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Uganda’s private sector is still weak and has been struggling to respond to the challenge of becoming the engine of growth in the country. It is estimated that nearly 90%  of the private sector in Uganda is micro and small enterprises, employing over 80% of the total workforce in the country and producing largely for the domestic market. The bottlenecks hindering Uganda’s private sector growth include: limited access and use of modern technology; insufficient engineering manpower; negative attitude towards work, leading to low labor productivity; limited access to credit; insufficient incentives; high production costs; low productivity; and low profitability.

Uganda has a big challenge of a labor force that is largely unemployed. Despite this huge unemployed labor force, the Ugandan economy still has a big shortage of appropriately skilled workers, which means that the education system has failed to tailor its outputs to the needs of the economy. The result has been a large number of unemployed youth who are becoming a social and economic threat. The failure to match the skills needed in the economy creates a gap in human capital, which is critical for economic and social transformation.

As a result of globalization and due to the unpredictability of many macroeconomic variables, it is a challenge to estimate the macroeconomic parameters over a long period with a fair degree of accuracy. Therefore, a broader perspective of direction based on empirical forecasts and benchmarking with selected Upper Middle-Income (UMI) countries is key. It is expected that harnessing opportunities by strengthening the fundamental will drive Uganda to achieve the desired transformation by 2040.

The current largely youthful population can be viewed as a great resource that presents opportunities for future economic growth and structural transformation. When the fertility decline pointers crystallize into a fertility transition, over the next 20 – 30 years, the country will then benefit from a “Demographic Dividend”. A demographic dividend has been defined as “a rise in the rate of economic growth due to a rising share of working-age people in a population”. This rise commonly occurs following a sizable drop in the fertility rate, meaning that much smaller cohorts are added at the bottom of the population pyramid in comparison to the previous ones currently in the working age bracket. Its biggest effect operates through a large decline in the youth dependency ratio.

Investment in key infrastructural needs such as energy generation, road and rail, and social infrastructure, and investment in technology enhancing production processes will spur productivity growth and hence the overall growth of the economy.