The effect of government road infrastructure investment on economic growth in Uganda

Abstract

Infrastructure development remains a key driver of economic growth and transformation, particularly in developing countries where access to basic infrastructure is often limited. Among the various forms of infrastructure, road transport plays a central role in facilitating trade, mobility, and access to services. In Uganda, the road network is the primary mode of transport, carrying over 90% of passenger and freight traffic (Muvawala et al., 2021). This makes road infrastructure critical for enabling agricultural development, market integration, regional connectivity, and overall productivity. Uganda’s road infrastructure carries about 95% of freight and 99% of passenger traffic linking rural producers to markets and urban centers (Eijbergen & Thompson, 2020). Recognizing this strategic importance, the Government of Uganda has consistently increased public investment in road infrastructure over the past two decades aiming to improve accessibility, reduce transport costs and stimulate economic activity across sectors such as agriculture, industry, tourism and trade (MoWT, 2023) by reducing transport costs, enhancing accessibility to remote areas and linking producers to markets, roads directly and indirectly stimulate economic activities (Kamedde, 2019; Mahebe & Mugobera, 2023). According to IbrahimIS (2020), such investments help overcome structural barriers that limit inclusive growth, especially in rural areas. Uganda’s road network consists of national roads, district roads, urban roads, and community access roads (DUCAR). In the 2020/21 financial year, a total of 341 kilometers of national and town roads were substantially completed, which is 221 km of national roads and 120 km of town roads. In addition, 16 bridges on the national road network were completed and 167.7 km of national roads were rehabilitated. By the end of the financial year, the total paved portion of the national road network had reached 5,591 km representing 26.6% of the entire network. The overall condition of the roads was said to be above the National Development Plan III (NDP III) targets, with 96.6% of paved roads and 81.7% of unpaved roads reported to be in fair to good condition (MoWT, 2022).

Theoretical and empirical literature supports the view suggesting that well planned public infrastructure investment particularly in roads leads to increased output, employment and private sector growth (Barra et al., 2015; Chindengwike & Tyagi, 2022). Studies such as Kamedde (2019) found a long-run equilibrium relationship between government spending on road infrastructure and economic output. Similarly, Muvawala et al. (2021) reported that despite short-term economic distortions, road infrastructure spending generates positive growth effects in subsequent years. Mahebe & Mugobera (2023) illustrate that transport infrastructure contributes significantly to Uganda’s economic competitiveness and productivity. Global and regional literature provides support that infrastructure stimulates economic growth. Etensa et al. (2022) show that an increase in the African Infrastructure Development Index AIDI across East Africa increases economic growth demonstrating the broader significance of infrastructure quantity. Similarly, (Kodongo & Ojah, 2016) highlight the role of infrastructure particularly road access in boosting export diversification and cross border trade competitiveness in lesser developed economies. However, studies like Timilsina et al. (2023) caution that while infrastructure investment has long-term GDP benefits, the short-run effects of road projects may be negligible or even negative depending on execution and complementary investments in other sectors. Evidence from Sub-Saharan Africa affirms the importance of road infrastructure in spurring economic growth. Studies such as those by (Bado & Dunakhir, 2024) show that in low-income countries, road infrastructure reduces transaction costs, increases productivity and attracts foreign direct investment (FDI) which collectively stimulate growth and job creation. They however show that poor project execution, corruption and inadequate maintenance often hinder the expected benefits. This view is echoed by (Barra et al., 2015) who found that while improved transport linkages enhance rural welfare and access to markets, their impact is context dependent and may be weakened by factors like conflict and weak local capacity. In Uganda according to (Mahebe & Mugobera, 2023), road infrastructure investments captured under the AIDI have a strong and positive effect on Uganda’s GDP by enhancing production efficiency and enabling other factors of production. Their findings underscore the necessity of a holistic infrastructure investment strategy encompassing roads, electricity, ICT and water to ensure long-term and sustainable growth. Chindengwike & Tyagi (2022) further find a statistically significant long-run relationship between government infrastructure expenditure and economic development with roads contributing directly to public and private sector efficiency. Despite the wealth of evidence, countries continue to face key challenges including inadequate road coverage, poor quality roads, and inefficiencies in implementation and maintenance (Calderon, 2018; Bado & Dunakhir, 2024). In many regions, especially rural areas, poor road conditions hamper market access and limit economic opportunities. Additionally, there remains a critical need for Uganda specific empirical research that isolates and quantifies the contribution of government road infrastructure investment to national economic growth. Existing studies (e.g., Muvawala et al., 2021; Ibrahim et al., 2020; Kamedde, 2019) have made important strides but further analysis is required to inform policy on how best to align infrastructure financing with growth targets especially within the context of fiscal constraints and rising development needs. Uganda Vision 2040 provides the broad strategic framework for the country's long term socio economic transformation. It highlights the need for first class infrastructure particularly roads, railways and energy systems to facilitate Uganda’s transition to a middle income status (NPA, 2013). Vision 2040 emphasizes that a robust transport network is essential for unlocking economic zones and reducing logistical constraints that hamper private sector growth. The government’s Tenfold Growth Strategy further operationalizes Vision 2040 by identifying road infrastructure as a core pillar for achieving tenfold GDP growth. It proposes targeted investments in key transport areas, improved connectivity to industrial and agro processing zones and enhanced linkages between rural and urban markets to support inclusive growth and structural transformation (MoFPED, 2025). Further, the Fourth National Development Plan (NDP IV) 2025/26–2029/30 underscores transport infrastructure as a priority investment area for accelerating industrialization, regional trade and job creation. NDP IV builds on the achievements of NDP III and outlines a strategic focus on upgrading road networks, maintaining existing roads and leveraging private sector partnerships to enhance efficiency and financing of infrastructure projects (NPA, 2024). This study therefore seeks to examine the effect of government road infrastructure investment on economic growth in Uganda drawing from both national and international evidence to contribute to more effective infrastructure planning, allocation and policy formulation.