Agro-industrialisation has emerged as a cornerstone of Uganda’s ten-fold growth strategy, as the country targets a $500 billion economy by 2040.
To turn this ambition into reality, the World Bank Group has outlined a set of foundational enablers and strategic pathways it says are essential for transforming Uganda’s agro-industrial sector, boosting value addition, and accelerating inclusive economic growth.
The 26th Edition of the Uganda economic update, themed: Cultivating Prosperity through Agro-Industrialisation, the World Bank states that Uganda’s transition to a modern, competitive, and climate resilient agro-industrial economy relies on three interlinked pillars.
The first of these three pathways is the government should strengthen foundations and infrastructure, including developing and disseminating climate-smart agriculture technologies and innovations to increase productivity.
It should also invest in irrigation to build agro-climatic resilience, establish co-located infrastructure (rural roads, energy, and water), develop skills, and enable digital solutions for the delivery of agricultural services.
The government should improve the policy and enabling environment by reforming policies, strengthening institutions, supporting farmer cooperatives, enabling competition among private sector players, and strengthening public institutions to deliver high-quality public goods.
Policy reforms should improve private sector participation in seed development (especially multiplication), strengthen public sector’s role in seed certification, de-risk the sector and increase access to finance, and harmonise with regional policies to remove trade barriers.
Private capital
The third pathway, the World Bank says, is the need for the country to mobilise private capital and market linkages by scaling up innovative financing, leveraging digital platforms, and enhancing trade competitiveness.
The World Bank recommends strengthening private capital mobilisation by developing financing instruments that support the entire agricultural value chain, while expanding access to finance through innovative solutions such as lease-to-own guarantees, insurance products, and blended finance mechanisms.
The World Bank country manager for Uganda, Dr Francisca Ayodeji Akal said: ‘Transformation of the economy to higher value-added activities is needed to deliver on the country’s ten-fold growth strategy.
Agro-industrialisation can be a key cornerstone of this transformation, leveraging agriculture as a platform for industrial growth and job creation.’
The World Bank Group remains optimistic that this edition of the Economic Update for Uganda focuses on identifying and addressing constraints to agro-industrialisation, which has enormous potential for job-creation, value addition, and inclusive growth.
‘The building blocks to pursue the agro-industrial agenda in Uganda are consistent with the World Bank’s AgriConnect initiative, which aims to integrate smallholders into agribusiness and transform the sector into an engine of sustainable growth, job-creation, and food security,’ said Ms Armine Juergenliemk, a senior agricultural economist and a co-author of the Uganda Economic Update.
She adds: ‘This initiative opens opportunities for productive partnerships between the public and private sector to facilitate technology adoption, de-risk value chains, expand service delivery, and ultimately create more jobs in agriculture and the rural economy.’
Agriculture as a cornerstone
Agriculture is the cornerstone of Uganda’s economy, driving economic growth, job creation, food security, and providing essential raw materials for the agro-industrial sector.
It remains the main source of livelihood for most Ugandans, particularly in rural communities.
Beyond its economic significance, agriculture plays a critical role in poverty reduction by enabling smallholder farmers to transition from subsistence to commercial farming.
The sector contributes approximately 24 percent to Uganda’s Gross Domestic Product (GDP), accounts for 35 percent of export earnings, and employs 68 percent of the labour force (UBOS 2021; 2024).
Food and seasonal crops, though vulnerable to climatic shocks, represent 47 percent of agricultural GDP, followed by livestock (17 percent), cash crops (12 percent), and fisheries (8 percent) (World Bank 2025).
About 77 percent of poor households rely on agriculture, primarily subsistence and smallholder farming and households headed by individuals working in agriculture have the highest poverty rates.
Strategic investments in agro-industrialisation, adoption of modern farming techniques, and targeted support for smallholders can unlock the sector’s full potential and reduce poverty.
Uganda’s long-term development frame- works-Vision 2040, Fourth National Development Plan (NDP IV), and the ten-fold growth strategy-aim to position the country as an upper-middle-income economy.
Ten-fold growth strategy
The ten-fold growth strategy aims for agro-industrialisation to contribute $20 billion annually to GDP by 2040. A key target of the NDP IV is to raise growth in agriculture, forestry, and fisheries from 6.6 percent to 10.13 percent by 2030.
NDP IV projects the creation of 208,409 to 983,396 jobs annually, with agriculture, fisheries, and forestry contributing to 35.6 percent of these new opportunities, especially in agro-processing.
In the foreword of the report, the World Bank division director Kenya, Rwanda, Somalia, and Uganda (Africa Region), Mr Qimiao Fan, said that despite ongoing global challenges, Uganda’s economy maintained robust and broad-based growth in FY25 driven by strong domestic demand and resilient performance across agriculture, tourism, industry, and services.
He further wrote that the medium-term outlook is positive, with growth expected to further accelerate as oil production commences.
Current projections reflect production starting in the financial year of 2027 and significant oil revenues starting in the financial year of 2028.
Risks
Yet, significant risks to the overall outlook persist, including fiscal slippage, delays in oil sector development, unsure overseas development assistance, global trade uncertainty, and climate shocks.
‘Uganda must advance its economic transformation by accelerating the transition of workers from low-productivity subsistence agricultural activities to higher-productivity industry and services jobs. Investing in human capital and infrastructure will be key to this transformation, to harness its demographic dividend, and to create more and better jobs,’ he said.
Mr Qimiao says agroindustrialisation is central to Uganda’s development strategy, offering opportunities for job creation, higher incomes, value addition, export earnings, and import substitution.
Challenges
However, progress has been constrained by a range of challenges, including: weak foundations in primary agricultural production and poor access to complementary services (irrigation, roads, energy; an enabling environment that remains challenging, marked by policy uncertainty; and inadequate private sector investments across agricultural value chains, including input supplies, primary production, processing and value addition, and exports.
‘Addressing these challenges will require strong and sustained investments and enabling policies. Key areas include improving access to agricultural extension services, use of modern inputs (including seeds and breeds), and access to irrigation and mechanisation. Development of financial instruments for delivering agricultural finance and insurance across various segments of agribusiness value chains is also needed, especially in primary production,’ Mr Qimiao wrote.
About 80 percent (193,200 km2) of Uganda’s land is arable, which is far higher than in Kenya where less than 10 percent (53,954 km2) of the land is arable and Tanzania, where 47 percent (440,000 km2) is arable, indicating significant expansion potential.