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Ugandans needs a smart industrial policy - expert

By John Odyek

Added 19th September 2017 06:33 PM

The report highlights the opportunity of developing productivity in the agro-processing industry and the agricultural sector in Uganda, which still employs 72% of the working population.

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The report highlights the opportunity of developing productivity in the agro-processing industry and the agricultural sector in Uganda, which still employs 72% of the working population.

DEVELOPMENT | POLICY

Uganda should develop a smart industrial policy that looks at opportunities and strengths of the economy and the benefits from regional integration.


Rodgers Mukwaya, an economic affairs officer for the UN Economic Commission for Africa (ECA), while commenting on Uganda’s industrial policy quest, cited the example of Malaysia, which targeted the electric and electronics sector, Ethiopia with the leather and garment sector and Rwanda with ICT-based services and tourism.

Mukwaya advised Uganda policy makers to inspire themselves from successful industrial policy experiences and to defy conventional wisdom.

“If South Korea had listened to experts in the late 1950s and 1960s, it would still be manufacturing shoes, not plasma screens, automobiles, and mobile phones,” he said.

Mukwaya was part of a team that produced a report titled, Transformative Industrial Policy for Africa 2016, that was launched in Kampala.

The report highlights the opportunity of developing productivity in the agro-processing industry and the agricultural sector in Uganda, which still employs 72% of the working population.

Peter Balimunsi, the commissioner for industry in the ministry of trade, said Uganda would next week announce a new consultant to support the design of a new industrial policy.

Uganda’s 10-year National Industrial Policy (NIP) was put in place in February 2008 and comes to a close in February 2018.

The NIP’s implementation faced challenges due to financial and institutional constraints. The United Nations Development Programme (UNDP) will provide technical and financial is designing the new policy

A smart policy can help Uganda achieve middle income status by 2020, overcome unemployment and lead to sustainable economic growth and development.

Regional integration is outlined as a major opportunity for expanding the industrial sector in Uganda, since most of Uganda's existing diversified manufactured exports go to neighboring countries, such as Rwanda and South Sudan and a small amount to high-income countries.

The report said despite an economic growth rate reaching 5,2 percent on average over the past five years, Uganda strong economic performance has not kept in pace with its East African neighbours (the sub-regional average growth rate was 6,9 percent over the past five years) and has not proven efficient enough to create quality employment and economic diversification.

Trends in the manufacturing sector clearly illustrate the lack of economic diversification essential to sustainable growth. The average share of manufacturing in GDP in Uganda was 6.7 percent between 2005 and 2014, which was lower than both the average for low-income countries (12.7 percent) and the global average (16.2%).

Moreover, while the national poverty rate declined to 19.7 per cent in 2012/13, from 50 per cent in 1995, more than 40% of the population is still classified as being insecure (living below twice the poverty line), according to a national survey carried out in 2012/2013. The report argues in favour of a targeted industralization policy as a key for structural transformation of the Ugandan economy.

The World Bank notes that Government needs to play a proactive role to facilitate urban-rural linkages, to encourage integration of local firms within the supply chains of international retailers, and to promote ‘export readiness’ of local firms in order to meet the growing market demand in Sub Saharan Africa.

It says the role of the Government for strengthening farmer organisations, cooperatives, providing proximity extension services and facilitating contract farming arrangements will be critical to ensure that farmers learn to consistently produce the standards required of agricultural produce in internationally competitive supply chains.

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