Agro-industrialisation in Uganda: Current status, future prospects and possible solutions to pressing challenges

Almost 70% of the working population is engaged in agriculture, which also provides the first job for three-quarters of those aged between 15 and 24 years. 78% of the Ugandan population lives in "rural" areas where farming is the predominant economic activity. Agriculture's contribution to Uganda's industrial sector has been significant, with the sector accounting for approximately 60% of the manufacturing sector's total output. However, the proportion of the GDP generated by the agricultural sector has declined from approximately 50% in 1995 to the current level of 24%. This change can be attributed to a rapid increase in the contribution made by the services sector. Manufacturing accounted for approximately 8% of GDP over the past decade, with no discernible trend. The bulk of Uganda's manufacturing output is accounted for by the processing of agricultural commodities, with food processing alone accounting for 40% of manufacturing output. The production of soft drinks and beer accounts for a further 17% of manufacturing output. In the five years to 2017, manufacturing growth was buoyant, increasing at an average annual rate of almost 6%. Much of this can be attributed to the rapid expansion in the value of the output of the food processing sub-sector, with particularly strong growth being registered in meat, fish, and dairy processing. The development of small- and medium-scale agro-industrial firms has the potential to supply the growing markets within Uganda and the region. Regional and global demands are enormous, and the country is well integrated into regional trade. Domestically, demand is being driven by the high overall population growth rate (3.2% per annum) and rapid urbanisation (5.4% annual urban population growth). Income growth in both the urban and rural areas is resulting in dietary shifts, giving rise to an increased demand for higher-value and more processed foods. The demand for meat, fish, eggs, and milk is rising rapidly across the country, while the demand for staple food grains, root crops, and legumes is growing less quickly than income. These trends are likely to intensify in the future and should be studied carefully to inform the food processing/value-addition strategy currently being promoted by national planners. The growth of a wider variety of convenient, processed food products is also expected to drive innovation and quality improvements demanded by urban consumers. The agricultural sector has the potential to be exploited even further, with both food and cash crops forming the basis of Uganda's productive agro-industrial sector. The development of small- and medium-scale agro-industrial firms can supply the growing markets within Uganda and the region, and has the potential to bring about inclusive and equitable economic growth and an expansion in job opportunities.