Ugandan Agriculture Must Commercialize to Drive Economic Growth and Reduce Poverty

Stocks and Financial Services Press Releases Wednesday June 20, 2018 09:07
KAMPALA--20 Jun--World Bank

KAMPALA, June 19, 2018—The Government of Uganda and the World Bank today launched "Closing the potential performance divide in Ugandan agriculture" report that provides an unprecedented review of the structural context of Ugandan agriculture, its main actors, and the trends, opportunities and challenges the sector is facing.

Agriculture is Uganda's 'green gold' that can transform the economy and the lives of farmers. Why is it then that Uganda's well documented agricultural potential is not realized? What specific public policies and actions are required to unleash the entrepreneurial energy of Uganda's largest private sector actors—its farmers? These and other questions are tackled in the report.

The report identifies three priority areas for policy action and investment, namely, (a) commercialization through value-addition and trade; (b) strengthened public institutions and policy implementation, and (c) enhanced resilience of agriculture production and rural livelihoods.

"Economic growth and poverty move with the fortunes of Uganda's agriculture sector, which, in turn, depends on the whims of the weather. Farmers will not invest in commercial agriculture while counterfeit and poor-quality inputs dominate the market. They need to be able trust the distribution system, and have tenure security and access to finance. This require effective policies and regulations, and that politics steers clear of the agriculture sector," said Christina Malmberg Calvo, World Bank Country Manager for Uganda.

The report notes several structural barriers in Uganda's agriculture sector, such as declining productivity, natural resource degradation, and high vulnerability to the impacts of climate change. The low level of tenure security and financial inclusion of smallholders, and comparably weak regulatory measures and poor quality-control systems have been found to limit technology adoption and to hamper agribusiness development. While public budget allocations for agriculture have remained modest, inefficiencies in spending are high.

Booming domestic and regional demand for higher-value foods arising from income growth, urbanization, and dietary shifts offer massive opportunities for Ugandan farmers, for value chains beyond farm production, and for better jobs in agriculture. Other sector potentials include developments in agricultural technology and ICT, and various successful agribusiness models that could be upscaled.

Strengthening the institutional base of agriculture, removing identified distortions, facilitating trade, and enhancing resilience through climate-smart agriculture and low-cost irrigation systems can help closing the divide between the potential and actual performance of Ugandan agriculture. Government needs to drive these high priority actions by forging a pact with the farmers and other private sector actors.

"A productive and climate-smart agriculture sector requires an effective enabling environment. Providing that environment is the role of the Government. Uganda's agriculture sector may not be transformed overnight. But making the right adjustments now will be critical to realize the Vision 2040," said Holger Kray, Head of the World Bank's Africa Agriculture Policy Unit and the study leader.

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