2018 Index of Economic Freedom

Uganda

overall score62.0
world rank83
Rule of Law

Property Rights43.5

Government Integrity28.3

Judicial Effectiveness40.3

Government Size

Government Spending90.9

Tax Burden73.0

Fiscal Health80.7

Regulatory Efficiency

Business Freedom45.4

Labor Freedom83.9

Monetary Freedom80.5

Open Markets

Trade Freedom78.1

Investment Freedom60.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 41.1 million
  • GDP (PPP):
    • $85.0 billion
    • 5.0% growth
    • 4.3% 5-year compound annual growth
    • $2,068 per capita
  • Unemployment:
    • 2.3%
  • Inflation (CPI):
    • 5.5%
  • FDI Inflow:
    • $541.2 million
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Uganda’s economic freedom score is 62.0, making its economy the 83rd freest in the 2018 Index. Its overall score has increased by 1.1 points, with improvements in judicial effectiveness and property rights outpacing lower scores for the tax burden and labor freedom indicators. Uganda is ranked 5th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional and world averages.

Government funding of energy-related, roadway, and other public-works infrastructure projects is often externally financed through low-interest concessional loans. As a result, debt servicing for these loans is expected to rise. The strong commitment to economic liberalization that made Uganda one of Africa’s most rapidly developing countries during the 1980s has diminished noticeably. Bureaucracy and expensive business licensing requirements discourage development of the private sector. A weak and inefficient judicial system and pervasive corruption are serious impediments to sustainable development.

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Background

The wide range of ethnic groups with different political systems and cultures within the former British colony of Uganda complicated governance after independence in 1962. President Yoweri Museveni and his National Resistance Movement have been in power since 1986. In 2016, Museveni won a fifth five-year term in elections tainted by government intimidation. The main opposition leader, Kizza Besigye, was arrested several times during the election cycle and was later charged with treason. Harassment of the government’s political opponents intensified in 2017 amid allegations of creeping authoritarianism. Uganda has significant natural wealth, including gold, recently discovered oil, and rich agricultural lands from which more than two-thirds of the workforce derives employment.

Rule of LawView Methodology

Property Rights 43.5 Create a Graph using this measurement

Government Integrity 28.3 Create a Graph using this measurement

Judicial Effectiveness 40.3 Create a Graph using this measurement

The constitution guarantees the right to own property, and legislation facilitates securitization of property through mortgages, trusts, and liens, but acquiring a clear title to land is difficult. Independence of the courts is often undermined by corruption, understaffing, inefficiency, and executive branch interference with judicial rulings. Government officials frequently engage in corrupt practices with impunity.

Government SizeView Methodology

The top individual income tax rate is 40 percent, and the top corporate tax rate is 30 percent. Other taxes include value-added and property taxes. The overall tax burden equals 14.3 percent of total domestic income. Over the past three years, government spending has amounted to 17.4 percent of total output (GDP), and budget deficits have averaged 3.2 percent of GDP. Public debt is equivalent to 36.9 percent of GDP.

Regulatory EfficiencyView Methodology

The process for establishing a business is costly and time-consuming, and the overall regulatory environment is inefficient. Labor regulations are very flexible, but child labor is a serious problem. The formal labor market remains inefficient and lacks dynamism. The government is funding substantial price-distorting subsidies by financing the oil refining and distribution and hydroelectric sectors.

Open MarketsView Methodology

Trade is moderately important to Uganda’s economy; the combined value of exports and imports equals 45 percent of GDP. The average applied tariff rate is 5.9 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average. Access to financial services has expanded gradually across the country, but development of a modern financial sector has largely stalled in the absence of needed structural reforms.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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