Governance Factors and the Growth of the Agro-Processing Industry in Uganda
Abstract
The study examined the influence of governance on the development of Uganda's agro-processing sector against four governance indices: regulatory quality, control of corruption, government effectiveness, and voice and accountability. Rooted in the institutional growth theory, the research employed a quantitative longitudinal study design based on time series data from 2000 to 2023. The secondary data were collected from the World Bank's Worldwide Governance Indicators (WGI) and Uganda's Ministry of Finance Macro Data Portal. Estimation was done using the Auto-Regressive Distributed Lag (ARDL) model, with the diagnostic tests such as the Augmented Dickey-Fuller (ADF) test for stationarity and the Variance Inflation Factor (VIF) test for multicollinearity. Facts revealed that regulatory quality had a statistically significant positive effect on agro-processing development (? = 0.425, p < 0.01), so also did control of corruption (? = 0.318, p < 0.05), and government effectiveness (? = 0.267, p < 0.05). Voice and accountability, while positive, were not statistically significant (? = 0.112, p > 0.05). The model was strongly explanatory with an adjusted R² being 0.716, indicating that 71.6% of the variation in growth in agro-processing was attributed to governance variables in the model. It was therefore concluded that the quality of governance, particularly regulatory quality and corruption control, plays a critical role in encouraging agro-processing industry development in Uganda through uncertainty mitigation, giving confidence to the investor, and the addition of value. The study recommends periodic review and enforcement of the regulatory frameworks, merger of anti-corruption institutions, and improvement of the service delivery mechanisms in order to foster a conducive environment for industrialization. These findings present significant policy implications for the achievement of Uganda's Vision 2040 and Sustainable Development Goals (SDGs), particularly industrial development and job creation.
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