How can Uganda harness urbanisation and rural development for economic growth?
Cities in Uganda are urbanising rapidly with growing challenges of density and congestion. The Parish Development Model can push economic productivity in rural areas for this growth to be inclusive.
Uganda's urbanisation rate is increasing by about 5% annually, with cities like Kampala accounting for over 70% of non-agricultural economic activity. Meanwhile, nearly 39% of Ugandan households rely on subsistence farming, facing issues like limited market access and financial constraints. The government has introduced various development models to address rural poverty and promote market engagement, but significant gaps in resources, infrastructure, and financial inclusion persist.
The IGC partnered with the Ministry of Finance, Planning and Economic Development (MoFPED) to host Uganda’s 8th Economic Growth Forum. Academic and policy experts discussed how rapid urbanisation and rural development can shape Uganda’s economic growth. Two pivotal presentations stood out during the forum— Firminus Mugumya’s (Makerere University) analysis of the Parish Development Model (PDM) and Victor Couture’s (University of Toronto) exploration of urbanisation as a driver of growth. Both presentations highlighted distinct yet complementary strategies for driving economic transformation, focusing on rural and urban settings.
How the Parish Development Model can transform rural Uganda
Firminus Mugumya’s presentation focused on Uganda’s Parish Development Model (PDM) as a key strategy for transforming rural households from subsistence farming to market-oriented economies. The PDM aims to decentralise economic planning by using parishes (the smallest administrative unit) as hubs for delivering services and driving economic activity. Through seven pillars, including production, financial inclusion, and infrastructure development, the model provides a holistic framework for improving the economic wellbeing of households at the grassroots level.
The PDM’s inclusiveness sets it apart from previous government interventions. The model provides a more universal approach to poverty reduction by targeting all rural households. It seeks to move rural communities away from subsistence agriculture by providing them with the necessary tools—such as access to affordable financing, agricultural insurance, and market linkages—to thrive in the market economy.
Challenges for the Parish Development Model
Despite its potential, Firminus Mugumya pointed out several challenges for the PDM to succeed. These include underutilised infrastructure, reliance on external funding support, and deeply ingrained subsistence mentalities (households in subsistence farming tend to focus on meeting immediate basic needs rather than investing in more productivity). He emphasised the importance of mindset change alongside practical interventions, suggesting that grassroots leaders, such as Parish Chiefs, be trained in community development to shift local attitudes toward self-reliance and market participation.
Implications for policy
Firminus Mugumya proposed that the PDM incorporate implementation science, a systematic approach to learning from on-the-ground experiences, to monitor progress and adapt interventions accordingly. Additionally, he called for local economic development (LED) strategies to be embedded in PDM efforts, empowering communities to identify and leverage their resources. He also urged greater collaboration between universities and local governments to ensure that community-based research informs policy decisions.
How urbanisation can catalyse economic growth
Victor Couture’s presentation lent a complementary perspective, showing how urbanisation is a powerful engine of economic growth and strongly correlated with it (see Figure 1). Victor Couture highlighted the significant economic benefits cities can provide through agglomeration economies—where businesses and workers thrive by clustering together in dense urban settings. However, urbanisation may also raise substantial costs, such as congestion, housing shortages, and pollution, which must be managed carefully.
Figure 1: Strong correlation between urbanisation levels and GDP growth.
Urban centres like Kampala are hubs of productivity, offering higher wages and better job opportunities. Victor Couture’s data showed that workers in Uganda’s cities earn significantly more than their rural counterparts. The economic benefits of urbanisation extend beyond wages, as cities foster innovation, better resource sharing, and opportunities for skills matching.
Challenges for urbanisation
While urbanisation drives growth, if not well managed, it can also create social challenges —Victor Couture called these the "demons of density." Kampala, in particular, faces challenges related to slow travel speeds and poor road infrastructure. These urban inadequacies limit the potential gains from agglomeration as workers struggle to access jobs and services efficiently.
Implications for policy - the 3 A’s:
Victor Couture proposed a three-part strategy for addressing urbanisation challenges in Uganda:
- Accommodate urban growth by expanding infrastructure, housing, and services to match the increasing population in cities. This includes upgrading transport networks and allowing for spatial expansion.
- Ameliorate urban dysfunctions, such as congestion and housing shortages, by implementing solutions like synchronised traffic lights and road expansions.
- Associate cities as part of a broader network rather than isolated units. This would improve resource distribution and mobility, fostering balanced regional development.
An urban and rural approach for Uganda’s economic growth
Firminus Mugumya and Victor Couture presented actionable strategies to drive Uganda’s economic development - rural transformation through the PDM and urban growth management through urbanisation. Their recommendations complement each other, offering policymakers a comprehensive roadmap for fostering balanced economic growth across both rural and urban settings.
Firminus Mugumya’s call for local economic empowerment through the PDM emphasises the need for strong grassroots institutions and financial inclusion, ensuring that rural households are equipped to participate in the market economy. Victor Couture’s Urbanisation strategy focuses on infrastructure planning and addressing urban dysfunctions, ensuring that cities like Kampala can maximise their economic potential while mitigating the negative side effects of density.
Together, these strategies present a unified vision for sustainable development: one that empowers Uganda’s rural population while fostering vibrant, productive urban centres. By adopting these insights, Uganda can ensure that both rural and urban areas contribute to the country’s long-term economic growth.