KAMPALA, Uganda — A new study suggests Uganda’s coffee sector has the potential to generate significantly more revenue than its nascent oil industry, provided the government invests in supporting smallholder farmers.
The study, titled “Economic Alternatives to Oil and Gas Development in Uganda,” estimates that coffee could earn the country $3 billion (10 trillion shillings) annually by 2030. In contrast, projected annual revenues from crude oil sales, expected to begin around 2028, average between $1.5 billion and $2 billion (5.4 trillion to 7.4 trillion shillings), according to the report released Wednesday. The study, commissioned by the advocacy group Global Right Alert, also highlighted the global trend of energy transition away from fossil fuels.
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Researchers at Makerere University Business School (MUBS) conducted a comparative analysis with Ghana and Senegal, which also discovered oil after Uganda but have more advanced strategies in renewable energy and agricultural development. The study concluded that Uganda could learn from these nations by implementing more comprehensive policies to strengthen its agricultural sector.
However, oil industry players at the report’s release offered mixed reactions, emphasizing that coffee and oil are not mutually exclusive. Clovice Irumba, director of production at Uganda’s Petroleum Authority (PAU), argued that the country’s 2008 oil and gas policy aims to ensure the oil sector contributes to, rather than hinders, other parts of the economy.
Humphrey Asiimwe, CEO of the Uganda Chamber of Energy and Minerals (UCEM), suggested the focus should be on responsible management of oil revenues and how the industry can support other sectors, such as providing infrastructure for coffee farmers. Joseph Kobusheshe, PAU’s director for environment, health and safety, stressed the need for economic diversification and strengthening linkages between different sectors.
The study noted that while agriculture contributes significantly to Uganda’s GDP and employs a large portion of the population, it faces challenges such as post-harvest losses and inadequate processing infrastructure, unlike the more developed agricultural sectors in Ghana and Senegal. The disbandment of the Uganda Coffee Development Authority (UCDA) last year was also cited as a step backward in supporting the coffee industry.
The report pointed out that Uganda lags behind Ghana and Senegal in implementing climate-smart agricultural practices and developing value-added industries for products like coffee, primarily exporting raw beans instead of processed goods.
Geopolitical instability and Uganda’s limited control over global oil markets were also identified as risks associated with oil development. Additionally, the oil industry directly employed a relatively small number of people, concentrated in specialized fields, limiting widespread local employment opportunities.
The study also highlighted the significant investments Ghana and Senegal have made in renewable energy, particularly solar power, for agricultural and rural development, contrasting with Uganda’s more nascent efforts in this area. The global energy transition away from fossil fuels adds further complexity to Uganda’s oil prospects.
The report concluded that while Uganda has taken some steps in energy and agriculture similar to Ghana and Senegal, it needs to strengthen the extent and specificity of its strategies to fully leverage its potential in both sectors.
