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.

Country Risk

Uganda Country Risk

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Core Views

  • Uganda's economy is poised to grow strongly over the next few years, supported by an increasingly buoyant consumer sector and major capital investment projects in the energy and transport sectors.

  • Monetary authorities in Uganda will maintain a hawkish bias over the coming quarters amid continued currency weakness and concerns over a ramp-up in pre-election spending.

  • Although President Yoweri Museveni will face little meaningful competition at next February's general election, his efforts to mobilise a disenfranchised electorate and maintain support within his increasingly divided party will be both costly and distracting. The president's popularity and political capital has diminished significantly in recent years but his grip on power remains firm.

  • Election-related...

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Uganda Operational Risk Coverage (9)

Uganda Operational Risk

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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 36.3 out of 100 for Operational Risk in BMI's Index, in 23rd position out of 48 countries in Sub-Saharan Africa and in 162nd place out of 201...

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Uganda Crime & Security

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BMI View: Uganda has been successful in quelling security threats posed by domestic rebel groups over the last two decades, co-opting some elements and weakening others. While these groups still pose an insurgency threat, the greatest risk now facing the country is that of a terrorist attack by al-Shabaab, a highly capable Somali Islamist group. This significantly raises security risk in...

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Uganda Labour Market

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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, Uganda ...

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Uganda Logistics

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BMI View: Businesses in Uganda face a variety of high level logistics risks, 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...

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Uganda Trade & Investment

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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)...

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Uganda Industry Coverage (10)

Agribusiness

Uganda Agribusiness

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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, particularly new disease-resistant trees. Moreover, coffee prices are higher year-on-year, meaning farmers will be able to invest in their crops. We expect Uganda to remain a net corn exporter in the coming years, although most of its corn will be shipped regionally. The...

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Autos

Uganda Autos

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The most recent data released by the Ugandan Motor Industry Association show that newly registered vehicles were down 13.9% year-on-year in the first nine months of 2014. This has occurred despite an improving inflation and private consumption outlook, growing public and private fixed investment and government commitment to improve 'productive infrastructure'.

BMI believes this is largely due to the supply shock effects stemming from the re-introduction of the Pre-Export Verification of Conformity (PVoC). In light of this, we have downgraded our forecasts over the 2015-2019 period.

The government's re-introduction of PVoC import restrictions was recently imposed in an effort to improve Uganda's ageing and poor-quality vehicle fleet. The re-introduction of the Pre-Export Verification of Conformity means that traders who fail to comply may lose their trading licence...

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Commercial Banking

Uganda Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Defence & Security

Uganda Defence & Security

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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...

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Food & Drink

Uganda Food & Drink

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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 accelerating investment in the infrastructure and extractive sectors. We forecast real GDP growth of 6.0% in 2015 and 2016, accelerating on the 2014 level of 5.5%. 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.

Economic growth in Uganda will be aided by improving credit conditions. The outlook for inflation is also generally supportive of this trend, with headline price growth likely to remain relatively contained over the course of the year. We believe, however, that risks to inflation are to the upside on account of a weaker...

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Infrastructure

Uganda Infrastructure

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BMI View: Robust economic growth will continue to drive construction industry growth over the coming years, with the industry set to expand in real terms over 2015 by 7.3% year-on-year. While public investment in the sector, particularly in the run-up to the 2016 election, will also support growth, we expect the government to face increasing fiscal pressures over the medium term which will threaten infrastructure growth. Furthermore, there is the risk that, in a lower oil price environment, the private sector will be less willing to invest to realise Uganda's full oil potential, which the government is relying on for future revenue.

Key...

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Oil & Gas

Uganda Oil & Gas

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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, one year behind our previous estimate. A series of limitations, most notably the infrastructure projects required for oil exports, will see upstream developments proceed slowly, and preclude a large-scale increase in production until 2020. This is far behind the government's official oil target of 2016/2017.

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Pharmaceuticals & Healthcare

Uganda Pharmaceuticals & Healthcare

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BMI View: Recently Civil society organisations in Uganda have urged the country's legislators to reject the proposed budget reductions by 4% for the health sector for FY15/16. The reduction would severely affect the efforts to stop maternal, new born and child mortality and also access to indispensable health services, the CSOs noted. On a more positive note, the country's economic prospects improved lately as well with the GDP forecasts being revised upwards. This allows us to expect that Uganda's government will maintain its focus on improving healthcare provision.

Headline Expenditure Projections

  • Pharmaceuticals: UGX1,146.0bn (USD433mn) in 2014 to UGX1,256.7bn (USD427mn) in 2015; +9.7% growth in local currency terms and -1.3% in US dollar terms.

  • ...

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Power

Uganda Power

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BMI View: A range of projects in the pipeline and high levels of private and foreign investment underline our positive growth forecasts for Uganda's power sector. Hydropower continues to dominate the country's energy mix and, with several hydropower plants due to come online during our 2015-2024 forecast period, is set to increase its share of total generation by 2024. Less investment is expected in terms of non-hydropower renewables. However, Uganda does offer substantial growth potential in this area and we do expect to see more projects in the near future. Key to development of the power sector is improvement of the country's national grid to ensure consumption levels can grow.

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Telecommunications

Uganda Telecommunications

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BMI View : Although the Ugandan mobile market is underdeveloped, BMI believes it offers significant growth opportunities. Investment will drive subscriptions growth in the short term through competitive pricing and network expansion to underserved areas. Strong competition will continue to weigh heavily on operators' ARPU, while plans to reduce cross-border roaming rates for data, SMS and voice calls with some of the neighbouring countries are likely to further erode revenues.

Market ARPU in Uganda has been below USD4 since 2011, dragging on operators' revenue and profit growth and limiting their ability to reinvest in network upgrades and expansion. This declined even further recently due to...

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