Agriculture will help economy recover from Covid - economist

Thursday June 25 2020

A farmer spreads out coffee beans on a farm.

A farmer spreads out coffee beans on a farm. PHOTO | FILE PHOTO 

By Ashita Chopra

The Agriculture sector will help Uganda’s economy to recover, Mr Fred Muhumuza, a development economist, says.

Agriculture will ensure food and nutrition, which are crucial elements of reversing and mitigating the Covid-19 effects on the health of both humans and the economy.

The Covid-19 pandemic has crunched the economy, with experts predicting that Uganda will grow at only 3.4 per cent.

The economy is already following global trends of reduced growth that is not expected to exceed 4 per cent.

Speaking during a webinar organised by Absa, Mr Ridle Markus, Sub-Saharan economist, Absa Group said, “ The sub Saharan region has seen a congestion and if the government is not able to change the economy by four and half per cent in terms of growth, it will affect the economy on a larger scale.”

Therefore, agriculture which has remained stable during the pandemic, remains a central piece for preserving and later restarting the economy.


Mr Fred Muhumuza, speaking during the same meeting said, “This sector will help us bounce back, even in the corona year the agriculture sector has seen a stable growth of 4 per cent, a good indication that it will be the driver for recovery and trigger the industry to grow.”

Dr Muhumuza says the above strategy will rebuild the internal resilience of the economy by reviving internal demand and productivity, thereby setting the foundation for import substitution industries.

However, there is a need to promote Uganda’s products that will help to build the economy by exporting to Kenya, South Sudan and DRC.

“Maize and other 14 crops the Cabinet is looking at should be promoted for exports and this will help in recovery.

In the Budget speech, Finance Minister Matia Kasaija announced a 60 per cent import duty on agricultural products that can be made locally in order to promote import substitution.
However, experts raise other concerns.

Fate of import substitution
Mr Muhumuza says, “Currently, we may not able to see import substitution because if we analyse the cost of utilities and other expenses to set up a factory, it is very high. Central bank should be conscious about strengthening the shilling.”

Whereas, Mr Ridle estimated that the second half of the year is set to see a bit of normalisation, as the demand of agriculture is increasing. Market confidence will grow by 2021.

“If we grow at least by 2 per cent by 2021, there will be a big jump, a solid level for now up to 5 per cent. 2022 will see further extension and further normalisation which will help SMEs to liquidate,” he added.