New oil reserves to account for 4% of Ugandan economy

Uganda’s new-found oil reserves may account for as much as 4 percent of its economy annually in coming years if managed well, the International Monetary Fund’s country chief says.

IMF Mission Chief for Uganda Axel Schimmelpfennig writes in a blog post that the country also needs some strategic infrastructure investment and better debt management.

Uganda’s economy has taken a hit over the past decade — particularly on a per capita basis — but is recovering.

According to IMF figures, growth was around 4.7 percent in 2016, currently above average for Africa. That was up from just 2.6 percent in 2011, but still well off its 10.4 percent high as the global financial crisis broke.

The IMF projects gross domestic product will grow at 5.7 percent in 2018, but Schimmelpfennig sees greater growth beyond.

“Drought in the Horn of Africa, regional conflict, and slow credit growth have contributed to (the decline), with per capita growth falling to half a percent from an average of 5 percent for the past 20 years,” he said in his blog post.

Per capita GDP — a closer measure of ordinary Ugandan’s conditions — has plunged in the past few years along with weakness in key exports such as tea, coffee and some minerals.

The shilling, Uganda’s currency, has also weakened, in particular during the run up to the February 2016 presidential election.

But with oil, all this could change.

“In our estimates the revenues could range on an annual basis from about half a percent GDP initially to about 4 percent at peak production, he says. “The challenge that many oil producers face is to manage this well.”

Uganda discovered commercial hydrocarbon deposits in the Albertine rift basin that straddles its border with the Democratic Republic of Congo in 2006. It estimates the deposits hold around 6.5 billion barrels of oil as well as commercial deposits of natural gas.

Production is due to start in 2020, after a number of years delay. An export pipeline is being developed and work is at the early stages of field development.

Schimmelpfennig said that if the government starts production as planned it could “reap the benefits” for almost 30 years.

Reporting by Jeremy Gaunt, additional reporting by Elias Biryabarema in Kampala, editing by Larry King

Related Content

Unpacking Uganda’s 3rd National Development Plan

In Uganda, the 3rd National Development Plan was tabled before Parliament in January 2020 by the Minister of State for Planning, a move that was supposed to inform the processing and approval of the budgets for the next five years starting with 2020/2021 financial year. Analyst, Charles Bwogi joins CNBC Africa for more.

COVID-19: East African Community unveils new measures to protect manufacturing industry

The East African Community finance ministers have agreed on measures to protect and enhance the competitiveness of the regional manufacturing industry. This comes ahead of the conclusion of a comprehensive review of the Common External Tariff that has dragged on for more than three years. Economic Analyst, Ted Kaberuka joins CNBC Africa for more.

Op Ed: East African finance ministers to present budgets for new fiscal year

Finance ministers of East Africa are expected to table their respective budgets in coming days for the new financial year that begins on July 1.

Coronavirus – African Union Member States (54) reporting COVID-19 cases (116,049) deaths (3,488), and recoveries (46,714)

African Union Member States (54) reporting COVID-19 cases (116,049) deaths (3,488), and recoveries (46,714) by region: Central (12,426 cases; 350 deaths; 3,281 recoveries): Burundi (42; 1; 20), Cameroon (5,044; 171; 1,917), Central African Republic (652; 1; 22), Chad (687; 61; 244), Congo (487; 16; 147), DRC (2,402; 68; 340), Equatorial Guinea (719; 7; 22), Gabon (2,135; 14; 562), Sao Tome & Principe (258; 11; 7). Eastern (12,983; 351; 3,438): Comoros (87; 1; 21), Djibouti (2,468; 14; 1,079

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

African born Billionaire Elon Musk’s net worth zooms past Warren Buffett’s

The blistering rally also puts Musk in reach of a payday potentially worth $1.8 billion, his second jackpot from the electric car maker in about two months.

U.S. sets record for new COVID cases third day in a row at over 69,000

“If we don’t adopt this best practice it could lead to a shutdown of business,” the Republican governor told local KLBK-TV in Lubbock, adding it was the last thing he wanted.

South Africa set to make SAA funding commitment, official says

JOHANNESBURG (Reuters) - The South African government is “on course” to provide a funding commitment for the restructuring of loss-making South African...

Akinwumi Adesina pays tribute to Prime Minister Amadou Gon Coulibaly

A humble man. A selfless man. A faithful man. A shining light. We met and spoke together on several forums around the world: on the plane, at airports, in high level forums and summits. My impression of him was the same: calm; wise; insightful. A man of few words, whose every word was always well honed for impact. He spoke always from his heart. An he had a heart of gold.

Partner Content

Uber launches its largest region-wide initiative in partnership with Mastercard

Uber, in partnership with Mastercard to provide 120,000 free trips to frontline workers in MEA, including South Africa, Nigeria, Kenya, Ivory Coast...

Maktech’s Godwin Makyao: Now Is A Time of Entrepreneurial Opportunity in East Africa

As an executive decision-maker in both the telecommunications and tourism industries, Godwin Makyao could not have experienced a more diverse set of...

Trending Now

Congo justice minister resigns after judicial reform dispute

KINSHASA (Reuters) - The Democratic Republic of Congo’s Justice Minister Celestin Tunda tendered his resignation on Saturday in the wake of a...

Veteran Zimbabwe farmer pours cold water on $58 million mission from Belarus with love.

“Belarus tractors have never been known for their quality or power. They were never bought by Zimbabwe farmers in the past. Training up 1000 Zimbabwe farmers isn’t the answer.

Congo central bank keeps 2020 economic growth forecast at -2.4%

(Reuters) - The Democratic Republic of Congo’s central bank kept its 2020 economic growth forecast unchanged at -2.4% because of the uncertainty...

South Africa’s rand recovers but caution remains, stocks slip

JOHANNESBURG (Reuters) - South Africa’s rand recovered in afternoon trade on Friday, after sliding earlier due to concerns about rising COVID-19 cases...
- Advertisement -