Uganda Overtakes Tanzania in GDP Per Capita

In a significant shift within East Africa’s economic landscape, Uganda has surpassed Tanzania to become the second-richest country in the region by GDP per capita, following Kenya. This information comes from the International Monetary Fund’s (IMF) projections for 2025. According to the IMF’s October 2024 World Economic Outlook (WEO), Uganda’s GDP per capita is estimated at $1,300, narrowly exceeding Tanzania’s $1,270, while Kenya leads the region with a GDP per capita of $2,190. Rwanda, often referred to as the “Singapore of Africa” due to its aggressive development model, has a GDP per capita of approximately $990 to $1,022. This development is a significant moment for Uganda, highlighting years of economic progress and strategic investments, even as broader regional dynamics and global economic conditions influence these results.

GDP per capita, calculated by dividing a country’s total economic output (GDP) by its population, provides insight into average economic well-being. The IMF’s 2025 projections indicate:

• Kenya: $2,190 – Solidifying its status as East Africa’s economic powerhouse.
• Uganda: $1,300 – A notable advance, overtaking Tanzania by a slim margin.
• Tanzania: $1,270 – A slight decline relative to Uganda, despite having a larger overall economy.
• Rwanda: Approximately $990 to $1,022 – Experiencing steady but slower growth compared to its neighbors.

These figures contrast with 2023 data from the World Bank, where Kenya stood at $1,952.3, Tanzania at $1,224.5, and Uganda at $1,002.3. The IMF’s forward-looking estimates suggest that Uganda’s per capita income has grown significantly, driven by a projected real GDP growth rate of 6.0% in 2024 and 7.0% in 2025, outpacing Tanzania’s expected 5.4% and 6.0% growth for the same period.

Uganda’s economic rise can be attributed to a combination of structural reforms, growth in various sectors, and strategic investments particularly in its emerging oil sector. Here are the key drivers:

• Oil and Gas Boom: Uganda’s oil sector is approaching commercial production, with projects like the East African Crude Oil Pipeline (EACOP) and the Tilenga and Kingfisher fields poised to enhance revenues. While actual production is expected to begin around 2025-2027, preparatory investments have already spurred economic activity, attracting foreign direct investment (FDI) and stimulating related sectors such as construction and logistics.
• Diversified Growth: Beyond oil, Uganda has shown strong performance in mining, construction, and hospitality. The African Development Bank reported a 4.6% GDP growth in 2023, decreasing from 6.3% in 2022, but projections for 2024 and 2025 suggest a rebound driven by consumer demand and regional trade. Although agriculture still employs 70% of the workforce, higher productivity sectors like services and manufacturing are emerging.
• Population Dynamics: With a population of approximately 49 million, Uganda’s economic gains are translating more effectively into per capita terms compared to Tanzania’s larger population of 65 million. This balance allows Uganda’s GDP growth to have a more direct impact on individual income levels.

Tanzania has experienced steady but relatively slower per capita growth compared to its neighbors. In 2023, the country’s economy grew by 5.2% and is projected to grow by 5.4% in 2024 and 6.0% in 2025, according to the IMF. Key drivers of Tanzania’s economy include agriculture, manufacturing, and tourism, along with public investments and business-friendly reforms under President Samia Suluhu Hassan. However, Tanzania’s larger population dilutes its per capita figures. Its total GDP ($79.06 billion in 2023) significantly exceeds that of Uganda ($48.77 billion), highlighting the distinction between overall wealth and per capita metrics.

Kenya maintains its leading position due to its diversified and industrialized economy, which encompasses sectors such as finance, technology (e.g., M-Pesa), and agriculture, with a projected GDP growth rate of 5.0% to 5.5% for 2025. Meanwhile, Rwanda, despite its effective governance and urban development, faces challenges due to its smaller economic base. Its GDP per capita is increasing but still lags behind its regional counterparts due to reliance on tourism and agriculture.

Uganda’s economic ascent is not without challenges. The country’s public debt-to-GDP ratio rose to 49.6% in 2023, which is considered sustainable but indicates a need for fiscal discipline as oil revenues begin to ramp up. Additionally, poverty has increased, from 21.4% in 2017 to 30.1% in 2020, highlighting that per capita gains have not yet reached all segments of the population. Tanzania is currently facing tight financing conditions and exchange rate pressures, although its inflation remains low at 3.0%-4.0%. Kenya is grappling with debt servicing costs, while Rwanda’s high growth, projected at 7%-8%, is moderated by its smaller economic base.

Globally, the IMF forecasts a 3.2% growth rate for 2025, with Sub-Saharan Africa projected to grow at 4.0%-4.2%, suggesting that East Africa remains a bright spot. If Uganda manages its oil-driven trajectory effectively, it could solidify its position in the region. Still, Tanzania’s larger economy and Kenya’s regional dominance ensure a competitive landscape.

While the claim about which country is the “richest” hinges on GDP per capita, this perspective is somewhat narrow. Total GDP reflects a country’s economic size, in which Tanzania and Kenya outpace Uganda. Using purchasing power parity (PPP) or assessing wealth distribution might yield different rankings. Nonetheless, Uganda’s emerging status underscores its potential as a rising player in the region, reshaping narratives once dominated by Kenya and, to a lesser extent, Tanzania.