It has been common knowledge that industrialisation is the clearest path to development.
That’s to say, developing countries have two options – either to pursue industrialisation or remain trapped in economic stagnation. This is also the case that this year’s Nobel Prize in Economic Sciences emphasised when Joel Mokyr made a clear case for creative destruction.
This process of creative destruction that leads to a culture of growth and ultimately development is only possible through industrialisation. Thus, whereas I disagree with President Museveni on many things, there’s one thing he’s got right: the emphasis on industrialisation, and why Uganda has no other option but to pursue this route.
Uganda has no other viable route to genuine transformation. Yet, in reading Uganda’s industrial strategy and listening to the conversations in the milieu about industrialisation, I conclude that we have a flawed understanding of the two concepts – industry and industrialisation.
A factory is not an industry
First, a factory is not an industry. And although an industry is a collection of factories, it’s not necessarily true that a collection of factories will give rise to an industry. An industry is a self-sustaining ecosystem of factories that feed from/into each other, mutually reinforce each other and continuously achieve high levels of integration with each other.
Thus, it’s possible, for example, to have dairy factories without having a dairy industry. Industrialisation, on the other hand, is the rigorous application/combination of human capital and technology to shift inputs/products from one plane of value to the next plane of value and to set up a momentum to successively and continuously climb to new planes of value.
Thus again, it goes without saying that although industrialisation is value addition, not all value addition amounts to industrialisation. The nature of industrialisation involves continuous leaps.
Successful industrialisation usually also results in financialization. Why? Because as factories begin to feed into/from each other, they will utilise new creative forms of financing to guarantee successful production, to hedge against supply chain distortions, thus new forms of financing will result, such as cross-shareholding, and derivatives.
How do you build an industry?
It is for this reason that industrialisation is not possible without a strong industrial policy. Because industries do not emerge as a chance activity, they’re deliberate actions. Let’s take an example of Uganda’s agriculture.
Assuming this was to be developed into an industry. We start with the fundamentals. To have agro factories, you must have backward linkages of productive farms. Productive farms imply that you have the right seeds and you can guarantee the right soil conditions.
At this point, one is thinking of the human capital to select and develop the right seeds. We are also speaking about fertiliser factories. Now here’s where the beauty of industry also starts to develop.
If you have a fertiliser factory that’s giving you ammonium nitrate, that same factory will soon also feed into your construction industry. You need ammonium nitrate in stone quarries for you to blast the stones.
If stone quarries can deliver cheaper stone to construction, this brings down the cost of road construction, and these roads can then open your farms. We can then also talk about the cold rooms to guarantee that produce once harvested has a longer shelf-life.
But you need affordable electricity to sustain cold rooms. You also need assembly plants for agro machinery. Now imagine that this same process must be replicated for every industry you set out to develop.
That’s why, for most countries, it always started with import substitution. Why? Because with import substitution, one is certain that demand already exists at home. And as you fill up that home demand with homemade products, the shift is always to export promotion.
Because soon, assuming Uganda is producing more fertiliser than it needs, there’s no option but to look for a market among its neighbours. Uganda thus suffers from one problem – an incoherent industrial strategy and a weak or absent industrial policy.
Some heuristics
I have illustrated the process of industrialisation for the agricultural industry. It goes without saying that if you were to also develop the automotive industry, the same would have to happen, a deliberate exercise of building this ecosystem of automotive players at the different levels of the value chain.
But there are also some indicators as to whether a nation is ready for industrialisation. For example, if a country doesn’t have an installed generation capacity of 10,000MW and above, that country is not yet serious about industrialisation.
If a country doesn’t have at least 1000km of well-maintained railway with a connection to a seaport, we also don’t talk about industrialisation. There are infrastructural fundamentals – the electricity, and the transport/logistics.
We also talk about the human capital that powers this exercise, which goes from the policy makers, industrial policy experts, those in research and development, the engineers, the technicians, the operators, and, of course, the managerial class.
Above all, we talk about the policy, the regulation, and the financial stream that fuels this industrialisation exercise. Here, we are also talking about the ability to cushion failure, to eat pain (since some factories will fail, others will work), and this must be endured over a long period of time, picking learnings from one failure to build success into the next endeavour.
Unfortunately, this is not how we talk about industrialisation in this country; we have a loose grasp of the concept, with many mistaking it for factories and some value-addition exercise. And by doing this, we are getting it wrong about industrialisation, all of us, including President Museveni.
The author is a Ugandan engineer
In other words, industrialization is not a political wishful thinking but a practical CULTURE (nurtured/cultivated).
Exactly. In Africa, because the current leadership is too aged and nearly senile, industrialization is either haphazardly done, or mismanaged by thieves, or even remains just political wishful thinking.
Dear Author,
I have enjoyed your candid deliberations on this key issue. It is not mere theory. We need to call a spade a spade! Hiwever, one thing I am not certain in all this about industrialisation is the environmental aspect.
