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Agro-industrialization

Agro-industrialization is positioned as a cornerstone of Uganda’s Fourth National Development Plan (NDP IV), serving as the fastest route to structural transformation and a key pillar of the Tenfold Growth Strategy. By commercializing and formalizing farming, it acts as a critical off-taker of agricultural produce, stimulates rural development, and ensures food security. The sector’s importance is underscored by its role in expanding manufacturing, with food products, textiles, and furniture leading growth during the NDP III period, reflecting the success of government interventions aimed at transforming agriculture into a driver of industrialization. In 2021, the fastest growing segments in manufacturing based on the annual growth rate of MVA was food products (19.1%), followed by textiles (18.1%) and furniture (9.4%). This demonstrates the effectiveness of several government interventions over the NDP III geared towards transforming the economy by transforming agricultural sector.

Performance up to 2025 shows significant momentum resulting from NDP III interventions. Over 2,263 Agro Processing Facilities (APFs) had been established across the country, cumulative storage capacity for grains increased to 1,236,219 MT by FY2023/24 which reduced the post-harvest losses for grain from 37% in 2017/18 to 18.2% in FY2022/23. In addition, expansion of financial services to rural areas through the Agricultural Credit Facility (ACF), Uganda Development Bank (UDB), and PDM has increased the loan portfolio to agricultural from Shs.1,127 billion in the FY 2020/21 to Shs.1,699 billion by FY2023/24. Government contributions of Shs.5 billion as a premium to agricultural insurance further strengthened resilience. These achievements highlight the sector’s growing capacity to add value and stabilize incomes, though challenges remain in prioritizing and fully developing agricultural value chains.

Despite significant investments, Uganda currently boasts only two fairly developed agro-industrial value chains, in dairy and sugar. The lack of focus on specific commodities has diluted efforts, leaving many chains underdeveloped. This gap underscores the need for sharper prioritization under NDP IV. The plan therefore shifts attention to three additional commodities: coffee, vegetable oil and fish. Coffee is already a major export earner, vegetable oil has broad industrial applications, and fish aligns with global health-conscious consumer trends. Developing these chains is expected to diversify exports and enhance competitiveness in international markets.

Looking ahead, NDP IV envisions agro-industrialization as a driver of exponential export growth. Medium-term interventions aim to raise agricultural exports from US$2.45 billion (35% of total exports) in FY2024/25 to US$4.76 billion (48%) by FY2029/30. Long-term projections target a five-fold increase in agro-industrial exports, reaching US$20 billion by FY2039/40. By consolidating gains from NDP III and strategically prioritizing value chains, Uganda seeks to transform its agricultural sector into a robust industrial base, ensuring sustainable growth, food security, and expanded rural employment opportunities.