World Bank Warns Uganda's Economy Is Failing to Create Enough Jobs

[Da Dona]

According to two new reports by the World Bank, Uganda's economy is growing steadily, but job creation is failing to keep pace with the country's rapidly expanding youthful population. The Bank warns that unless urgent reforms are implemented, unemployment and underemployment could become Uganda's biggest development challenge over the next decade.

The warning is contained in the World Bank's Country Partnership Framework (2026–2035) and the Uganda Public Finance Review, which argue that while Uganda has strong economic potential, structural weaknesses continue to limit the creation of quality jobs. The reports call for job creation, private sector development, and better public investment to become the country's top priorities.

Presenting the findings, World Bank Division Director for Kenya, Rwanda, Somalia and Uganda, Qimiao Fan, said Uganda's labour market is under increasing pressure. Every year, about 650,000 young Ugandans join the labour market, yet the economy creates only around 17,000 formal jobs annually. By the end of 2025, Uganda's estimated jobs deficit had reached 1.64 million, while nearly 90% of workers remained in the informal sector. He described closing this gap as the country's defining development challenge for the next decade.

The World Bank says economic growth alone will not improve living standards unless it is accompanied by higher productivity and better-quality employment. It recommends shifting focus from simply increasing investment to ensuring investments deliver measurable results. Under the new partnership framework, the Bank will support Uganda between 2026 and 2035 through concessional financing while also mobilising private investment.

The strategy prioritises stronger economic governance, improvements in education and healthcare, expanded infrastructure, and a more productive private sector. World Bank Country Manager Francisca Ayodeji Akala said the reports are intended to guide cooperation between the government, the World Bank and Ugandans over the coming decade.

The Public Finance Review, titled "Uganda's Oil Decade: A Fiscal Agenda for Growth and Jobs," cautions that expected oil revenues from commercial production around 2027 will not automatically translate into lasting prosperity. Instead, the report stresses that Uganda must build long-term national assets through prudent investment and stronger institutions.

The report also finds that nearly one-third of infrastructure investment is lost because of weaknesses in planning, procurement and project implementation. It recommends broadening the tax base, improving public spending efficiency, reducing domestic borrowing, and investing more in education, healthcare and human capital. If these reforms are implemented, Uganda's economy could expand by about 8% above current projections by 2035 and generate an estimated 3.2 million additional jobs.

Finance Minister Henry Musasizi welcomed the findings, saying they align with the government's long-term economic plans. He said Uganda has already introduced reforms in public financial management, debt management and domestic revenue mobilisation, but acknowledged that more work is needed. According to the minister, government will continue prioritising job creation, fiscal sustainability and the prudent management of future oil revenues.

Source: The Observer Media Ltd