Uganda’s economy is transforming: Industry’s share of gross domestic product (GDP) has increased from 25% in 2009 to 30% in 2019. Services’ share of GDP has increased from 44% in 2009 to 46% in 2019, while agriculture’s share of GDP has fallen from 31% in 2009 to 24% in 2019.
However, employment shares have not changed much. In 2016, still close to two-thirds of workers worked in agriculture. For young workers, this was 72%. Particularly for young Ugandans, economic transformation must be accelerated. The transformation in work in the economy will require increased export competitiveness, more value addition in agro-processing, value chain linkages for agricultural products, and an improvement of labor productivity in industry and services.
The influx of some 800,000 young workers seeking jobs each year is making the task of finding a productive job harder. Although people are gradually shifting into service work, the evidence suggests that most start in agriculture and move into low productivity service jobs after they reach their mid-twenties.
Worse still, there is evidence that median hourly earnings for non-agricultural self-employed workers fell between 2012 and 2016. These workers worked longer hours to make ends meet. Growth in the labor force started to peak at close to 4% annually, just as five-year trend growth in the economy was slowing. Consequently, returns to education, though still relatively high, have started to narrow.
With an average age of 16, Uganda, Africa’s youngest nation after Niger, is in the midst of a youth employment challenge. Recognizing that all African nations are facing this challenge, the special theme for the recent IDA19 Replenishment for the World Bank and International Finance Corporation (IFC) is “Jobs and Economic Transformation.” We are committed to helping Uganda meet this jobs challenge in all of our programs.
Like many other African countries, Uganda is an emerging production platform of intermediary and finished goods. Uganda can continue improving the institutional framework, improving policy outcomes and reduce costs and improve connectivity in supply chains. And since most workers are on farms, this means ensuring that Uganda’s farmers are better connected to competitive markets that offer consistent and increasing returns to investment.
Demand for food is rising throughout Africa, and as urbanization continues and incomes rise, the demand for higher value produce such as meats, dairy, fresh vegetables, fresh fruits and juices, will expand fast. Blessed with good weather and soil, Uganda can be a garden state for Africa. Agribusiness and agro-processing can create many productive jobs in the food system, from transport, storage and warehousing, to retail and restaurants. Products of the land have always been, and remain, Uganda’s main exports.
Under IDA19, we will align our portfolio of projects in support of the government’s programs for connectivity, linking farmers to lead suppliers, to dairies, to aggregators and packing stations for fresh produce. Further support to a more streamlined growth of cities will improve the environment for building both agro-processing industries, to create off-farm jobs. To help attract more foreign direct investment under the Private Sector Window, IFC will assess how their investment portfolio can best support productive alliances in agribusiness and agro-processing.
We recognize the importance that the government attaches to value addition in agro-industry. Our support to connectivity in the roads and electricity sectors will therefore emphasize the importance of agro-processing in those secondary towns with most potential.
Uganda is blessed with a lot of regional diversity, and so the solutions for jobs and economic transformation will be locally specific. Our support will take this into account.
Uganda has grown out of conflict, stabilized the economy, opened to trade and private investment. The country has reduced poverty and invested in human capital, and the solid foundation of macroeconomic stability and openness gives Uganda an edge. With determination and coordination, and in partnership with the World Bank, IFC, and our development partners, together we can meet the jobs challenge.