Uganda's economic reconstruction and recovery efforts over the last three decades have yielded impressive structural shifts. In the 1980s, agriculture was the mainstay of over 50% of the population and 75% of export earnings. In 2017, agriculture accounted for 21.5% of GDP and 46% of export earnings. Uganda's gross capital formation averaged about 21% over the same period. In 2019, services accounted for 43.2% of GDP while industry contributed 27% of GDP (Manufacturing value added at 8.3% as of 2017/18). The structural shift away from agriculture and towards services has created numerous investment opportunities and employment for millions of Ugandans.
A good example of Uganda’s economic shift is the country’s ICT sector: It played a vital role in the nation's economic recovery in the mid and late 1990s. This was a consequence of the liberalization of the telecommunications sector and subsequent deliberate policies to boost investment into the two sectors to drive growth, innovation, and job creation. In 2006, the Government set up the Ministry of ICT to coordinate, support, and advocate for the formulation of policy, laws, regulations, and strategies for the ICT sector in Uganda. Consequently, according to the Ministry of Finance, the ICT sector has grown to contribute upwards of 3.2% to GDP (financial year 2018/19). Despite a low number of formally registered firms, thousands more informal ICT firms directly and indirectly employ an estimated 2.5 million Ugandans.
Uganda has been ranked as a global hotspot for entrepreneurs with 35.5% of adults (age 18 and above) owning or co-owning a new business in 2014, more than three times the global average. The country has established a vibrant startup ecosystem where startups have emerged as a prominent type of development actor with the potential to solve sector specific challenges and bridge the service delivery gap. Uganda has the second youngest population globally with over 78% of the population being below the age of 35 years. Over 55% of the youth own or co-own a new or existing business. Uganda enjoys a regional trade hub status serving as a convenient goods and services' transit point for reaching central Africa's hinterland. Also, numerous entrepreneurial opportunities manifest in the need for solving efficiency bottlenecks in industry and commerce in Uganda.
Uganda's reputation for entrepreneurial vibrancy is rooted in the economy's high liberalization rate and an ascendant attractivity for a diverse investor base. True to this attribute, Kampala's tractable startup ecosystem has served as a testbed for entrepreneurs who experiment with new business models tailored to fulfil the unmet needs of a tech-savvy class of youthful digital device holders in a business environment unfettered by burdensome regulations. Broadly, FDI inflows to Uganda reached a record high of USD 1.3 Billion in 2019, a 20% increase from USD 1 billion in 2018, on account of oil and gas, including the international oil pipeline, and also projects in construction, agribusiness and manufacturing. Other sectors of interest that continue to attract investments include transportation, healthcare, and energy. Some sub-sectoral growth rates are staggering. For instance, from 2016 to 2018, Uganda’s fintech industry which has over 80 players, registered an average annual growth rate of 35%. As of the year ending 2020, Fintech reached 155, almost doubling in number over two years.