KAMPALA, Uganda – A University of Oxford scholar advised Uganda to increase and diversify its exports to withstand global economic challenges and avoid stagnation.
Speaking at the Economic Growth Forum at the Kampala Serena Hotel on Wednesday, Prof. Stefan Dercon, an economist at the Centre for the Study of African Economies, said the global economy is more complicated than in the past, with “growth engines harder to start and sustain.”
Dercon warned that globalization is being reshaped, tariffs are re-emerging, and financial flows are drying up. He urged the Ugandan government to find practical solutions to these disruptions and to proactively find buyers for its products.
“Supply doesn’t create demand,” Dercon said. “If you want to export, you must find people who actually want to buy your product. Just announcing you’re going to export some value-added product doesn’t mean people will come flocking.” He cited Bangladesh and Ethiopia as examples of countries that successfully secured buyers before scaling up production.
Tracing the impact of global shocks since the 2007-2008 financial crisis, Dercon noted that Western aid flows to developing countries are declining. He said while aid helped countries like Uganda maintain stability in the past, it was never a reliable driver of long-term growth.
Dercon cautioned that natural resources, despite their abundance in Africa, have historically not been good for sustained growth, citing a World Bank review that found they “slowed down growth” in most countries. He pointed to the “Dutch Disease” as a key reason for this, explaining that resource rents can lead to currency overvaluation, which hurts competitiveness and diverts investment from tradable goods.
He contrasted the divergent paths of Nigeria and Indonesia between 1970 and 1990, noting that while both had similar levels of natural resource rents, Indonesia avoided the Dutch Disease through “sensible economic management” and strategic investment.
Dercon argued that sustainable growth requires a “development bargain”—a shared commitment to national growth among those in power. He said leaders who rely on natural resource rents for financial security often prioritize stability over growth.
Prof. Jonathan Leape, executive director of the International Growth Centre, echoed Dercon’s views, stating that Uganda’s future development will require strong leadership and mobilizing domestic resources.
Uganda’s Finance Minister Matia Kasaija acknowledged the challenge of tightening global finance, stressing that the country must rely more on its own revenue.
“Our tax-to-GDP ratio is only 13 percent. This is far too low for a country that wants to grow its economy ten-fold,” Kasaija said. “We must live within our means. That means saving more, widening the tax base fairly, and making sure every shilling collected is put to good use.”
Kasaija urged the government to mobilize private savings through pensions, capital markets and the diaspora, adding, “Ugandan money must build Uganda. No country—certainly not Uganda—can develop on borrowed money alone.”
