- Kampala

Triggering economic transformation in Uganda: Industrial Policy revisited.

In spite of the deliberate efforts to industrialize Uganda, relative macroeconomic stability, increased private sector investment, donor support, increased exports of primary goods, a stable political environment, and significant growth of GDP, real transformation of Uganda's economic structure has not taken place. Industrial sector development, especially in manufacturing, has been hampered by poor co-ordination, planning and budget processes, lack of competence within relevant institutions, poor communication, corruption, bureaucracy, low levels of technology, limited financial resources, conflict of interest and infrastructural bottlenecks. UNIDO in its review of Uganda’s current ten year National Industrial Policy pointed out that the policy was not well funded because of competing priorities. The current National Industrial Policy expires in February 2018.

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 dialogue

  • shared the key findings from the FES study on the existing industrial policies and state of implementation in Uganda;
  • discussed the structural changes required in Uganda’s economy to achieve the stated development goals;
  • elaborated on the role of the state in promoting industrialization and especially the development of the manufacturing sector;
  • promoted an understanding of the role of industrial policy as a tool of an active, efficient and competent state to support the development of an internationally competitive manufacturing sector;
  • discussed 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;
  • encouraged learning from the experience of other countries on how industrial policies and practices promote or constrain industrial development.

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?” and the dialogue undertook to answer this question as many others.

Panelists and participants made the following recommendations:

  • There is a need for an industrialisation or industrial policy, which - among other issues - needs to define the role of the state. The state needs to be actively involved in economic development.
  • 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 has so far been lacking for proper implementation of an industrialisation strategy and needs to be present alongside the financial backing.
  • Policies and implementation need to be better integrated.
  • There is need to incentivise local manufacturers through tax rebates and provision of affordable credit.
  • We need to benchmark progress and learn from examples such as Ethiopia.
  • We need to design our own home-grown strategies suited to Uganda’s needs.
  • We need to be mindful of the debt trap.
  • Uganda needs to focus on areas that will guarantee returns. There is a need to prioritise and select critical sectors which have transformative linkages to other areas
  • Agencies and staff need to have the capacity and right training and mindset (energetic and motivated) for implementing policies.

 

 

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