Uganda pursues diverse routes to strong economic performance

KEY RESULTS

• The Enhanced Integrated Framework (EIF) has helped the Government of Uganda to mainstream trade into its National Development Plan II and other sectoral strategies.
• In support of women’s economic empowerment, the EIF has helped improve the productivity and quality of women-led shea butter production. 
• The EIF has funded a project to diversify and increase the competitiveness of Uganda’s tourism industry, generating employment and increasing incomes for handicraft and souvenir producer communities.
• Through support to institutional capacity-building for District Commercial Offices (DCOs), the EIF has contributed to the effective implementation of the Ministry of Trade, Tourism and Cooperative’s mandate at the local level.

The Republic of Uganda is a landlocked country situated in East Africa, populated by dozens of ethnic groups. Known as "the Pearl of Africa", the country is blessed with rich and diverse landscapes, ranging from tall volcanic mountains to densely forested swamps. It enjoys an abundance of natural resources, including oil reserves and fertile soils. As such, the agricultural sector plays a dominant role in Uganda’s economy, contributing to a quarter of the country’s Gross Domestic Product and generating 70% of employment opportunities. 

Uganda has demonstrated notable economic progress, with a 30% increase in its formal exports between 2008 and 2015, and a significant reduction in poverty, falling from 29% in 2008 to 18% in 2013. Gold remains a leading export earner for Uganda, contributing substantially to the nation’s total exports valued at USD 1.82 billion, representing almost half of the country's merchandise exports.[1] Tourism also plays a crucial role in the economy, employing a significant workforce, predominantly women. Other primary exports include coffee, cocoa beans and tea.

The EIF programme has been supporting Uganda since 2009. The collaboration aims to realize the country’s trade policy vision and help Uganda better integrate into the global economy. Improved trade capacity and performance, fostered by in-country development programmes such as that of the EIF, have undoubtedly supported Uganda’s ongoing economic achievements.

Building strong national structures 

Uganda’s first Diagnostic Trade Integration Study (DTIS) was conducted in 2006. The study identified opportunities for developing and improving trade activities, while at the same time highlighting challenges and constraints. The Government of Uganda updated the study in 2013, and again in 2021, with a view to providing a fresh perspective on the trade development agenda, recent and emerging challenges, and government priorities. 

Ensuring that national structures can sustain programmes is an important part of the EIF’s work. This process takes time and is best done in close collaboration with people at different levels of government. The EIF’s strong emphasis on partnerships and building relationships is key to its success, and it used this approach in supporting Uganda’s tourism, industry, and cooperatives sector. The EIF programme established a National Implementation Unit (NIU) early on to make sure that trade was mainstreamed into national and sector-specific strategies and to strengthen coordination across ministries.

The EIF supported the country in implementing a Trade Capacity Enhancement Project, followed by a Sustainability Support Project to help its Ministry of Trade, Industry, and Cooperatives (MTIC) strengthen and build on progress made to date. These projects laid strong foundations on which to build the institutional capacity of the NIU, ensuring a trade agenda was integrated into national development policies. 

For instance, the Government of Uganda committed to establishing free trade zones, strengthening regional relationships, and improving trade infrastructure. In addition, the MTIC developed the capacity to monitor and report on Aid for Trade (AfT). It worked especially hard to make sure that the NIU coordinated well with other ministries, making the achievements of the project sustainable in the long term and ensuring progress towards the country’s National Trade Policy Vision.

Striving towards inclusivity in shea butter production

In August 2020, the EIF began funding the East African Women in Business Platform, a regional project covering the Nilotica shea-growing region, which spans southern South Sudan and northern Uganda. The project is being implemented by the Uganda Women Entrepreneur Association Limited, which supports women shea butter entrepreneurs in northern Uganda. 

Shea butter is an ivory-coloured fat extract from the nut of the African shea tree. It is widely used in cosmetics as a moisturizer, in food preparation, and even to make traditional African percussion instruments to increase the durability of the wood.

The primary goals of the project were to facilitate women’s participation in the shea value chain in Uganda; improve product quality to meet international standards; enhance the leadership and decision-making roles of women within the industry by empowering them through structured support for cooperatives ; and promote value-added exports. Producers and processors were trained on the formation of cooperatives: more than 4,000 producers now have the skills in this area. Through rigorous training and quality enhancement initiatives, the project successfully improved the quality of shea butter products to meet international standards, effectively facilitating their entry into export markets. Additionally, the project raised awareness to stop the illegal burning of shea trees in Northern Uganda, the only place in the world, except for South Sudan, where the high-quality Nilotica shea tree grows.

