How Uganda plans to finance its agro-industrialization agenda

Last week, Uganda, Kenya, and Tanzania presented their budgets for the upcoming fiscal year, with Uganda unveiling a significant focus on agriculture industrialization to boost its economy. Africa Kiiza, the Project Coordinator at the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) in Uganda, shared insights on this strategic shift in a recent interview with CNBC Africa. The shift towards industrialization post-COVID-19 has been imperative for Uganda, aligning with the government's vision of import diversification and increased export revenues, particularly through agro-industrialization. The government has actively embarked on measures to enhance the agriculture sector, emphasizing value addition through industrialization. As part of these efforts, Uganda aims to establish industrial parks across different regions to attract both local and foreign investments, supply necessary agro-inputs, set up agro-processing factories with robust infrastructure support like irrigation and electricity. However, challenges persist as the current budget allocation for agro-industrialization fails to address the needs of the majority, particularly small and medium enterprises (SMEs) in the agro-processing sector. Limited adherence to standards and lack of experience among SMEs hinder their growth and participation in value addition activities. Africa Kiiza highlighted the importance of providing financial support in the form of credit facilities to aid existing agro-processors, instead of solely focusing on government-initiated factory establishments that often operate below capacity due to lack of farmer linkages. There is a growing call for the government to redirect funds towards establishing common user facilities in key locations, enabling startups and marginalized groups like women and youth entrepreneurs to access expensive machinery and packaging materials for value addition. This shift could lead to a more connected and efficient agro-industrialization ecosystem, ensuring that products meet market standards and avoid unnecessary competition with established processors. Additionally, concerns were raised regarding the current budget's consumption-driven approach rather than production-focused strategies, signaling a need for a more sustainable and market-oriented agro-industrialization plan in Uganda. The push towards a production-based budget and greater market extension services could further propel the country's agricultural sector and enhance economic growth. As Uganda navigates the complexities of agro-industrialization, balancing government-led initiatives with private sector participation and adequate support for SMEs will be crucial in advancing the nation's economic objectives.