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

  • We maintain our view that economic growth in Uganda will quicken in pace in 2014 driven by a fast-growing consumer segment and accelerating investment into the infrastructure and extractive sectors. Still, we believe the outlook has softened slightly in recent months owing to the effects of the intensifying crisis in South Sudan and a weaker-than-expected recovery in credit growth.

  • We are more pessimistic than the government in our projections for the country's fiscal balance in FY2014/15. Official tax collection targets are likely to prove overly ambitious, particularly set against a recent softening in the outlook for the economy and Uganda's deteriorating relationship with foreign donors. Limiting expenditure to a 10% rise may also prove challenging against a backdrop of soaring capital spending and wage and election-related current spending pressures.

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Uganda Operational Risk Coverage (9)

Uganda Operational Risk

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BMI View: The recovery of the Ugandan economy in the past decade has been down to the government's ability to promote favourable trade and investment policies, which has 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. These expand the opportunities present to investors and make the country an attractive market within Sub-Saharan Africa. However, further development of the economy is hindered by the weakness of its infrastructure, particularly in energy and water which are both vital to support economic activity. Corruption also remains pervasive, driving up costs for businesses and complicating business operations.

Weakness in transport and power infrastructure...

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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 Uganda...

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Uganda Labour Market

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 are down 27.4% 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 2014-2018 period; most notably for the remainder of 2014.

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...

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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

Infrastructure

Uganda Infrastructure

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  • BMI View: While we maintain our forecasts for 7.3% year-on-year (y-o-y) growth in Uganda's construction industry in 2015 we have revised down our estimates of growth for 2014 to around 7% year-on-year (y-o-y) from 9.5%, on account of sluggish economic performance. Although the Ugandan government remains committed to the country's infrastructure development, there is little momentum in the market. Uganda's growing economy and continued progress towards bringing the country's oil reserves online are eliciting some private interest in the market and as such we are maintaining our positive outlook for construction industry growth.

Key Trends And Developments

  • Entebbe...

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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 license 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 ramp-up in production until 2020. This is far behind the government's official oil target of 2016/2017.

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Headline Forecasts (Uganda 2013-2019)

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Pharmaceuticals & Healthcare

Uganda Pharmaceuticals & Healthcare

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BMI View: Communicable diseases result in a high mortality rate in Uganda, which is reflected in the latest outbreak of typhoid fever. However, tackling the acute shortage of healthcare professionals to deal with diseases such as typhoid should be a priority in the country, and the government's latest plans to send over two hundred doctors, nurses and midwives to the Caribbean on renewable two-year contracts seems to be at odds with its need to provide adequate healthcare. The government has been criticised for this and will likely face pressure to reverse its decision.

Headline Expenditure Projections

  • Pharmaceuticals: UGX1146bn (USD433mn) in 2014 to UGX1,256.74 (USD438mn) in 2015; +9.7% growth in local currency terms and +1.1% in US dollar terms.

  • ...

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Power

Uganda Power

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BMI View: The outlook for Uganda's power sector is good. Following an unbundling of the power sector last decade and a commitment by the government to diversify beyond a traditional dependence on hydropower, the country is now developing the capacity to generate thermal and renewable energy. This will underpin a near doubling in electricity generation over the next decade from 3.3TWh in 2015 to 6.1TWh by 2024. During the same time timeframe, demand for electricity will also nearly double from 3.1TWh to 5.7TWh as the economy and population grow, and as investment in the electricity grid gives more people access to power. However, market opportunities are limited by a hazardous investment environment, characteris...

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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. However, rolling out high value services will remain the main objective of the country's major players in the longer term as they aim to create new revenue streams and offset the impact of declining growth from traditional services.

Market ARPU in Uganda has been below USD4 since 2011, dragging on operators' revenue and profit growth...

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