A few years ago, I was chatting with a businessman returning from Asia. He told me something that has stayed with me ever since. “The difference between us and them,” he said, “is that over there everybody seems to be trying to produce something. Here, too many people are trying to position themselves between the producer and the customer.”
That observation
neatly captures Uganda’s next economic challenge.
This year marks
40 years since the NRM took power in 1986. Whatever one’s politics, the scale
of economic transformation during that period is undeniable. Uganda’s economy
has grown more than ten-fold. Tax revenues have increased roughly 60-fold.
Inflation was tamed, foreign exchange shortages disappeared and sectors like
telecommunications, digital payments and modern financial services emerged.
"The liberalisation of the economy fundamentally altered Uganda’s trajectory. It unleashed private initiative, attracted foreign investment and diversified exports beyond coffee and cotton into fish, flowers, gold, cement, steel products and regional trade services.
Forty years ago
Uganda was largely surviving. Today it is functioning.
But the next
challenge is no longer recovery. It is transformation — ensuring the gains of
growth are distributed more equitably, mainly that productive sectors create
millions of jobs, especially for young people.
With the
announcement of the new Cabinet, the real work now starts.
The first and
most urgent challenge is corruption.
"For years corruption served a political utility function, helping maintain patronage networks and political coalitions. But like all political tools, there comes a point when the side effects outweigh the benefits.
That point may
well have arrived.
Corruption is now
an economic threat. It distorts incentives, reallocates capital from productive
enterprise to political rent-seeking and deepens wealth inequalities in
socially dangerous ways. Young people stop admiring entrepreneurs and instead
admire brokers and politically connected dealmakers. Economic energy shifts
from creation to extraction.
No country
develops sustainably that way.
The second
challenge is improving the business environment so that incentives sit squarely
with producers rather than commission agents and rent seekers.
At the heart of
every prosperous country is a simple formula: production must pay better than
speculation.
A farmer who
grows maize should earn more than the broker standing between the farmer and
the market. A manufacturer should thrive more than a politically connected
importer gaming procurement systems.
But too often in
Uganda, the opposite happens.
The productive
economy carries the tax burden while rent-seeking flourishes in the shadows.
Businesses spend too much time navigating bureaucracy, delayed government
payments and regulatory overlap instead of expanding production.
Uganda also needs
clarity about how government intervenes in the economy.
East Asian
economies did not subsidise businesses indiscriminately. Governments
strategically backed firms capable of competing in export markets and
generating foreign exchange. Support was tied to performance and
competitiveness.
By contrast, many import substitution schemes in Africa degenerated into protection rackets for politically connected businesses. Shielded from competition, such firms became financial black holes enriching a few cronies at the expense of taxpayers and consumers.
Government
intervention should therefore focus on unlocking Uganda’s genuine competitive
advantages.
Agriculture
remains the clearest example. Uganda has fertile soils, good climate and
abundant labour. The goal should not merely be producing raw commodities but
building globally competitive agro-processing industries.
Tourism is
another underexploited goldmine. Few countries combine Uganda’s biodiversity
and climate in such a compact geography. Yet tourism still performs below
potential because of weak infrastructure and fragmented value chains.
Education and
health services could position Uganda as a regional hub if quality improves.
Logistics and financial services naturally position Uganda as a gateway to the
Great Lakes region, while mining should support industrialisation rather than
simply exporting raw minerals.
The third
challenge is financing infrastructure sustainably through infrastructure bonds.
Uganda’s
infrastructure deficit remains enormous. Roads, railways, irrigation systems
and logistics networks require massive long-term financing. Yet excessive
dependence on external borrowing exposes the country to exchange rate risks and
rising global interest costs.
Uganda has
quietly built pools of long-term savings through institutions like NSSF,
insurance companies and pension schemes. Infrastructure bonds could channel
these savings into productive national assets while deepening domestic capital
markets.
Infrastructure is
not consumption. It is economic oxygen.
The fourth
challenge is guarding against the oil curse.
Oil has destroyed
as many countries as it has enriched. The danger is not the oil itself but what
oil revenues do to political and economic behaviour. Easy money can weaken tax
discipline, fuel corruption and undermine agriculture and manufacturing competitiveness.
"Uganda must resist the temptation to consume oil revenues politically before investing them productively. The smartest oil economies use oil revenues to diversify away from oil.
Finally,
agriculture.
Agriculture
remains Uganda’s largest employer and perhaps its greatest untapped wealth
creator. The real challenge now is mass job creation, and no sector can absorb
labour at scale faster than agriculture linked to agro-processing, logistics,
storage and export marketing.
For too long
agriculture discussions have focused narrowly on production. But agriculture is
a value chain, not merely farming. The real wealth often lies beyond the farm
gate.
The first 40
years were about rebuilding a collapsed economy. The next phase must be about
transforming a functioning economy into a broadly prosperous one.
Stability was the foundation. Transformation is now the mission.
