Our comprehensive assessment of Uganda's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Uganda, as well as the latest industry developments that could impact Uganda's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Uganda before your competitors.
Uganda Country Risk
An ambitious infrastructure spending programme and a failure to rein in recurrent spending will, despite improvement in revenue collection, see Uganda's fiscal balance remain deep in the red over the coming years.
Upside inflationary risks and a vulnerable shilling will see the Bank of Uganda keep monetary conditions tight through H116, with increasing consequences for the real economy.
The inter-related factors of elevated inflation, FX weakness and higher interest rates will dampen economic activity in Uganda in 2016 and keep economic output below potential. We have revised down our prediction for growth next year to 5.1% from 5.7%.
Although President Yoweri Museveni will face little meaningful competition at next February's general election, his efforts to mobilise a...
Uganda Operational Risk Coverage (9)
Uganda Operational Risk
Uganda Operational Risk
BMI View: Investors in Uganda benefit from the government's favourable trade and investment policies, which have greatly improved the business environment and encouraged investment. While the economy remains highly reliant on agriculture, recent diversification efforts have also seen the Ugandan economy branch into other sectors, such as low-end manufacturing, construction and commerce. However, investors face operational risks in the form of disruptions to energy and water supplies and high transport costs due to the country's weak infrastructure. In addition, corruption remains pervasive, driving up costs for businesses and complicating business operations. Uganda receives a score of 35.6 out of 100 for Operational Risk in BMI's Index, in 24th...
Uganda Crime & Security
Uganda Crime & Security
BMI View: Uganda's security environment is weakened by the terrorist threat from the Somali-based group al-Shabaab and high levels of crime which the police force fails to prevent and prosecute. Investors are also exposed to corrupt practices and financial crime in the form of bribery and money-laundering, heightened by the lack of criminalising legislation. Although Uganda has managed to resolve the majority of its territorial disputes with neighbouring countries, limiting the risk of interstate conflict, security threats remain a pertinent concern for businesses based in the country. Uganda therefore receives a low score of 27.0 out of 100 for Crime and Security Risk, ranking 34th out of 48 Sub-Saharan African (SSA) states.
|Crime And Lawlessness Remain Significant Problems Despite Security Improvements|
|Uganda and Regional Average Crime and Security Risks...|
Uganda Labour Market
Uganda Labour Market
BMI View: Uganda offers one of the largest working-age populations in Sub-Saharan Africa (SSA). The country's workforce is characterised by high levels of employment, particularly among women. However, the diversity of skills within the Ugandan labour pool is constrained by low levels of educational attainment, while the quality of labourers is limited by generally poor health and low life expectancy. Although Uganda has one of the fastest urbanisation growth rates in the region, businesses struggle to access large amounts of labour in cities due to the concentration of populations in rural settings. A major advantage for firms operating in Uganda is the low levels of labour regulations, which ensure low wages and a high degree of flexibility in terms of hiring and firing workers. Taking these factors into account,...
BMI View: Businesses in Uganda face a variety of high level logistics risk, ranging from a lack of direct connectivity to international ports and a limited transport network, to poor and unreliable utilities supply and high levels of trade bureaucracy. The greatest threat to businesses lies in the Trade Procedures and Governance category, with investors encountering high international shipping costs and slow lead times. Other notable sources of risk include frequent electricity shortages, a small market, and an overreliance on an inadequate road network. However, the completion of various infrastructure projects in the long term will likely reduce operational risk, enhancing Uganda's...
Uganda Trade & Investment
Uganda Trade & Investment
BMI View: High levels of trade and investment risk stem from inefficient public administration, high rates of corruption, and delays to vital legal reforms. While these shortcomings present significant impediments to business operations, we continue to see foreign direct investment (FDI) flow into Uganda as the government pursues investor-led growth. With high economic growth forecasts, business friendly policies, and increased public infrastructure spending on the cards, we believe trade and investment risks in Uganda are manageable in the context of Sub-Saharan Africa (SSA)...
Uganda Industry Coverage (10)
BMI View: We see potential for output growth in corn and coffee, two of the main crops in Uganda. For coffee, we see Uganda as an East African leader in terms of exports, largely owing to government support for the sector and new disease-resistant trees. Moreover, coffee prices are higher y-o-y, meaning farmers will be able to invest in their crops. We expect Uganda to remain a net corn exporter in coming years, although most of its corn will be shipped regionally. The country is unlikely to...
