Uganda’s economy may be growing, but it is not creating jobs fast enough to keep pace with the country’s youthful population, the World Bank has warned.
The World Bank argues that the widening employment gap could become the country’s defining development challenge unless urgent reforms are implemented.
The warning comes in two newly launched reports, the Country Partnership Framework (2026– 2035) and the Uganda Public Finance Review, which paint a picture of an economy with strong potential but weighed down by structural weaknesses.
Together, the reports set out a roadmap that places job creation, private sector growth and stronger public investment at the centre of Uganda’s development agenda over the next decade.
Presenting the findings, Qimiao Fan, the World Bank’s division director for Kenya, Rwanda, Somalia and Uganda, said the country’s labour market is under mounting pressure as young people continue to enter the workforce in numbers the economy cannot absorb.
“Every year, approximately 650,000 young Ugandans enter the labour market. Yet the economy generates less than one-tenth of that number in formal jobs, about 17,000 annually,” Fan said.
By the end of 2025, Uganda faced an estimated jobs deficit of 1.64 million, while about 90 per cent of the country’s workforce remained in the informal sector.
“Closing this gap is not just an economic priority; it is the defining development challenge of the next decade,” he added.
Although Uganda has maintained steady economic growth in recent years, the World Bank argues that growth alone will not deliver prosperity unless it is accompanied by higher productivity and better-quality employment.
The focus, the reports say, should shift from simply increasing investment to ensuring that investment produces measurable results. Under the new Country Partnership Framework, the World Bank Group plans to support Uganda between 2026 and 2035 through concessional financing from the International Development Association while mobilising private investment through the International Finance Corporation and the Multilateral Investment Guarantee Agency.
The strategy prioritises stronger economic governance, improved health and education services, expanded infrastructure and a more productive private sector. Francisca Ayodeji Akala, the World Bank’s country manager for Uganda, described the two reports as complementary guides for the country’s future.
“These are not just documents, but a shared platform for engagement with government and the people of Uganda over the next decade,” she said.
The Public Finance Review, titled Uganda’s Oil Decade: A Fiscal Agenda for Growth and Jobs, cautions that the country’s anticipated oil revenues, expected after commercial production begins around 2027, will not automatically translate into long-term prosperity.
“The question is not how high growth will be during the oil years, but what lasting assets the country will build,” Fan said.
According to the report, nearly one-third of Uganda’s infrastructure investment is lost because of weaknesses in planning, procurement and project implementation.
It recommends broadening the tax base, improving the efficiency of public spending, reducing domestic borrowing and increasing investment in education, healthcare and other forms of human capital.
If implemented, the reforms could expand Uganda’s economy by about eight per cent above current projections by 2035 and create an estimated 3.2 million additional jobs. Finance Minister Henry Musasizi welcomed the findings, saying they align with the government’s long-term economic priorities.
“The Public Finance Review provides timely analysis as Uganda enters the oil decade. It reminds us that sustainable prosperity will depend not only on oil revenues but also on strong institutions, efficient public expenditure and investment in people,” Musasizi said.
He said government had already introduced reforms in public financial management, debt management and domestic revenue mobilisation but acknowledged that more work remains.
“Our focus will remain on accelerating job creation, strengthening fiscal sustainability and ensuring prudent management of oil revenues,” he said.