Abstract:

Agriculture accounts for 70% of employment, overwhelmingly on small farms; occupies half of all land
area, and provides half of all exports and one-quarter of GDP in Uganda. It is considered a leading sector
for future economic growth and economic inclusion in the current National Development Plan. Yet despite
having very favorable natural resource and climate conditions for production of a wide variety of crops and livestock,
average Total Factor Productivity (TFP) growth--the difference between aggregate output growth and the growth
of all inputs and factors of production that produced it--in Ugandan agriculture has been negative for the last two
decades. This suggests that on balance the country is now getting less for equal or greater effort. While drought
and pest issues likely have played a harmful role, other plausible explanations are a combination of the following:
weakening over time of the public institutional base for promoting agricultural productivity at the level of small
farms, inefficiencies in agricultural public expenditures, inadequate agricultural regulation and policies, and a lack
of collateralizable farm assets. National agricultural output has grown at only 2% per annum over the last five years,
compared to agricultural output growth of 3 to 5% in other EAC members
and 3.3% per annum growth in Uganda’s population over the same period.