seized power. In 2005 Uganda’s gross domestic product (GDP) was $8.7 billion, or $302.80 per capita.

A.

Government Role in the Economy

In 1987 Museveni adopted reforms designed to reduce the size of the state and privatize many economic activities, and in return Uganda has received large loans from the World Bank and the International Monetary Fund (IMF). Under the reforms the government eliminated state regulations over the exchange rate and state control over prices for export crops. More importantly, the government succeeded in diversifying its foreign exchange base by steadily reducing its reliance on coffee exports. Excellent macroeconomic management enabled the government to reduce inflation from 200 percent annually in the late 1980s to an annual average of 8 percent in the period 2000–2005.

B.

Labor

In 2003, 69 percent of Ugandan workers were engaged in agriculture, 8 percent in industry, and 23 percent in services. Only a small fraction of the workforce is engaged in paid employment, and the largest wage employer is the government. Since the 1970s wages have failed to keep up with the cost of living, forcing those receiving salaries to supplement their income through farming or business. In addition, inadequate wages led to widespread corruption in most government services.

C.

Agriculture

Agriculture (including forestry and fishing) makes the largest contribution to the GDP, amounting to 33 percent in 2005. Almost all farmers work small plots, primarily with rustic tools, and subsist mainly on their own food crops, notably bananas, cassava, sweet potatoes, and millet. They also grow crops for sale, both for local consumption and export. Historically, almost all foreign exchange was earned by the sale of cotton on the world market. Later, coffee surpassed cotton as the most important foreign exchange earner. The economy still is heavily dependent on world coffee prices, but the government has successfully promoted a more diversified foreign exchange basis. Besides coffee and cotton, important export crops include tea, tobacco, cocoa, corn, beans, cut flowers, sesame, and vanilla. Livestock (particularly cattle) and animal products are also important export earners.

D.

Forestry and Fishing

The thickest stands of timber are in the center and west of the country. In 2005 production of roundwood timber amounted to 40 million cu m (1,412 million cu ft). Much of the wood cut in Uganda is burned for fuel. Nile perch and tilapia are the most important fish caught in Ugandan lakes. The total catch was 377,300 metric tons in 2004. A growing export industry based on fish processing plants developed in the 1990s.

E.

Services and Tourism

In 2005 services produced 43 percent of GDP. The largest contributor was government services, followed by retail and wholesale trade, construction, transportation and communications, and the hotel and restaurant sectors. The tourist industry, which collapsed during the Idi Amin regime, recovered in the 1990s and has become very important to the economy. Most tourists came from Western Europe, particularly Britain, and the United States. Favorite destinations for tourists are Jinja, where the Nile exits Lake Victoria, Queen Elizabeth National Park in the southwest, Kabalega National Park in the north, and the Kasubi Tombs in Kampala.

F.

Manufacturing and Mining

Although expanding, the manufacturing sector was still small in the early 21st century, providing only 9 percent of GDP in 2005. The most important manufactured products were textiles, processed coffee, grain, sugar, beverages, chemicals, and tobacco. Ugandan mines produce cobalt, gold, limestone, and iron ore.

G.

Energy

Uganda’s principal fuel source is wood, the burning of which produces 90 percent (1997) of the energy used in the country. Hydroelectric power plants at the Owen Falls Dam and a number of smaller facilities produce 100 percent (2003) of the electricity used.

H.

Transportation

Paved roads connect the major urban areas of southern Uganda, but only about 23 percent (2003) of the country’s roads are paved. Recent reconstruction of Uganda’s main roads has been an important factor in its economic recovery. Steamer traffic on Lake Victoria has been curtailed by the spread of hyacinth weed, which blocks harbors and clogs motors. The main lake ports are Port Bell, serving Kampala, and Jinja. The international airport is located in Entebbe, on Lake Victoria. A number of airlines serve domestic, East African, and a few European airports.

I.

Communications

Uganda’s mainline telephone network is limited, so many more Ugandans have mobile telephones than mainline telephones. Among the largest English-language newspapers are the government-owned daily New Vision, the daily The Monitor, and the weekly Guide. The Taifa Uganda Empya is the main Luganda-language daily. All the main newspapers are published in Kampala. The government radio station, Radio Uganda, broadcasts in 24 languages. In the 1990s a number of private radio stations were established in the capital and in other cities. The state-run Uganda Television broadcasts in English, Swahili, and Luganda.

J.

Foreign Trade

Uganda has typically imported more than it has exported since the Amin regime, but the proportion of imports to exports progressively grew in the 1990s. In 2004 exports ($639 million) were worth far less than imports ($1,657 million). Foreign aid, primarily loans, finances this trade imbalance. Uganda’s chief exports are coffee, fish and fish products, and gold. The most important imports are petroleum products, road vehicles, grains, machinery, medical and pharmaceutical products, iron, and steel. Uganda’s main suppliers are Kenya, South Africa, the United Kingdom, India, and the United States. The main purchasers of its exports are Belgium, Netherlands, Germany, the United States, and Spain. Uganda is a member of the Common Market for Eastern and Southern Africa (COMESA), the African Export-Import Bank, and the World Trade Organization (WTO).

K.

Currency and Banking

The unit of currency in Uganda is the Uganda shilling (1,781 Uganda shillings equal U.S.$1; 2005 average). The currency is issued by the Bank of Uganda, which was founded in 1966, in Kampala. There are also several private banks. Uganda has a stock exchange, founded in 1997, in Kampala.