Is Industrialisation being taken seriously in Uganda?

The library of the Ministry of Tourism, Trade and Industry (MTTI) is hot, and the paltry breeze wafting in from its windows is hardly relief for anyone who has just climbed the six flights of stairs to browse its dusty shelves. On these shelves, if you ever make it to this corner of the ministry, you will find thousands of documents, policies, manuscripts, and reports, which, after the hundreds of thousands of work hours put into creating them, now sit idly collecting dust and are often all but forgotten. One document has not yet made its journey to these shelves. It is hot off the press and fresh in the minds of its creators and President Museveni himself.
“The National Industrialisation Policy: A Framework for Uganda’s Transformation, Competitiveness and Prosperity” is the latest in a string of industrialisation policy plans for the country, and was recently approved by Parliament. Is it, like so many others, destined to end its short life in the policy document morgue that is the ministry library? Or will it play a more central role in the making of the future of Uganda? “Transformation of Uganda’s economy is one of the fundamental goals and commitment of the National Resistance Movement Government,” writes President Yoweri Museveni in the policy’s forward. “Uganda’s economic transformation will critically hinge upon industrialisation, and the application of Science, Technology, and Innovation, as the main driver and prime agent.” But what kind transformation is really being envisaged here? And what evidence is there that the NRM is committed to this transformation, whatever it may be?
A transformation involves both a starting and ending point. The starting point is Uganda’s economy as it stands today. Uganda’s economic growth performance is generally strong, with an average growth rate around 6 percent for the past 20 years. But the population has also been growing at a rate of between 3 and 4 percent, meaning that GDP per capita is not increasing as fast as overall GDP growth. Uganda’s labour force was 10.9 million in 2005/6 and is projected to be around 12 million today. Approximately 65 percent of this force works in agriculture, 25 percent in manufacturing, and 10 percent in industry. Contribution of industry to GDP increased slightly from 2001/2 to 2005/6 from 18.9 percent to 20.5 percent, but the contribution of industry to GDP growth rate actually declined from 2.1 percent to 0.9 percent between 2004/5 and 2005/6.
Though agriculture has long contributed the most to Uganda’s GDP, as a percentage of GDP it has been decreasing for the past few years. However, 88 percent of the population resides rurally, the majority of whom engage in some form of agriculture. Moreover, these agriculturally based rural populations have a much higher population growth rate than urban populations. In rural populations, women in Uganda have an average of 7.1 children, while in urban populations the average is 4.4 children per woman, according to the 2006 Demographic and Health Survey. What will this rapidly growing and primarily rural population mean for the economy?

Although the industrialisation policy sets a goal of 25 percent of total GDP to come from manufactured products within 10 years, it does not address how the millions of children who will enter the labour force during that time will be able to meaningfully contribute to that goal. What kind of education will they have access to and what skills will they have acquired? Nearly 25 percent of Uganda’s population is currently in primary school – how will they be not just surviving, but actively contributing to the country’s industrial development? None of this is clear from the policy. Agro-processing will be a principle focus of the policy, but what impact will the growing population have on the country’s ability to export agricultural products that its citizens also need to survive?

Other target indicator goals by the tenth year of policy implementation include a 30 percent contribution of manufactured exports to total exports and 30 percent value added in industry as a percentage of GDP. Along with these come a long list of policy actions – everything from infrastructure development to skills and human resource development to gender balanced and sensitive industrial transformation. But amidst all the ideas, it becomes easy to lose focus and “prioritisation” ceases to retain meaning. For all the policy rhetoric, what evidence is there of commitment to industrialisation, as it has been defined by certain target indicators, which may or may not be adequate or attainable?

The policy itself notes that “Government is yet to invest adequately in Industry and Technology and meet the AU set target of allocating at least 1% of GDP to this sector.” Granted, foreign investors will be critical to the so-called economic transformation of the country, but the government will likely need to take a more active role as well and not rely solely on foreign direct investment. The Ministry for Tourism, Trade and Industry, chiefly responsible for coordinating the industrialisation effort, receives a budget of less than Shs 40 billion, even including donor assistance. This, when compared to the budget for Defense for example, over Shs 400 billion, is simply laughable. Collaboration with better financed ministries like that of Works and Energy, with budgets of around Shs 570 billion and Shs 330 billion respectively, will help, but it does not excuse the fact that MTTI works on a budget similar to that of the Office of the President.
Heartening, however, is Uganda’s recent Export Performance Analysis, which indicates increasing investment in the re-export sector and increasing industrial output. Formal merchandise exports in the country grew by 39 percent in 2007, from US$962 million to $1.34 billion. The largest share of total exports, 39 percent, went to COMESA. Trading with COMESA grew 78.9 percent between 2006 and 2007, from US$283 million to $500 million. This suggests that so-called economic transformation may lie in further developing regional trade, a point which is noted though not particularly emphasized in this most recent industrialisation policy.
Uganda’s economic success, especially when compared to the rest of sub-Saharan Africa, is impressive, but it does not in and of itself indicate a commitment to industrialisation on the part of the government. Neither does the production of this latest industrial policy. As it stands there is not yet a comprehensive implementation guide and it is hard to see how MTTI, with its scant budget, will be able to effectively implement the policy even with a guide. Economic growth is likely to continue with or without this industrialisation policy document. The real question is not whether these pieces of paper will sit collecting dust in a few years time, but how the country will address the issues that may ultimately threaten continued economic growth like food security, population growth, and an increasingly competitive market.

Melina Platas
The Independent

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