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In recent years, Uganda has made concerted efforts to revive its industrial policy as part of a broader strategy to stimulate economic development and structural transformation. Therefore, the first session of the Annual Bank Conference on Development Economics 2024, organized by the World Bank, explored “Industrial Policy” the political economy surrounding these efforts, drawing insights from Uganda's challenges and strategic directions. The lessons from this discussion can serve as the model of change management at the country level for the world.
A LOOK BACK AT UGANDA’S INDUSTRIAL POLICY
Uganda’s industrial policy trajectory can be divided into distinct phases, each marked by varying degrees of state intervention and market orientation. Post-independence Uganda initially embraced import substitution industrialization (ISI), aiming to build domestic industries and reduce reliance on foreign goods. However, the political turmoil of the 1970s, particularly under Idi Amin’s regime, disrupted these efforts and led to economic decline. In the 1980s and 1990s, Uganda shifted to market-led reforms under structural adjustment programs (SAPs), prioritizing trade liberalization, privatization, and deregulation. While these policies stabilized the macroeconomy and spurred growth, they also led to the dismantling of state-supported industries and a retreat from active industrial policy.
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.-THE CHALLENGES OF REVIVING INDUSTRIAL POLICY-
Reviving industrial policy today presents Uganda with complex challenges. Internally, political resistance from influential budget-focused ministries favors fiscal restraint over industrial investment. Externally, donor agencies often push market-led approaches that limit Uganda’s flexibility to support industrial initiatives directly. Additionally, the legacy of past policy missteps has fostered skepticism toward protectionist strategies among policymakers and private stakeholders. These hurdles emphasize the need for Uganda to carefully balance industrial goals with other developmental priorities, particularly as the country increasingly considers sustainable development objectives alongside economic growth.
TACKLING THE GLOBAL DEBT CRISIS
Uganda, like many developing nations, faces pressures from the global debt crisis that threaten economic stability. Effective responses require a multi-faceted approach involving debt restructuring, concessional financing, and fiscal reforms focused on long-term resilience. Uganda could benefit from debt relief initiatives, enabling the country to reinvest in infrastructure, education, and industrial development that prioritizes stability and growth. Recent shifts in global industrial strategies emphasize strengthening domestic industries alongside export-led growth, a model that Uganda can adapt by drawing lessons from successful approaches in other countries. This hybrid model can help Uganda leverage both local and global opportunities to foster a more balanced, resilient economy.
MOBILIZING PRIVATE CAPITAL
Private investment plays a pivotal role in advancing Uganda’s industrial ambitions, as it provides the necessary capital, expertise, and innovation to drive large-scale projects and foster economic growth. According to the World Bank, Uganda attracts approximately $1.1 billion annually in foreign direct investment (FDI), significantly below the African average of $2.4 billion. This disparity highlights the untapped potential in Uganda’s investment landscape and the need for targeted efforts to close the gap and attract more investors. Public-private partnerships (PPPs) have proven to be a powerful mechanism for funding critical infrastructure projects. For instance, the $600 million Kampala-Jinja Expressway, supported by PPPs, serves as a key transport corridor, facilitating trade and reducing travel time. As highlighted by the Uganda Investment Authority, such collaborations not only fill funding gaps but also bring efficiency and expertise from private stakeholders, creating a model for scalable infrastructure development. In addition, Uganda has made strides in aligning industrial growth with sustainability.
Reviving industrial policy in Uganda involves navigating a complex political economy landscape marked by historical legacies, contemporary challenges, and the need for strategic adaptation. By addressing these issues head-on and fostering a supportive environment for industrial growth, Uganda was able to chart a path toward sustainable development and structural transformation. For other countries, by focusing on these strategies, they can leverage the Uganda model to drive sustainable growth and improve the quality of life for their citizens.
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