BMI View: Commercial vehicles will outperform passenger vehicles, with sales of commercial vehicles growing at a rate of 9.2% in 2016, driven by significant investment being directed towards infrastructure expansion. Although GDP per capita in local currency will grow at an annual average of 7.6% over our five-year forecast period, cheaper imported used cars will remain a drag on total new vehicle sales in 2016.
|Commercial Vehicles Leading From The Front|
|Uganda - Vehicle Sales By Segment, Units|
|e/f = BMI estimate/forecast. Source: Uganda Bureau of Statistics, BMI...|
Uganda Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Defence & Security
Uganda Defence & Security
BMI View: In recent years, the size of the Uganda People's Defence Force (UPDF) and the country's arms procurement have grown significantly, a trend BMI expects to continue over the forecast period, from 2015 through to 2019. This primarily reflects the growing role of the army in Uganda's domestic political landscape, which we attribute to President Yoweri Museveni's increasing domestic political isolation, as well as the need to maintain the country's status as a strategic ally of the US. In addition, Ugfanda's desire to become a regional power and the burgeoning arms race with Sudan to drive procurement. As such, we expect imports to Uganda, which lacks its own military-industrial base, from Russia and China in particular, to steadily increase for the foreseeable future.
Uganda's lack of an indigenous defence industry and underdeveloped...
Food & Drink
Uganda Food & Drink
BMI View: We maintain our view that economic growth in Uganda will quicken in pace in 2015, driven by a fast-growing consumer segment and by accelerating investment in the infrastructure and extractive sectors. Nevertheless, we have revised downwards our forecast real GDP growth to 5.4% in 2015 and 5.0% in 2016 (from 6.0% in both years). The formal food and drink sector will grow considerably over the coming years, from a low base, as international firms such as The Coca-Cola Company and regional firms such as Shoprite look for fast-growing and underdeveloped regions. However, the rate of urbanisation in Uganda is not increasing in line with the country's population growth and this may persuade investors in the formalised retail sector to look elsewhere first.
BMI View : Uganda's construction sector will expand throughout our 10-year forecast period up to 2025, recording 7.1% growth in real terms in 2016 and averaging annual growth of 7.9% over the next five. Infrastructure related to the development of Uganda's oil reserves will be the primary driver of this expansion, supported by improvements to the national power supply and regional transport links. Potential investors may be discouraged by the dominance of Chinese firms and allegations of government corruption.
Latest Updates And Structural Trends
We maintain our forecasts of...
Oil & Gas
Uganda Oil & Gas
BMI View: A resolution of the refinery dispute, the signing of a MoU with oil companies and the award of CNC's Kingfisher production licence are finally paving the way for the country to become an oil producer. However, we forecast first oil in Uganda in 2020. A series of limitations, most notably the infrastructure projects required for oil exports, will see upstream developments proceed slowly, and preclude oil production until 2020 at the earliest. This is far behind the government's official oil target of 2016/2017.
Pharmaceuticals & Healthcare
Uganda Pharmaceuticals & Healthcare
BMI View: Uganda's reliance on aid funding and the basic nature of the country's public health spending suggests a weak outlook for public healthcare sector provision and we believe that the private sector will remain dominant over our forecast period to 2019. The private sector makes up the clear majority of pharmaceutical spending in the country in terms of value and strong private consumption growth will drive medicine spending further in this regard.
Headline Expenditure Projections
Pharmaceuticals: UGX1,146bn (USD433mn) in 2014 to UGX1,257bn (USD393mn) in 2015; +9.7% growth in local currency terms and -9.3% in US dollar terms. Forecast in US dollar terms revised downwards from last quarter....
BMI View: Electricity generation in Uganda is forecast to increase to 7.4TWh in 2024 from 3.8TWh in 2016, mostly due to new hydropower projects. Along with investments into improving the distribution infrastructure, this will enable Uganda to more efficiently provide electricity to its population
BMI View : The Ugandan mobile market continues to attract new subscriptions, with over nine operators competing. This includes some of the largest telecoms groups, such as MTN, Airtel, Africell and Vodafone. The potential for growth is very high, as the penetration rate is below 60%, but macroeconomic trends have put a brake to stronger growth. They include low urbanisation, with operators not able to fully cover rural areas because of costs, and a high dependency ratio, limiting disposable income. These trends, allied with competition in the market, have led to low ARPU, limiting return on investment. The competition for advanced services will only take shape in the longer-term, with mobile money currently the main differentiator alongside basic quality of service for voice....