Fix agriculture before oil gets out of the ground – World Bank

The World Bank in Uganda launched a new report on agriculture, Closing the Potential-Performance Divide in Ugandan Agriculture on Wednesday at the Sheraton Hotel in Kampala.

The report which gives an outlook to the structural challenges in the sector across the last two decades was said to be “the most critical” of all reports the Bank has launched.

Speaking at the launch, the country manager for the World Bank Group in Uganda, Christina Malmberg Calvo said that the government needs to consider the suggested reforms and fix agriculture “before the black gold gets out of the ground.”

Most of the reforms that the report suggested require a refocusing of public spending and policies to allow for the involvement of the private sector in order to make agriculture profitable. As it stands, the sector is growing at a very slow pace. In the last five years, agriculture in the country has grown at 2% per annum – while population has grown at 3.3% annually in the same period.

“Farms have become smaller – especially those of smallholder farmers,” Holger Kray, the head of the Africa Agricultural Policy for the World Bank said.

Read more: Investment in agriculture is not matching its output performance – World Bank report

Mr Kray said that this was a good time to reform agriculture because “opportunities for agriculture are the strongest they have ever been.”

Uganda has benefited from several opportunities in the last two decades as peace and stability has meant more people are engaging in agriculture, expansion of cropland, more avenues for regional agricultural trade and a new independent trading partner in South Sudan.

The report refers to all these as “one-shot stimuli” which could be strategically harnessed for longer-term growth.

“Is agriculture able to drive growth and development or not? Or is it a holdout and other sectors will drive growth?” Mr Kray asked.

It has often been said that oil will transform Uganda’s economy, and where agriculture was a focus for national strategy in years past, oil is fast becoming the sector that is framed as the magic bullet that will make Uganda a middle-income economy.

Uganda meanwhile could easily be the food basket for the region, where it already supplies a substantial percentage of food crops, and the continent. Mr Kray compared admirable policy changes to the 2016 Rwanda changes that emphasised value addition and identified cities on the continent as export targets for the sector.

For required policy changes, the World Bank officials worried that when oil production starts, “governance will take eye off the ball of agriculture.”

Oil production will also affect foreign exchange rates, which will mean that imported processed goods will be cheaper than the locally produced ones making value addition in the sector challenging.

And yet, according to the report, we should be looking towards commercialisation through value-addition.

There will be a rise in demand for items like sugar, tea, coffee and soft drinks from the increasing urban middle class. “The dietary shift in urban centers means a shift in demand for processed, packaged and perishable goods,” Mr Kray said.

Related: Agriculture is the ‘green gold’ that could transform the economy and the lives of Ugandan farmers