Import Substitution: Uganda's Post COVID-19 Industrial Policy Strategy

Uganda has set out to turn the misfortunes of the coronavirus pandemic (Covid-19) into an opportunity by converting the country’s huge import bill into a boost for domestic manufacturing capacity. The NDP III cites “import replacement/promotion of local manufacturing” as one key development strategy Uganda is going to pursue between the financial years 2020/21 and 2024/25 to achieve the plan’s objectives. The NPA has prepared an Import Substitution Action Plan to guide implementation of the strategy.

This paper set out to review, discuss and document Uganda’s record in import-substitution industrialisation policies and also pick lessons from success stories to guide the current industrial policy ambitions. The analysis relied entirely on an extensive document and literature review.

 Some of the key industrial policy documents reviewed include: the Vision 2040; the third National Development Plan (NDPIII) 2020/21-2024/25; the Import Substitution Action Plan (2020/21- 2024/25; the National Trade Policy 2007; and the Draft National Industrial Development Policy (2018) among others.

A critical review of past research established that although ISI is necessary to restrain the growth of “other” imports and thus release foreign exchange for capital equipment required by the growing manufacturing sector, standard literature depicts ISI as an inadequate strategy that causes more problems in the economy than benefits.

However, some scholars have argued that it was not ISI per se that was at fault in its classic failures, but its implementation due to a poor institutional context which constrained policy makers and economic actors. Since import substitution strategy is not new to Uganda - actually it is as old as the country itself - the difference will be created by avoiding the mistakes that failed it in the past.