Exploit marketable products to diversify economy - World Bank

Animal husbandry can help diversify Uganda’s economy. World Bank experts have said agriculture-related processing industries such as dairy products, and new sugar products, can leverage the country’s agriculture production, and help in diversification of the economy. PHOTO BY MICHAEL KAKUMIRIZI 

In Summary

Fact. A sound diversification strategy should be focused on light manufactured exports – Report

Kampala. World Bank Group has urged Uganda to develop and utilise her 800 tradable products properly to achieve broad economic diversification needed for long term and sustainable economic development.
Diversification of the economy and broad-based economic development are critical for the long-term sustainable development in resource-rich developing countries (RRDCs). Evidence from around the world shows some countries with a strong resource base have managed to diversify their economies and exports, but many have not.

The Bank says though Uganda has expanded its export products to 60, there are still a lot of resources that need to be exploited to transform and diversify the economy.
Presenting the Country Economic Memorandum at Kampala Serena Hotel last week, World Bank country economist, Dr Jean-Pascal Nganou, said: “There are 800 products that Uganda can export. It is currently exporting 60 products, but there is a potential to produce products for export.”

Dr Nganou noted that the main report shows that a sound diversification strategy should be focused on light manufactured exports such as garments, leather, and wood products.
“These products do not require sophisticated skills which are not readily available in Uganda, and would use the large pool of unskilled and semi-skilled workers available in the country,” he said.
Looking at development that has taken place in other parts of Africa, Dr Nganou said Uganda’s strategy could get inspired by the recent success of Ethiopia and Lesotho in developing a vibrant local manufacturing industry.

He explained that other opportunities include agriculture-related processing industries (cereals, dairy products, more types of cooking oils, and new sugar products), that can leverage the country’s agriculture production.
“The existing chemicals and metal product industries can also serve as stepping stones towards more sophisticated diversification in the longer term. The oil and gas potential of the country can offer an opportunity for Uganda to diversify its economy, although this needs proper management to avoid a negative impact on other forms of diversification,” he said.

Prospects of oil and mineral development indicate that the country’s total oil reserves are estimated at 6.5 billion barrels (of which 1.3 billion barrels are recoverable), but only 40 per cent of the country’s potential has been explored so far.
Dr Nganou said: “The exploitation of oil could create synergies with local industries through forward and backward linkages. Successful countries are those which have been able to harness those channels over time,” he said.

Finance minister, Mr Matia Kasaija, said government views economic diversification as key component of its strategy, adding that government is very conscious and will endeavour to avoid negative consequences.
“Uganda has the potential for emergence of a modern manufacturing sector focused on agro-processing and light manufacturing which would serve both the domestic and the regional markets and would provide substantial export opportunities for a variety of small and medium-sized enterprises,” he said.
World Bank country manager, Ms Christian Malmberge Calvo, said: “Uganda’s economic diversification should ensure agricultural (and) human capital development by investing in education and health.”

World Lessons
The country memorandum discusses the prospects of oil and mineral production in Uganda and uses the lessons of international experience to propose an agenda of policy and institutional reforms aimed at maximising the positive impact of oil production and avoiding the “resources curse” that has affected new producers of oil, gas and minerals negatively.

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