Uganda’s GDP is projected to receive a significant boost with start of oil production in 2025

According to the IMF’s projection, Uganda’s economic growth potential will reach 10.8% in the 2025/2026 fiscal year, up from a projection of 6.2% in the previous period.

In a report published on Wednesday, the International Monetary Fund (IMF) said, “Growth is expected to strengthen, boosted by the start of oil production, which will make (a) lasting improvement (to) the fiscal and current account balances.”

It added that Uganda’s economic recovery is strengthening on the back of low inflation, favourable agricultural production, and strong activity in the industrial and services sectors.

The Uganda Oil Project encompasses 14 oil fields located in the Lake Albert region of Western Uganda, along with a 1500-km long crude oil pipeline stretching from Lake Albert to the port of Tanga in Tanzania and the establishment of an oil refinery.

According to the IMF report, Oil production in the East African country is expected to commence in 2025. The refinery, slated to become operational in 2027, is also expected to achieve a peak capacity of approximately 21 million barrels per year.

With oil production expected to commence in Q4-2025, Uganda will require substantial funding to meet critical milestones, including the final investment decision on the refinery and various aspects of oil production. These include upstream development, the construction of the oil pipeline and refinery, and additional infrastructure such as roads and an airport.

“There is a significant risk of stranded assets for Uganda’s oil project, as the global shift towards renewable energy and stricter environmental regulations could reduce the long-term demand for fossil fuels. Policy efforts (such as improving business environment and infrastructure) are also needed to improve the competitiveness of the non-oil sector and minimize risks of “Dutch disease” from becoming an oil exporter,” the report stated.