This expansion of value-added shea products into new markets has had direct benefits for women-led small- and medium-sized enterprises (SMEs) and women producers, through an increase in their incomes. The achievements of this project have also enabled the NIU to draw funding for future projects.

Empowering local communities in the handicrafts sector

The EIF supported Uganda’s efforts to diversify and increase non-traditional exports and generate employment as per Uganda Vision 2040, especially by harnessing the potential of the tourism industry. Between June 2019 and August 2023, the Ministry of Tourism, Wildlife and Antiquities implemented the Handicraft and Souvenirs Support Development Project (HSDP), targeting microenterprises and SMEs, craft and souvenir producers, and local communities in the tourism sector. 

The project trained almost 8,100 handicraft and souvenir producers in product design and market development, with 67% of the beneficiaries being women. Forty-six (46) women entrepreneurs who supply the Rwenzori Sustainable Trade Centre (RSTC) (see below) with handicrafts for export were trained in product design and market development. This training resulted in enhanced product quality, which led to increased sales and a higher income for the producers. For example, the Ngombe Women’s Group now makes 600 woven baskets a month, up from 200 a month (the baseline figure) before. Handicraft entrepreneurs were also trained in governance and leadership, and Fairtrade standards, assessment, and certification, making their products more competitive in the global market. 

Margaret Kasande is the Crafts Production and Marketing Manager at the RSTC, which works with associations of crafts producers across six districts in Uganda. The EIF project helped increase its export of handicrafts – mainly woven baskets – from less than 75,000 in 2018 to almost 137,000 in 2023 as part of the HSDP. The quality of the crafts has also improved significantly; 90% of the RSTC’s products are now accepted for export, up from 57%. The combined effect of increased productivity and improved quality has allowed the weavers – more than 3,000 of the approximately 3,200 of whom are women – to increase their incomes from USD 125 to nearly USD 310 per year. 

According to Kasande, this financial empowerment has made a real difference to women weavers’ lives: 

The project also sought to strengthen links between handicraft producers and traders. For instance, the RSTC participated in a pop-up event at a Japanese restaurant in Kampala, which connected crafts producers to a buyer from Japan. They now export their products to this buyer. 

Overall, the project helped the sector to diversify the products it could offer for sale and increased both their quality and value. It improved marketing and packaging and provided a much-needed boost to Uganda’s handicraft competitiveness in markets at all levels.

Enhancing commercial and business services at the grassroots

In Uganda’s decentralized administrative system, DCOs are central to delivering commercial and business services at the grassroots level. Their efficient operation is essential for the delivery and development of businesses of all kinds and sizes. The DTIS in 2006 identified a lack of staff, equipment, and skills in the 25 DCOs, which was presenting a major challenge to economic performance. The EIF programme supported the government in designing and delivering a DCO capacity-building project that would help the DCOs deliver services to communities more efficiently and effectively.

By the end of the three-year project, which ran between 2012 and December 2016, renovations and refurbishments had taken place for 15 DCOs, while 92% of the supported districts had mainstreamed trade into their development plans and budgets. The district commercial officers’ capacities had also been enhanced by redefining their roles, building their skills, and by facilitating links to MTIC, local governments, and the public. Additionally, the project increased the income of SME entrepreneurs, their employees, and the general community in the target districts. 

Sustaining economic transformation 

The Government of Uganda recognized the importance and value of the EIF’s support in building the capacity of its DCOs and took on the funding of the commercial offices in all local governments after the project’s closure. Georgina Mugerwa, Uganda’s NIU Coordinator, observed that investing in DCOs is a "win-win" scenario: DCOs provide an invaluable service to local people by facilitating trade and licensing their businesses, thereby boosting their incomes. At the same time, the government gains significant economic returns through increased tax revenues and enhanced local economic activity, resulting from improved business efficiencies and compliance facilitated by the DCOs.

There are several other examples of the country’s commitment to the ambitions of the EIF, which holds promise for a sustained legacy. The NIU was integrated into the Ministry of Trade between December 2017 and October 2019.

The Government of Uganda has also set a goal to transform to middle-income country status by 2025 in its National Development Programme (NDP) III, improving livelihoods and incomes across the nation. The Ministry of Trade maintains active oversight and engagement in ongoing development projects beyond EIF involvement, to ensure these initiatives contribute effectively to the national economic goals set in NDP III. Uganda has achieved this goal in some key sectors. The government’s proactive role in boosting and facilitating commerce sets a formidable example for other least developed countries.