Agro-industrialization Offers Clear Path Toward Increased Economic Growth and Job-creation in Uganda

KAMPALA, December 24, 2025 - Uganda's economic growth remains strong, with real gross domestic product (GDP) rising to 6.3% in FY2024/2025, up from 6.1% the previous year. A new World Bank report attributes this performance to recovery in household consumption, accelerated government spending, and continued investment growth.

The 26th edition of the Uganda Economic Update, published today, notes broad-based growth across agriculture, industry, and services. As a result, poverty is projected to have declined in FY2024/2025. The report further shows that tight monetary policy helped keep inflation at 3.5%,

below the central bank's medium-term target of 5%. However, fiscal pressures have increased, with a widening deficit and higher debt levels and servicing costs, underscoring the need to return to fiscal consolidation as signaled in the country's FY2025/2026 budget.

The report projects a positive medium-term outlook, supported by moderating spending growth after the general elections, the accrual of oil revenues expected to start in 2027, continued export dynamism and sustained foreign direct investment inflows. Inflation is expected to remain low, anchored by prudent monetary policy and stable commodity prices. In line with these projections, poverty is expected to further decline in 2026 and 2027. Risks to the outlook stem from possible fiscal slippages, delays in oil sector development, further reductions in overseas development assistance and heightened global uncertainty which could impact commodity prices and global financial conditions. In addition, climate shocks and lower than expected rainfall could increase poverty in the absence of mitigating measures because most of the poor depend on rain-fed agriculture.

"Uganda's growth remains strong, however economic activity is currently concentrated in low-productivity and climate-vulnerable agriculture and informal jobs, which offer limited opportunities for income growth and upward mobility," said Francisca Ayodeji Akala, World Bank Country Manager for Uganda. "Transformation of the economy to higher value-added activities is needed to deliver on the country's Ten-Fold Growth Strategy. Agro-industrialization can be a key cornerstone of this transformation, leveraging agriculture as a platform for industrial growth and job-creation."

This edition of the Uganda Economic Update focuses on identifying and addressing constraints to agro-industrialization, 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 Armine Juergenliemk, Senior Agricultural Economist and a co-author of the Uganda Economic Update. "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."

The report makes three key recommendations to the government to smooth Uganda' agro-industrialization path:

1. Strengthen foundations and infrastructure, including developing and disseminating climate-smart agriculture technologies and innovations to increase productivity sustainably; investing in irrigation to build agro-climatic resilience; establishing co-located infrastructure (rural roads, energy, water); developing skills; and enabling digital solutions for delivery of agricultural services.

2. 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 aim to improve private sector participation in seed development (especially multiplication), strengthen public sector role in seed certification, de-risk the sector and increase access to finance, and harmonize with regional policies to remove trade barriers.

3. Mobilize private capital and market linkages by scaling up innovative financing, leveraging digital platforms, and enhancing trade competitiveness. Private capital mobilization should aim to develop instruments for whole-of-value-chain financing and expand access to finance through innovative instruments such as lease-to-own guarantees, insurance, and blended finance.

Contacts:

Bernard Tabaire, (+256) 414 302200, [email protected]