In January 2022, Uganda’s economy grew by 4.6% an uptick from 3.4% in 2021 and 3% in 2020. Despite facing challenges during the pandemic, the country’s economy quickly recovered as the services sector and industries resumed activity. However, the East African nation with a population of 47.1 million people has an international poverty rate of 42% making poverty reduction efforts more critical than ever.
The Slowdown in Poverty Reduction in Uganda
The slowdown in poverty reduction in Uganda was in part due to rising commodity prices and disruptions in the global supply chain exacerbated by the war in Ukraine. This triggered high inflation which reached 6.8% from only about 2.7% in 2021. In response, the Bank of Uganda increased its policy rate by 1% in 2022 to 7.5%. This monetary policy slows the economy to keep inflation stable and return to lower price levels. A more stable economy in January 2022 allowed Uganda to experience increased private investment and higher activity in construction and manufacturing and export diversification.
The Impact of COVID-19 on Poverty Reduction in Uganda
One cannot dismiss COVID-19’s impact on poverty reduction in Uganda. In 2020, the government closed the borders and issued a nationwide lockdown and curfew. In addition, it also shut down schools, shops and churches. Economic growth slowed down and the government’s free health care programs reduced access to health care. In this period, relief aid went to urban areas and the poorest in rural areas ended up vulnerable. After seeing the impact of the pandemic the government gave out credit facilities, offered waivers of interest on tax, tax deductions and lowered interest rates to finance the private, agribusiness and manufacturing sectors.
The Village Enterprise Microenterprise Program
NGOs have also stepped in to boost Uganda’s economic growth and development. The Village Enterprise microenterprise program partners with governments and NGOs to eradicate extreme poverty primarily in rural East Africa. It works directly with poor households through entrepreneurship with the objective of lifting 20 million people out of extreme poverty by 2030. Over a period of one year, it provides them with mentorship, cash transfers, business training and the formation of saving groups. In Uganda, more than 30,000 businesses started through this program and 113,000 first-time entrepreneurs have received training. The impact created more consumption and income and improved the standard of living of hundreds of thousands of households.
The Strengthening Education Systems for Improved Learning (SESIL) Program
Uganda’s low education level presents another challenge directly contributing to poverty. Two out of five secondary school teachers did not have undergraduate degrees in 2017. Additionally, most classrooms have too many students, in some cases more than 60 which does not provide an environment that facilitates quality education. Uganda has one of the fastest-growing youth populations but government spending on education has fallen from about 25% in the early 2000s to only 11% in 2018.
The government recognized the growing youth population and in 2018 launched the Strengthening Education Systems for Improved Learning (SESIL) program. This U.K. aid-funded program improved the quality and equity of education in lower primary schools by focusing on an approach called Managing for Results (M4R). Teachers and ministry officials used data collection and analysis to monitor student progress. Based on their interpretation they were able to make decisions to improve students’ learning outcomes. This program has undergone implementation in more than 1,800 schools and trained more than 6,000 teachers in Uganda. There has already been evidence of the value of the program and its data collection approach to spot challenges and sustainable solutions in lower education.
The youth is what makes poverty reduction in Uganda and in other parts of the world important. They make up the future generation of this world. Their education is of the highest priority. It not only provides them with opportunities and pathways away from poverty but it also guarantees a more sustainable future.
– Hans Harelimana Hirwa