“The Policy focuses on addressing the gaps identified in the National Industrial Policy of 2008 and puts in place strategic measures to optimally benefit from the emerging opportunities, e.g. the AfCFTA,” says the Ministry of Trade, Industry and Cooperatives.
The government has drawn a plan that it hopes will increase the
level of industrialization to 31.7% of the value of the Ugandan economy (GDP)
in the next 10 years up from the current 27% recorded in 2018/2019. The
new National Industrial Plan, it is hoped will be supported by the
implementation of the African Continental Free Trade Area, which, among others,
is expected to increase market opportunities for industrial products by opening
Uganda’s industrial sector comprises manufacturing,
construction, mining and utilities (like electricity, water and roads). Manufacturing
is currently the largest component of the industrial sector, contributing 57.2%
of the output. While the number of manufacturing enterprises stood at 5200 as
of June 2020. By 2029/2013, the share of manufactured exports is
expected to have grown from 22.5% in 2018/19 to 46.8% by 2029/30, according to
The manufacturing sector should also account for 15% of the job opportunities
in the economy by then, up from the current 9.8%. “The Policy
focuses on addressing the gaps identified in the National Industrial Policy of
2008 and puts in place strategic measures to optimally benefit from the
emerging opportunities, e.g. the AfCFTA,” says the Ministry of Trade, Industry
This new National Industrial Policy seeks to address the challenges that the
government has identified by lowering the cost of manufacturing especially with
regard to energy and transport. Through the policy, the government also hopes
to increase the range of value-added competitive products to create more
employment and improve Uganda’s trade balance through enhancing import
One other challenge that has repeatedly been cited by investors and
prospective investors is the high cost of finance, with the most accessible
source being commercial banks. Uganda has some of the highest interest rates in
the region at an average of 18% per annum.
The Minister of Trade, Cooperatives and Industry Amelia Kyambadde, says the
policy aims to see the cost of finance, at least for industries, go down.
Part of the solutions is the increase in the capitalization of Uganda
Development Bank. It should also widen the industrial base and improve
integration with agriculture, mineral exploitation and other natural resources.
The policy also addresses the issue of the required skills for Ugandan
industrial workers and unskilled youths, upgrading the technology being used in
the industries, and improving the efficiency of industrial operations and better
resource utilization in the industrial sector.
Currently, Uganda mainly exports raw materials and
intermediate products, which is names one of the reasons for the low export
value for the country. The country’s export earnings are valued at
about US$ 3.8 billion, compared to imports which are double the figure, at US$
“The goal of the National Industrial Policy 2020 is to double the manufacturing value-added as a percentage of GDP from 8.3% in 2018.19 to 16% in 2029/30
and increase industry sector contribution to GDP from 27.1 2018/19 to 31.7% in
the next ten years,” she says.
The private sector has welcomed the policy, saying it addresses most of what is
required to boost industrial growth, especially in value addition. “The
problem is the reliability and cost of electricity. It is very discouraging
when the electricity goes off in the middle of a production session, for example during
the night schedule. You still have to maintain the staff at the premises yet
they are idle,” said Daniel Birungi, the Chief Executive Officer, Uganda
Indeed, international reports have consistently rated access to reliable and
affordable electricity as one of the hindrances to Uganda competitiveness,
alongside the high cost of finance. However, Minister Kyambadde says they are
sure that as the generation and transmission continue to improve, electricity
will become cheaper and more reliable.
The government has also decided to extend electricity to
industrial parks by direct transmission, instead of through distribution, which
they say, increases the cost and affects quality. These, it is expected,
will be achieved through an increase in public investment and nurturing of
industrial development projects in strategic areas and increases the supply of
quality raw materials for value addition in the sector.
Other actions will be geared towards developing and strengthening skilled human
resource, and accelerated development through the use of research innovations
and adoption of appropriate technologies in the industry. The policy also
provides for the promotion of resource-efficient and environmentally sustainable
In the agriculture sector, the government has identified the specific priority
sub-sectors to focus on in the implementation of the policy, including Fruits,
Coffee, Tea, Cassava, and Cotton, Oilseeds, Bananas, Textile & Apparels,
Grains, Sugar cane, Cassava, Dairy, Leather and Leather products.
Kyambadde says these were selected through extensive study and consultation.
Others are in the extractive industries, which involves Iron and
steel, Cement, Oil and Gas (LPG, synthetics, plastics and petrochemicals), Salt
and Fertilizers. The focus will also be on what they term “The Knowledge
based industries", which includes Automobiles, pharmaceuticals, electrical
and electronic products.
The business community also cites the difficulties accessing the regional
markets especially due to the bad roads and lack of alternative means of
transport. “This makes it hard for exporters because it leads to delays
and damage to goods especially the highly perishable ones,” says Florence
Kutesa, the Acting CEO of CEEWA Uganda, an NGO dealing with the economic
empowerment of women.
However, a Senior Commercial at the Ministry of Trade, Brenda Kabasinguzu says
it is one of the reasons they are constructing export zones and warehouses at
border points, like Busia, Koboko and Katuna.