By Orla Ryan Kampala, Uganda

When the World Bank's Robert Blake left Uganda in July this year to return to Washington, local journalists asked him if he was leaving the country in a better state than when he had arrived seven years earlier.

Kampala has benefited more than other regions from the growth

His response was an emphatic "yes".

Now, he said, when he went upcountry, he saw children in school uniforms - even though they didn't have shoes - and mud huts slowly being replaced by brick houses with tin roofs.

Uganda's achievements since 1986 - when President Museveni's National Resistance Movement government came to power - have long been praised.

It is one of three African countries (Botswana and Mauritius are the others) that has seen sustained growth for the past 15 years.

The economy is still growing, but the speed of growth has started to slow to about 4.5% on an annual basis, according to World Bank figures.

The stated centre of Ugandan government policy is to eradicate poverty, and for Uganda to reach its poverty target, it needs to grow at 7% a year.

New poverty plans

The slowdown is causing government finance heads to spin as they revise their strategy on eradicating poverty.

The revised version of the Poverty Eradication Action Plan, referred to as PEAP, is expected in February.

Don't forget, the Ugandan economy is still growing fast, if you look at the past four years Keith Muhakanizi Ministry of Finance

Different people give different reasons for the slowdown.

The Ministry of Finance is clear. Bad weather and a low coffee price have temporarily sent the economy off track.

But some local economists say that Uganda's youthful growth spurt has ended and the difficult adolescent growth stage lies ahead.

In the past 15 years, shattered buildings have been rebuilt, shopping centres opened, and mobile phone networks established.

Now the question is - what next?

'Still growing fast'

Keith Muhakanizi, director of economic affairs at the Ministry of Finance, is dismissive of those who say the growth spurt has ended.

"It is a combination of two things, in the last year, there has been bad weather that affected crop production," he said.

Rapid growth could be giving away to a difficult period

"Since agriculture contributes 41% to the country's gross domestic product (GDP), what happens to agriculture does heavily impact on GDP.

"The terms of trade [for coffee and cotton] have not been good, that has affected the growth rate."

Mr Muhakanizi points to World Bank research that says that poor "terms of trade" have taken away about 2.2% of GDP.

"If you look at growth rate and suppose that had not happened, the slowdown in the growth rate would not be there.

"Don't forget, the Ugandan economy is still growing fast, if you look at the past four years, you are looking at a growth rate of 6%," he said.

But he does admit to awareness of a bigger problem - bad weather might be a temporary problem but poor terms of trade could be here to stay.

"In that case, you have to look at other sources of growth," he said.

'Teenage' growth

An independent report by Oxford University and the Economic Policy Research Centre, Kampala, says the slowdown should not be exaggerated but it could reflect the "unwinding of the growth impetus from earlier achievements".

It says a 7% target could be over-ambitious, but even if growth is lower than that, it is still a substantial achievement.

"The price of sustained rapid growth is continued reform," it adds.

This does reflect what local economists have said.

Standard Chartered's managing director Richard Etemesi said the Ugandan economy is in "teenage stage" and it is this phase of growth, which is most difficult.

In the budget, which was unveiled in June, the government said it wanted to reduce reliance on donors - which pay for 53% of Uganda's budget - by increasing local tax revenue and income from exports.

This heavy reliance on donors has political and economic repercussions - one World Bank economist has referred to the Ugandan economy as existing on a lifeline.

Donors were angered by a government decision last year to cut welfare budgets to fight rebels in the north of the country.

Need for reform

It's time to concentrate on strengthening institutions - such as commercial courts - and eliminating corruption and growth will continue, the Ministry of Finance's Mr Muhakanizi said.

"Suppose corruption was not there, or the bottlenecks, what would have been the rate of growth, it would have been much higher if institutions were strong and efficient," he said.

Even if growth remains strong, questions remain about how many people are moving out of poverty.

The latest Poverty Status report admits that growth has been "uneven".

Urban populations have benefited more than rural ones, and much of the growth has been concentrated in the central region, where Kampala is based.

The children that the World Bank's Mr Blake described as attending school are unlikely to be those in war-torn north, who move into Gulu at night to find a place to sleep safe from fighting.

The war on the north affects the battle on poverty in other ways, for example the increase in defence spending.

New challenges

Now the Ministry of Finance says it is key to balance out these regional disparities.

"Even the growth rates we have been achieving here, we can eradicate poverty only if growth is more equitable... some sections of society have benefited more than others," Mr Muhakanizi said.

So far, it is a challenge the government appears to have accepted.