By Richard Rays Kyorakunde
Global capital is being redirected. Supply chains once anchored in China are dispersing toward Vietnam, Bangladesh, India and parts of Africa; sovereign wealth funds from the Gulf are diversifying into ports, logistics and food systems across the continent; multilateral lenders are recalibrating toward economies that can absorb capital productively. Uganda sits inside this reallocation, and by the headline numbers, it is participating meaningfully. Foreign direct investment reached a record $3.3–3.4 billion in 2024, and coffee export earnings roughly doubled to $2.2–2.4 billion in the 2024/25 season. These are genuine achievements, not statistical artefacts. The question worth asking is not whether Uganda is attracting capital — it plainly is — but whether the country’s industrial policy architecture, much of which already exists on paper, will be enforced with enough discipline once the fiscal space to test it arrives. That is a narrower question than the one usually posed in investment forums, and a fairer one than the one usually posed by Uganda’s critics.
Before First Oil, Judge the Foundation, Not the Building
Uganda has not yet produced a barrel of commercial oil. The Lake Albert development and the East African Crude Oil Pipeline represent the capital-formation phase of a resource economy — pipeline construction, upstream investment, logistics build-out — not its output phase. This matters for how the FDI data should be read. Uganda’s FDI stock has grown from roughly $14 billion in 2019 to over $20 billion by 2024, but the composition is concentrated: oil and gas-linked investment dominates recent inflow growth, and the Netherlands alone accounted for close to 59 percent of 2024 inflows, with France a distant second. This concentration is a legitimate concern, and it should not be waved away as a temporary phase — resource-dependent FDI structures have a documented tendency to persist well past the point at which diversification should have begun. But it is also true that comparing this construction-phase composition to Vietnam’s decades-old, mature manufacturing export base compares two different stages of economic development as though they were contemporaneous. The honest position holds both facts at once: the concentration is real and worth tracking closely, and the sequencing argument is also real and should temper how quickly conclusions are drawn from it.
Uganda’s Economy Is Growing. Its Factories Aren’t Gaining Ground.
Manufacturing value added has held near 15 percent of GDP for several years — a share that, taken alone, invites a stagnation narrative. It shouldn’t be taken alone. GDP has grown at over 6 percent annually across the same period, meaning manufacturing output has expanded substantially in absolute terms even as its
share of a growing economy stayed flat. The more precise and more defensible claim is this: manufacturing is growing, but not gaining share relative to services and extraction — meaning Uganda’s economy is getting bigger without becoming meaningfully more industrialised in relative terms. That is a real diagnosis. It is different from, and more damaging in its way than, claiming manufacturing itself is stagnant, because it points to a structural ceiling rather than a temporary lull.
Namanve Has the Industrial Parks. Agro-Processing Doesn’t Have the Incentives.
It would be inaccurate to suggest Uganda lacks an industrial policy framework. The Namanve, Kapeeka, Mbale and Luzira industrial parks, the Investment Code’s export-incentive provisions, and local-content requirements written into the Petroleum Act and enforced through the Petroleum Authority of Uganda and the Uganda National Oil Company’s procurement rules all exist and predate any current critique. The National Industrial Policy sets explicit value-addition targets. The more precise criticism, and the one that should replace any suggestion of a policy vacuum, is that implementation has been uneven: local-content enforcement is strongest in oil and gas procurement, where it is legally mandated and monitored, and considerably weaker across agro-processing, where value-addition targets exist on paper but incentive structures — a ten-year tax holiday calibrated for investments above $50 million — continue to reward capital-intensive, often extractive projects over the mid-sized, labour-intensive manufacturing that would actually diversify supplier networks. The framework is there. The incentive structure inside it is still pointed at the wrong scale of investment.
Coffee’s “Bean to Beauty” Story Is Real. The Beans Still Leave Green.
Coffee is Uganda’s best-performing export and its clearest illustration of both progress and its limits. The country shipped roughly 8.4 million bags worth $2.4 billion in the year to October 2025, the largest coffee export performance in its history. The Uganda Coffee Development Authority’s roasting and packaging initiatives, its pivot toward Asian buyers to reduce reliance on European demand, and geospatial farm-registration to meet EU deforestation-compliance rules are active, funded programmes, not aspirations — this transition is genuinely underway. What has not changed is the scale: the overwhelming share of export volume still leaves Uganda as green beans, with roasting and retail margins captured by buyers in Italy and Germany. The accurate claim is not that Uganda has failed to begin moving up the value chain in coffee. It is that the value-addition programme, while real, remains marginal relative to the volume still leaving the country unprocessed — and the gap between programme and scale is the thing worth watching over the next several harvests.
Why Hanoi and Kigali Are the Wrong Mirror — and Addis Is the Right One
Vietnam, Rwanda and Bangladesh are frequently invoked in this debate, and each comparison carries a genuine asymmetry worth naming rather than glossing over. Vietnam sits inside Asia’s densest shipping-lane network; Uganda is landlocked, absorbing Mombasa and Dar es Salaam transit costs on every container. Rwanda manages 13 million people with no resource-curse sequencing problem; Uganda manages 48 million alongside an oil discovery that requires fundamentally different fiscal pacing. Bangladesh’s garment-export growth relied on trade-quota arrangements specific to an era of global trade
policy that no longer exists to replicate. None of these asymmetries excuse slower industrial upgrading, but a fairer comparator is Ethiopia — landlocked-adjacent, a large population, a state-directed industrial-park model, and a comparable starting GDP per capita a decade ago. Ethiopia’s experience is instructive precisely because it has not been a clean success: several industrial parks have struggled with occupancy and debt sustainability, a cautionary case Uganda should study in detail before scaling its own park model further, rather than treating industrial parks themselves as a guaranteed solution.
The Netherlands, the Oil, and a Shrinking COMESA — What’s Actually at Stake
The concentration of Uganda’s FDI in oil and gas, the decline in intra-regional COMESA investment — down from 15 percent of greenfield project count in 2019 to 12 percent by 2024, and from 12 percent to just 5 percent by value — and the gap between agro-processing policy and agro-processing enforcement are not contestable points; they are documented in Uganda’s own investment-climate data and in UNCTAD’s regional reporting. The question worth debating is not whether these problems exist, but whether Uganda’s current sequencing — oil capital first, industrial diversification enforcement second — is a defensible strategy given where the country sits in the resource-development cycle, or whether the enforcement gap in agro-processing and manufacturing incentives should be closed now, ahead of First Oil, rather than treated as a problem for the post-oil fiscal surplus to solve.
The Test Uganda Hasn’t Sat Yet
Uganda’s investment story is neither the straightforward success suggested by record FDI headlines nor the structural failure implied by comparing a construction-phase resource economy to mature manufacturing exporters a generation ahead of it. It is a country with a genuine industrial policy framework, uneven enforcement of that framework outside the oil sector, and a narrowing window — the same global capital reallocation toward the Global South that is not guaranteed to remain this generous — in which to close the gap between policy design and policy discipline before First Oil determines whether Uganda diversifies or simply industrializes its extraction. That is the test that has not yet been sat. How it is answered, more than any FDI figure published this year, will determine what Uganda’s economy looks like a decade from now.
