Uganda’s Vision 2040 aims to transform the nation into a competitive upper middle-income country, but there are still barriers to overcome. For instance, 39 percent of the population remains engaged in subsistence economy while 51 percent work in the informal sector.
At the risk of comparing an elephant to a rabbit, China’s rapid economic growth offers valuable insights, particularly considering its influence on Ugandan markets. This is evident from the China Town store frenzy, which has led to impulse buying. By any measure, China is far advanced in comparison to Uganda. It is the second biggest economy in the world after the US. Nonetheless, we can pick lessons from their rapid advancement. By trying to emulate China’s approach, Uganda can focus on tailoring key strategies, such as investing in infrastructure and education, to fit its specific context and achieve the Vision 2040 goals.
China’s economic transformation began in 1978 with a series of reforms that redefined its economic landscape. The establishment of Special Economic Zones (SEZs) was instrumental in this transition. These SEZs enabled China to produce goods catering for a diverse range of income earners, thereby fostering broad-based economic growth.
This inclusivity in production has facilitated participation from various segments of the population, enhancing overall economic stability and resilience. By 2020, SEZs accounted for approximately 22 per cent of China’s Gross Domestic Product (GDP), 45 per cent of its foreign direct investment, and 60 per cent of its exports, as reported by the World Bank.
In contrast, within FY2021/22, Uganda’s industrial sector contributed 26.8 percent to GDP, while the agricultural sector contributed 24.1 percent, highlighting the need for further diversification and industrial expansion. The SEZ model illustrates how targeted economic policies can drive substantial growth. Uganda, which has been developing industrial parks in Namanve, Mbale, and Jinja, among others, can draw lessons from China, particularly regarding enhancing its infrastructure, regulatory frameworks, and attracting foreign investment.
Infrastructure development has been pivotal to China’s rise as an economic powerhouse. The Beijing-Shanghai Expressway, stretching approximately 1,262 kilometres, connects the nation’s political and financial capitals, facilitating the seamless flow of goods, labour, and capital, which has driven rapid industrialisation and urbanisation. Similarly, the Shanghai-Chengdu Expressway, which stretches about 1,960 kilometres, links eastern and western China, bridging regional disparities by connecting Shanghai, an economic hub, with Chengdu, one of the largest cities in western China. This connectivity has significantly improved access to markets and economic opportunities across regions.
Furthermore, the Belt and Road Initiative (BRI) has enhanced global trade routes and economic integration, linking countries across Asia, Africa, and Europe. For instance, the Lianyungang-Khorgos Expressway, which spans 4,200 kilometres, extends to Kazakhstan’s border, exemplifying China’s dedication to fostering regional and international trade through large-scale infrastructure projects such as the China Railway. Countries like Pakistan, Malaysia, and Egypt have reaped substantial benefits from infrastructure development under the BRI. Uganda can draw valuable lessons from China by prioritising infrastructure investments, such as reviving the Standard Gauge Railway and upgrading major roads to strengthen connectivity between rural and urban areas. To achieve this, Uganda must enhance public-private partnerships (PPPs) and adopt innovative financing mechanisms, including blended finance approaches that have been successfully implemented in China.
Moreover, education and skill development have played a fundamental role in China’s economic growth. The gross enrolment ratio in tertiary education surged from 1.4 percent in 1978 to 54.4 percent in 2018, fostering a highly skilled workforce that drives innovation and productivity. Uganda’s Vision 2040 emphasises human capital development through improvements in education and healthcare systems. Uganda needs to bolster its educational infrastructure, particularly in Science, Technology, Engineering, and Mathematics (STEM) fields. Expanding vocational training will also be crucial for modernising agriculture and diversifying the economy. Building a skilled workforce will be vital for driving innovation and economic growth in Uganda.
China’s economic success is also attributed to strong governance and strategic planning. Effective, transparent governance has been crucial in implementing economic reforms and maintaining stability. For Uganda to replicate this success, it must ensure effective governance, build strong institutions, and maintain political stability. These elements will support the efficient implementation of Vision 2040 and foster sustainable development.
In addition, China implemented targeted poverty alleviation strategies, investing over $246 billion in poverty reduction efforts between 2013 and 2020. These initiatives led to a remarkable decrease in the poverty rate, which plummeted from 88 percent in 1981 to less than 1 percent by 2021. This substantial investment underscores the significance of well-funded and targeted initiatives in effectively mitigating poverty.
Similarly, Uganda’s Parish Development Model (PDM) aims to transition 39 per cent of households from subsistence to a monetary economy. The Parish-Based Management Information System (PBMIS) can play a crucial role of monitoring all transactions and ensuring proper accountability of funds. This process is supervised by the Ministry of Finance Planning and Economic Development, Ministry of Information, Communications Technology and National Guidance and Local Government which collaborate to ensure that this initiative achieves its objectives.
Additionally, to replicate China’s success, Uganda must ensure that its social protection programmes, such as those administered by the National Social Security Fund (NSSF), are well-integrated and accessible to the informal sector, enhanced through the application of information and communication technology (ICT), mobile systems and the Parish Based Management Information System.
It is important to note that while Uganda can draw lessons from China’s development model, the context is different. China’s success was driven by unique political, economic, and demographic factors. The lessons that Uganda learns from China must consider differences in governance structures, population size, and historical contexts. However, good practices, such as infrastructure development, expanding education and vocational training, and ensuring effective governance, establishment of special economic zones (SEZs), targeted poverty alleviation strategies, and inclusive retail models, can be adapted to Uganda’s context to drive economic growth.
Nonetheless, Uganda’s ability to follow China’s path is hampered by several challenges. One major issue is the dominance of the informal sector, which employed 80 percent of the workforce as of 2021/22. This extensive informal economy hinders efficient taxation, social protection, and overall economic formalisation. To address this, Uganda needs to implement two key strategies, that is, strengthening regulations and ensuring compliance while supporting informal businesses in their transition into the formal sector.
Uganda has the potential to make substantial progress towards its Vision 2040 goals. Achieving this vision will require strategic planning, sustained commitment, and innovative approaches. With the right measures in place, Uganda can indeed pave its way to a prosperous future, drawing inspiration from China’s remarkable economic journey.