By Rogers Wanambwa 

KIU, Main Campus – According to the Minister of Finance, Hon. Matia Kasaija, the outbreak of COVID-19 negatively impacted economic activity with real GDP growth shrinking to 2.9% in FY 2019/20.

Kasaija, who was flanked by Ag. Secretary to the Treasury, Patrick Ocailap, made the statement on Wednesday while discussing the implementation of the NRM Manifesto commitments 2016 to 2021.

He, nonetheless, expressed optimism saying the economy is expected to have a gradual improvement over the medium term with real GDP growth being projected at 3.1% in FY 2020/21 and to further rise to the potential of 6% to 7%.

Kasaija said the positive outlook is premised on better economic prospects in the oil and gas sector following the culmination of the Final Investment Decision (FID) and the ongoing COVID-19 vaccination.

Furthermore, the Minister added that the Central Bank Rate (CBR) was decreased to 7% since June 2020 from 17% in January 2016 and that the low and stable inflation outlook gave room for a reduction in the policy rate to support economic growth.

Average annual headline inflation for the period 2016 to 2020 remained low at 4.3% due to prudent macroeconomic policy as well as the increased supply of agricultural produce to the market which brought down food prices.

“The lending rates declined to 19.3% in FY 2019/20 from 24.0% in FY 2015/16,” he said, adding that the stock of private sector credit as of June 2020 was recorded at UGX.17.3 trillion from UGX.11.9 trillion in January 2016.

The government also increased the capitalization of Uganda Development Bank from UGX.58.3 billion in FY 2019/20 to UGX.103 billion in FY 2020/21. In FY 2020/21 government has so far disbursed above UGX.500 billion to capitalize UDB.

In regards to the Microfinance Support Centre (MSC), Kasaija said capitalization has increased over time from UGX.4.9 billion in FY 2016/17 to UGX.341 billion in FY 2020/21.

Besides, as of 31st March 2021, (MSC) had expended UGX 196.96 billion to 6,344 Constituency-based SACCOs in 347 constituencies, 146 districts including cities.