Assessment of USAID support for agribusiness : Uganda case study

This study examines USAID's agribusiness support program, which has included the Rehabilitating Productive Enterprises (RPE) and Cooperative Agriculture and Agribusiness Support (CAAS) projects; the Agricultural Non-Traditional Export Promotion Program (ANEPP), and a P.L. 480 Monetization Program in support of CAAS. USAID has contributed significantly to the improved policy environment for agribusiness through policy conditionalities under ANEPP and the P.L. 480 programs, and by financing policy studies and dialogue. However, the program's success in strengthening institutions that are important for agribusiness growth has been mixed. RPE failed to create an agricultural lending capability in the major commercial banks, CAAS failed to make cooperatives commercially viable, and ANEPP has not yet institutionalized policy analysis and development capabilities related to NTAEs. USAID did provide critical support for establishment of the Uganda Investment Authority (UIA), a key institution in promoting private sector agribusiness investment, and has also played an important role in strengthening the Uganda Manufacturers Association (UMA), the country's largest and most effective private sector trade association (although UIA's sustainability is not assured). The study finds that in the 1980's USAID's agribusiness strategy lacked clear objectives and was based on an inadequate analysis of constraints. In 1990, USAID increased the emphasis on NTAEs, identified constraints to agribusiness growth, redesigned its activities (including those supported by P.L. 480-generated local currency) to address those constraints, and provided more direct assistance to agribusiness. Since then, the agribusiness program has made measurable progress in creating the conditions for export-led growth, although it is too early to measure the impact in terms of increased value-added, employment, and income. Uganda's experience shows that even after decades of conflict, mismanagement, and damage to physical and institutional infrastructure, 5 years period of political stability, accompanied by macroeconomic reforms and infrastructure rehabilitation, are enough to restore export-oriented agricultural growth and lay a foundation for agribusiness expansion. However, inefficient institutions (ranging from research and financial institutions to cooperatives and public utilities) can be critical limiting factors. In Uganda, political interference and corruption in some of these institutions compounded the problem. Among the lessons learned are: (1) specific policies and regulations affecting agribusiness take just as much effort and capability, if not more, as putting sound macroeconomic policies in place; (2) effective policy dialogue with donors and with private agribusinesses, along with a strong policy analysis capacity, are essential to assure a coherent long-term policy framework; (3) once policy and infrastructural elements are in place, agribusiness growth can be accelerated through selective, time-limited direct assistance (e.g. by transferring knowledge about technologies and market information); (4) expert TA is vital, for in the case of high-value NTAEs, it is often not possible to predict in advance which commodities, enterprises, or aspects of operations will need assistance; (5) the local private sector and private sector associations should be involved in designing and implementing an agribusiness strategy; (6) if an agribusiness strategy in a low-income country like Uganda is to have significant impact on smallholders, attention must be paid to low-value NTAEs, such as maize and beans; (7) enhanced participation of women requires attention throughout the USAID program, including in education of women and girls; and (8) USAID/U has been strong on implementation monitoring, but weak on the monitoring and evaluation of impact or results.