- Kampala

Triggering economic transformation in Uganda: Industrial Policy revisited.

Inspite of the deliberate efforts to industrialize Uganda attributable to relative macroeconomic stability, increased private sector investment, donor support, increased exports of primary goods and stability political environment, real transformation of the economy has not been realized in real terms despite the significant economic growth. It has also been pointed out that the country’s main stay the agricultural sector has not been closely associated with industrialisation thus calling for increased investment in agro-business and processing that will lead to employment creation and consequently promoting the manufacturing sector in Uganda.

A section of the Participants at the meeting. Photo: Maria Alesi/FES Uganda

On 30th November 2017 Friedrich Ebert Stiftung hosted a policy dialogue titled, “Triggering economic transformation in Uganda: Industrial Policy re-visited?” The objectives of the dialogue were to share the key findings from the FES study on the existing industrial policies, and state of implementation in Uganda; to debate about the structural changes required in Uganda’s economy to achieve the stated development goals; to enhance the understanding of the role of the state in promoting industrialization and especially the development of the manufacturing sector; to promote understanding of the role of industrial policy as a tool of the active, efficient and competent state to support the development of an internationally competitive manufacturing sector; to discuss the political aspects, necessary steps and required changes in political will and power relations to promote the implementation of an effective industrial policy in order to achieve economic transformation in Uganda;  to encourage learning from the experience of other countries on how industrial policies and practices promote or constrain industrial development; and to encourage further research and policy debates on industrialization and economic transformation in Uganda with the aim of realizing the aspirations of the NDPII and Vision 2040. One of the key questions raised by the Resident Representative of Friedrich Ebert Stiftung Uganda was, “How can policy coherence and joint implementation be achieved through institutional restructuring?” The debate was expected answer this question among others.

Inspite of the deliberate efforts to industrialize Uganda attributable to relative macroeconomic stability, increased private sector investment, donor support, increased exports of primary goods and stability political environment, real transformation of the economy has not been realized in real terms despite the significant economic growth. It has also been pointed out that the country’s main stay the agricultural sector has not been closely associated with industrialisation thus calling for increased investment in agro-business and processing that will lead to employment creation and consequently promoting the manufacturing sector in Uganda. Industrial sector development has been hampered by such challenges as poor coordination, planning and budget processes, lack of competences within relevant institutions, poor communication, corruption, bureaucracy, low levels of technology, limited financial resources, conflict of interest and infrastructural bottlenecks. It has also been pointed by a review by UNIDO that Uganda’s current 10 – year National Industrial Policy expiring in February 2018 was not well funded because of competing priorities.

From the meeting the panelists and participants made the following recommendations.

·         Need to develop an industrialisation policy as opposed to industrial policy – review content and implementation. The state needs to be involved in economic development.

·         Limiting private sector led development and industrialisation will not be enough

·         We need to increase investment in agricultural development and ago-processing

·         There is need to develop skills to fill the skills gap in Uganda.

·         Political will – this needs be properly guided (not mixing up agro processing for industrialisation)

·         Integrate policies and implementation – we should divorce planning from processes

·         There is need to incentivize local manufacturers through tax rebates and provision of affordable credit

·         We need to benchmark with others for example Ethiopia

·         Design our own home-grown strategies suited to Uganda’s needs

·         We should be mindful of the debt trap

·         Uganda maximize on areas that will guarantee returns (need to strategize and prioritise)

·         Selecting critical sectors with transformative linkages to other areas

·         The right caliber of people should deliver policy implementation – energetic and enthusiastic 

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