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publication November 20, 2018

Farming Up: Uganda’s Agriculture and Food System Can Create Jobs

Latest Issue: 
  • November 2018

GULU, November 20, 2018 -  Agriculture can provide jobs to Uganda’s unemployed youth if well harnessed, according to the twelfth Uganda Economic Update published today by the World Bank.

The report, “Developing Uganda’s Agri-Food System for Inclusive Economic Growth,” notes that the sector’s economic contribution extends well beyond the production sector into the wider food system, including related processing, manufacturing, and services. However, the employment potential of Uganda’s agriculture and agri-food system remains largely untapped, despite providing 70% of the country’s employment opportunities, contributing more than half of all exports, and about one-quarter of gross domestic product (GDP).

To realize agriculture’s potential, the report points out that the country will need to overcome a range of challenges. National agricultural output has grown at about 2% per annum over the last five years, which is well below the population growth rate and below the 3-5% growth rates in other East African countries. In the medium term, the agriculture growth rate is expected to remain around 2.5%, assuming reasonable weather conditions and no army worm infestations.

The report notes that both domestic and regional demand for agriculture commodities is on a rapid rise, and an increasing number of urban dwellers demand more processed food and protein-rich diets. By 2050, the Bank estimates that about 102 million people will live in Uganda, providing massive opportunities for the country’s agriculture sector and wider agri-food system.

“All steps along the value chain – food production, input provision, processing, handling, marketing, transport and retail – require labor, both skilled and unskilled, and can contribute to inclusive economic growth,” said Richard Ancrum Walker, World Bank Senior Economist and lead author of the report. “Uganda’s agri-food system really has the potential to enhance employment opportunities for the country’s predominantly young population, the majority of whom live in rural areas.”

Diverse agribusinesses, particularly along the dairy, maize and coffee value chains, have developed in recent years, linking farmers to inputs, markets and finance, and improving rural livelihoods. To fully harness the agriculture sector’s unique opportunities, the report recommends spurring the agribusiness dynamism, and continuing to shift the agriculture sector from low-value smallholder farming towards a higher value-added agri-food sector.

“Many Ugandan producers live in remote areas and have only limited access to markets and extension services, but also insecure rights to land; these challenges are particularly pronounced in the northern and northeastern parts of the country,” said Ladisy Komba Chengula, World Bank Lead Agriculture Economist. “To foster the agri-food system transformation and inclusive economic growth, agricultural productivity will need to increase, while the resilience of agriculture production systems and rural livelihoods to climate and market risks needs to be enhanced.”

Achieving agriculture productivity growth and resilience will require better technology, tenure security and sound land management practices, as well as the dissemination of knowledge on sustainable input use through effective extension services. Boosting the sector needs higher-value addition and job creation, policy implementation and regulation will need to be strengthened; institutional coordination improved; and private sector participation encouraged. The organization of producers and their integration into sustainable agri-food value chains should be supported to increase farmers’ access to finance and markets, and for the competitiveness of the sector more broadly.

To address this, the government has undertaken a series of policy and regulatory measures, ranging from new policies on irrigation and seeds to the setup of new agricultural finance mechanisms. These measures have, however, been insufficient according to the report, and sometimes even counterproductive. Furthermore, the report notes that limited differentiation has been made between the needs of smallholder, emerging commercial, and commercial farmers.

The economic update identifies four areas for immediate attention:

  1. Fostering sustainable agricultural total factor productivity growth. To increase agricultural productivity, providing effective advisory (extension) services to smallholder farmers is important to enable them adapt quickly to new production technologies, regulate the markets for agricultural inputs to ensure their quality, and to help smallholder farmers to access inputs through targeted mechanisms, such as e-vouchers. 
  2. Promoting commercialization of agriculture, and private sector led value addition and trade. Smallholder farmers need to be assisted to invest in agriculture as a business, meaning producing surplus for the markets, to improve their incomes and livelihoods. To achieve this, access to markets and agro-processing facilities is key through their farmer or producer organizations.
  3. Building resilience to agriculture production systems and managing related risks – climate change, disease and pests. Investing in irrigation and water harvesting technologies to combat climate variability and climate change is critical; as well as putting in place early warning systems (EWS) and emergency response mechanisms (ERM) for managing disasters, such as droughts, floods, and outbreak of pests and diseases.
  4. Improving policy and regulatory environment and strengthening institutions. To attract private investments in the agriculture sector, the government needs to create an enabling business environment. This include addressing institutional capacity gaps at the national and district level, so that they are able to provide advisory and regulatory services; and adopting policies that will enhance competitions in the input (particularly seeds and fertilizers) and output markets, as well as value addition or agro-processing.