世界发展银行-Uganda-Economic-Update,-16th-Edition,-December-2020---Investing-in-Uganda_rsquo_s-Youth_84页_9mb

Uganda Economic Update Summary (16th Edition, December 2020)

Core Content

The 16th Edition of the Uganda Economic Update focuses on the importance of investing in the country's youth as a key driver for sustainable economic growth and development. The report highlights the challenges posed by the global COVID-19 pandemic, which has significantly impacted Uganda's economy, and outlines the necessary policy actions to support a resilient and inclusive recovery.

Main Points

1. State of the Economy

• Economic Growth Stagnation: Uganda's real GDP growth in FY20 was 2.9%, down from 6.8% in FY19, due to the effects of the pandemic. It is expected to grow at a similar rate in FY21, but with high downside risks.
• Impact of Lockdowns: Domestic lockdowns, border closures, and global supply chain disruptions caused a sharp contraction in public investment and a slowdown in private consumption, especially in the informal service sector.
• Poverty and Human Capital: The crisis has threatened to reverse structural transformation gains and the decline in poverty over the past decade. Household incomes have fallen, and the movement of labor back to farming has raised concerns about human capital development.
• Current Account Deficit: The crisis reduced imports and foreign investment, narrowing the current account deficit to 5.9% of GDP in FY20 from 6.8% in FY19. Coffee, maize, and gold exports helped offset some of the losses.
• Fiscal Deficit: The fiscal deficit reached 7.2% of GDP in FY20, the highest in a decade, and is expected to increase further. This has deepened fiscal vulnerabilities and reduced fiscal space.
• Debt Sustainability: Despite the high debt-to-GDP ratio (close to 50% in FY21), Uganda remains at low risk of debt distress, but with heightened liquidity vulnerabilities.

2. Economic Outlook and Risks

• Uncertain Recovery: A slow and uncertain economic recovery is expected. Risks are heavily tilted to the downside, with potential adverse impacts on exports, FDI, tourism, and remittances.
• Long-Term Challenges: If the pandemic persists, it could further depress productivity and economic recovery, leading to more severe social and economic impacts.
• Oil Sector Concerns: Lower oil prices are beneficial for Uganda's trade balance but pose risks to the oil sector's investment plans, which are expected to start production by 2024/25.
• Election and Weather Risks: Uncertainty around the 2021 elections and weather shocks could exacerbate the economic challenges.

Key Recommendations

To support a resilient recovery and promote sustainable development, the report recommends three key policy actions:

a) Preserve and Strengthen Human Capital

• Expand shock-responsive social protection programs to avoid lasting damage to human capital.
• Develop strategies to ensure children return to school, including proactive re-enrollment.
• Invest in health services to manage the direct effects of the pandemic and ensure continuity of non-pandemic essential services.
• Implement key reforms to improve the quality and efficiency of health and education services.

b) Support and Revive Small Businesses and Jobs

• Extend relief measures such as loan extensions, tax deferrals, and utility payment suspensions.
• Encourage the adoption of digital technologies and support the digital entrepreneurship ecosystem.
• Accelerate the repayment of domestic arrears and promote e-government platforms.

c) Prudent and Transparent Fiscal Management

• Rationalize tax exemptions and increase tax revenues to reduce liquidity pressures.
• Shift reliance from expensive domestic financing to external concessional borrowing.
• Improve the efficiency of resource allocation in the education and health sectors through program-based budgeting and results-based financing (RBF).

Investing in Uganda's Youth

Demographic Transition

• Uganda's population is projected to grow from 46 million to around 104 million by 2060, with close to 70% of the future population of working age.
• The country faces significant challenges in providing basic education and health services to its growing population.
• To benefit from the demographic dividend, Uganda needs to substantially increase education and health sector funding.

Education Sector

• Current Challenges: Only one-third of Ugandan students complete the 7-year primary cycle, and gross enrollment rates in secondary schools have stagnated at 30% for decades.
• Fiscal Implications: Education sector funding is expected to increase from US$480 million in 2019 to an average of US$833 million during 2020-2025 under the 'Business as Usual' (BaU) scenario.
• SDG Scenario: To meet the Education and Sports Sector Strategic Plan (ESSP) targets, education sector funding will need to almost double to US$979 million per year.
• Strategies for Improvement: Focus on quality enhancement, strategic and systemic reforms, and more efficient resource deployment. Diversify service delivery platforms through remote learning and digital technologies.

Health Sector

• Current Coverage: Basic health services cover only 44% of the population, and the fiscal cost is expected to rise to US$914 million by 2030.
• SDG Scenario: To achieve universal health coverage by 2030, health sector funding needs to increase from US$1.4 billion in 2020 to US$1.8 billion.
• Efficiency Gains: Improving resource deployment and use is critical for generating savings. Strategies include results-based budgeting, program-based budgeting, and enhancing staff performance and equipment maintenance.
• Private Sector Role: Encourage private sector participation and contributions to the health sector. Develop a policy framework to govern and regulate non-state actors.

Enhancing the Agency of Girls and Women

• The report emphasizes the importance of enhancing the agency of girls and women to leverage the potential benefits of the demographic transition.
• Key areas include improving access to education, empowering women, and increasing access to reproductive health services.
• These actions are central to ensuring that the demographic dividend translates into economic growth and development.

Conclusion

Investing in Uganda's youth is essential for the country's future prosperity, especially in the context of the ongoing pandemic. Without significant and sustained investment in education and health, Uganda risks falling further behind in access and quality, making it difficult to catch up in the future. The report calls for a more effective management of education and health budgets, stronger collaboration with the private sector, and a focus on improving the agency of girls and women to ensure a more equitable and productive demographic transition.