Agro-industrialisation can unlock Uganda’s economic growth

Processed coffee commands a price five to ten times higher than raw coffee beans.

Its successful implementation requires collaboration of the government, private sector, and development partners

COMMENT | DAVID WOZEMBA | Agriculture is often considered the backbone of Uganda’s economy, employing over 70% of the population and contributing roughly 24% of GDP. However, its potential remains largely untapped. One of the challenges limiting the sector’s earning potential is post-harvest losses, estimated at 30-40% for grains such as maize and 30-80% for fresh fruits and vegetables. However, agro-industrialisation, which involves transforming raw agricultural produce into high-value products, offers the country an opportunity to reduce post-harvest losses, promote economic growth, reduce unemployment, and enhance food security.

Uganda is a major producer of crops like coffee, maize, bananas, and cassava but, most of these commodities are exported in their raw form, which often fetch low prices on the international market. Agro-industrialisation has the potential to transform the entire agriculture value chain, broaden markets and increase household incomes. For instance, processed coffee commands a price five to ten times higher than raw coffee beans. Similarly, turning maize into flour or oil, or processing fruits into juice, generates more income than selling the raw produce. According to the Uganda Bureau of Statistics (UBOS), agro-processing contributed over 6% of Uganda’s industrial output in 2022, but there is potential to more than double this figure with targeted investments.

Uganda’s population is projected to reach about 100 million by 2050, according to the United Nations. This will require strategic interventions to create more jobs and increase food security. According to the World Bank, agro-processing industries could create over 17 million jobs across Africa by 2030. Therefore, with targeted investments in the sector, Uganda can capture a significant share of the opportunities it presents.

Beyond economic growth and job creation, agro-industrialization has the power to improve food security. However, there is a need to invest in storage, processing, and distribution infrastructure, to reduce food losses and ensure that surplus produce reaches markets during times of shortage. This is critical for rural communities often vulnerable to food insecurity due to poor infrastructure and post-harvest losses.

One of the major challenges Uganda faces in realising agro-industrialisation is limited access to modern agricultural technology. Smallholder farmers, who constitute the bulk of the agricultural workforce, often have limited access to improved seeds, fertilizers, and mechanisation. As a result, productivity remains low. The average yield for maize, one of Uganda’s staple crops, is around 2.5 tons per hectare, compared to potential yields of 5-7 tons per hectare with improved practices.

Climate change also poses a threat to agricultural productivity, with unpredictable rainfall patterns and increased incidences of drought and flooding affecting harvests. Therefore, it is essential to prioritise climate-resilient agriculture, which includes adopting drought-resistant crops, promoting irrigation, and providing farmers with climate-smart agricultural practices.

Successful implementation of agro-industrialisation requires strong collaboration between the government, private sector, and development partners. The Ugandan government has already taken steps, such as the Agro-Industrialization Program under the Third National Development Plan (NDPIII). However, more can be done to create an enabling environment for private investment in this sector.

The government can support the development of value chains that connect farmers to markets. This includes investing in infrastructure such as roads and storage facilities, promoting mechanization, supporting irrigation systems, energy, and increasing access to finance for smallholder farmers and agribusinesses. Especially considering that lack of finance remains one of the biggest barriers to scaling agricultural enterprises. The regulatory frameworks should also be streamlined to encourage innovation and reduce the cost of doing business for agro-processors.

Development partners like the Alliance for a Green Revolution in Africa (AGRA) are currently supporting smallholder farmers to access improved inputs, training, and markets. Through partnerships with local financial institutions, we are also providing much-needed capital to agro-entrepreneurs, who often lack access to affordable financing, and promoting climate-smart agriculture. AGRA is also enabling women and youth farmers and agribusinesses to enhance contribution to and benefits from agricultural transformation for their economic empowerment. Generally, with strategic investments in agriculture value chains with focus on sustainability, Uganda has the potential to become a leader in agro-processing in Africa.

****