Uganda has retained its position among the world’s low-income economies, falling behind regional neighbours Kenya and Tanzania, both of which continue to maintain lower-middle-income status.
According to theeastafrican.co.ke, the latest classification has reignited debate among economists and policy experts over the factors that have slowed Uganda’s economic transition and prevented it from matching the progress recorded by its East African counterparts.
As it is, the classification by the annual World Bank, which comes out every July, has implications beyond its borders and ability to attract affordable development financing.
The World Bank classifies economies based on Gross National Income (GNI) per capita, the average income earned per person annually, calculated using the Atlas method, which allows comparison across countries. A country is considered low-income when its GNI per capita is $1,175 or below. There are four categories: Low, lower middle, upper middle and high.
In July 2020, the World Bank officially elevated Tanzania to lower-middle-income status, five years ahead of its Vision 2025 after the economy expanded to $91.8 billion and Gross National Income (GNI) per capita crossed the World Bank’s lower-middle-income threshold of between $1,006 and $3,955. The country’s economy had sustained robust growth of about 7 percent leading up to the classification, with real GDP growth reaching 5.9 percent by 2025.
In 2014, the World Bank rebased Kenya’s economy that significantly increased the estimated size 25 percent more than it had been estimated. Kenya officially crossed the World Bank’s lower-middle-income threshold in July 2014.
This year’s classifications remained unchanged for the East African region. Although Uganda remains a key economic player, with strong foreign exchange inflows from gold exports, coffee, tourism, and diaspora remittances, its income levels have not yet crossed the threshold required to join the lower-middle-income category.
Economists warn that the classification can affect perceptions of risk among international lenders and investors, potentially influencing the cost and availability of financing for major development projects.
Uganda’s per capita income has in recent years remained between about $800 and $980, keeping it among the group of low-income economies globally and placing it behind several regional peers that have moved closer to middle-income status.
In Uganda, the debate has been whether the country’s expanding gross domestic product (GDP), growing private sector, and increased investment activity demonstrate progress towards middle-income status. However, the World Bank relies on internationally standardised measurements, including population data and the Atlas methodology, to maintain consistency across economies.
These classifications inform which countries can access concessional loans and development assistance at greater cost, and help governments, researchers and a wide range of international organisations track economic progress worldwide.
For Uganda to break into lower-Middle Income the population will have to earn $1,136 to $4,495 per individual. To transition to Upper-Middle Income then each will have to generate $4,496 to $13,935 per year. To be classified as a high-income nation, the country’s average economic output per person must exceed $14,375 per year.
Although the World Bank Group takes note of the country’s total income growth, this wealth is divided among a rapidly expanding population, keeping the average individual’s income below the World Bank’s threshold. Even when the economy expands, the high birth rate and large percentage of dependants outpace the growth in overall national wealth, keeping per capita income low.
Though Uganda has achieved localised economic recovery, the total income earned by a country’s residents and businesses generally fluctuates around $800 to $980. A heavy reliance on agriculture-a source of livelihood of the population, employing 72 percent of the labour force remains tied to agriculture, which is highly vulnerable to weather shocks, such as droughts and heavy rains.
Henry Musasizi, Uganda’s Finance minister says the economy continues to demonstrate remarkable resilience and dynamism. In his 2026/27 Budget Speech he said, “Economic growth for FY 2025/26 is estimated at 6.4 percent, up from 6.3 percent in FY 2024/25. The size of the economy is projected to increase to approximately $ 69.3 billion.”
“In purchasing power parity (PPP) terms, is projected to increase to $1,420. The government plans to improve competitiveness by promoting a rapid uptake in science, technology, and innovation in the following growth areas: full monetisation of the economy; value addition and industrialisation; agriculture; tourism development; mineral-based industrial development; ICT; and finance.”
Senior economics lecturer at Makerere University Business School, Dr Fred Muhumuza, said, “Fair or not, the classification points out the truth. We have to talk less at operational project level and do more of strategic and logical interventions.”