If you get it out of the equation then there is imbalance that negatively affects the desired growth or industrilusation. Otherwise, I recommend the article for wider reading and integration of the ideas in our thinking process and planning for a better tomorrow of Uganda.
Thank you Mr Ugandan Engineer for identifying a flaw in our understanding the concept of what is an industry and industrialization. I think looking at the broader synergy of what the president is advocating for, the interdependence forces of both backward and forward leakages will fuse at a convergent point of need.
The point at hand, among others is to reduce on our import bill to save money to fund research as it is already ongoing by government through the ministry of science and technology in partnership with Makerere University and other collaborations to link knowledge to production value chain to the farm, to the market etc. A woman in Sebei demonstrated a step forward in practice is better than a superfluous knowledge. With her Parish Development Money (PDM) money she bought a cow, sells the milk, feeds the cow dung in her bio digester, gets gas to cook. The multiplier effect of this innovation along the production value chain will definitely lead to the creation of both industry and industrialization. The president has started a journey of a thousand miles with one step-industrialization. The second step in the journey of a thousand miles invites you and me and all others to join and create both backward and forward leakages needed to catalyze the movement of both industry and industrialization.
Agreed!
Building a thriving industry in Uganda requires more than just factories; it demands a connected ecosystem where factories mutually support each other and continuously add value through innovation and integration.
Successful industrialization involves applying human capital and technology to leap to higher value levels, supported by robust financial mechanisms to manage risks and fuel growth. Learning from other countries, Uganda should focus on strong industrial policies, backward linkages in agriculture and manufacturing, and developing its financial sector to enable sustainable industrial growth.
Thank you.
By the way, where is the standard gauge railway which a Ugandan politician once said he was funding to enhance cheaper movement of goods as well as raw materials to Uganda? Kenya built hers in preparation to connecting with the Ugandan section of the same SGR in the hope that that would reduce transportation costs between Mombasa and Kampala. As well, Tanzania also built hers and even went beyond with the high speed train. So where is the SGR in Uganda?
Or isn’t that another sweet pipe dream to industrialize without a standard gauge railway?? Welcome to Africa!
Building a thriving industry in Uganda goes beyond merely establishing factories. It requires creating a vibrant and interconnected industrial ecosystem where factories not only coexist but also actively support one another. This ecosystem promotes continuous value addition through innovation, integration of supply chains, and the development of complementary industries. Such interdependence increases efficiency, reduces costs, and enhances the quality and competitiveness of manufactured goods in both local and global markets.
A successful industrialization strategy must leverage Uganda’s human capital—its skilled and semi-skilled workforce—and modern technologies to accelerate movement into higher-value production activities. This “leapfrogging” enables Uganda to skip intermediate stages of development, producing more sophisticated goods and services that command greater economic returns. Human capital development through education, vocational training, and skills upgrading becomes critical to equip the workforce to handle new technologies and processes effectively.
Technological adoption should be paired with innovation ecosystems that nurture research and development, promote entrepreneurship, and facilitate the transfer of knowledge from universities and research institutions to the industrial sector. This creates a dynamic environment where continuous improvement and upgrading are the norm, allowing industries to adapt to market changes and emerging global trends.
Moreover, the industrial development journey must be strongly supported by robust financial mechanisms. Access to finance is essential for managing the risks associated with investment in new technologies, infrastructure, and production capacity expansion. Developing financial institutions that can provide long-term credit, insurance, and venture capital will empower businesses to innovate, scale operations, and withstand economic shocks. A vibrant financial sector also facilitates the mobilization and allocation of domestic savings into productive industrial ventures, driving sustainable growth.
Uganda can draw important lessons from other countries that have successfully industrialized. Key among these is the importance of strong, coherent industrial policies that guide investment decisions, protect infant industries where necessary, and promote targeted sectors capable of generating significant backward and forward linkages. Backward linkages—such as linking manufacturing with agriculture through agro-processing industries—create a multiplier effect by increasing demand for local raw materials, raising the incomes of farmers, and fostering rural development. Forward linkages ensure that Uganda’s industrial products find markets and integrate into regional and global value chains.
Developing these linkages requires deliberate coordination among policymakers, industry players, and financiers to ensure policies align with business realities and incentivize collaboration across sectors. Strengthening infrastructure—such as transport networks, energy supply, and communication systems—is also crucial to enable efficient movement of goods and information within the industrial ecosystem.
Finally, strengthening Uganda’s financial sector is vital to underpin all these efforts. This includes deepening capital markets, improving banking services tailored to industrial needs, and promoting inclusive finance to reach small and medium-sized enterprises that form the backbone of the industrial economy. Public-private partnerships and international cooperation can play an important role in mobilizing resources and expertise to build a resilient and expansive financial architecture.