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
Despite an improved outlook for the currency the Ugandan economy will, particularly through H116, feel the effects of the heavy currency depreciation that took place in 2015 via higher borrowing costs and elevated inflation.
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.
We believe that the aggressive monetary tightening cycle that began in April 2015 has reached a peak. Barring a significant intensification of pressures on the currency through early 2016, we expect monetary conditions to be loosened from mid-2016 onwards.
There has been little apparent...
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, Lawlessness Remain Significant Problems Despite Security Improvements|
|Uganda & Regional Average - Crime And Security Risk Scores...|
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: Uganda has potential as a Sub-Saharan African trade and investment destination, given the country's steady forecast medium-term economic growth rate, regional economic integration by virtue of its EAC membership, vast and largely untapped natural resources, and pro-investment attitude of the Ugandan government. However, this potential is hindered somewhat by the ongoing political risk in Uganda stemming from the 2016 presidential elections, high tax rates and levels of red-tape for bureaucratic procedures, as well as high levels of corruption within the Uganda public sector and judiciary. Hence, the country scores a relatively low 43.5 for Trade and Investment Risk, ranking 10th out of 48 Sub-Saharan African states.
|Legal Risks Weighing On Uganda's Trade and Investment...|
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 vehicle sales will grow 6.6% in 2016 outperforming passenger vehicle sales growth due to Uganda's infrastructure expansion driven economy. Although private consumption will continue to drive passenger vehicle registrations, imported used vehicles will continue to negatively affect new vehicle registrations.
|Commercial Vehicles Leading From The Front|
|Uganda - Vehicle Sales By Segment, Units|
|e/f = BMI estimate/forecast. Source: Uganda Bureau of...|
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 is forecast to expand by 7.7% in real terms over our full forecast period, with investment flows into bringing Uganda's oil reserves online a major driver of growth, along with improvements to overall logistics capacity. Additional revenue from oil exports when the first reserves are brought online will help to ease the pressure on Uganda's fiscal deficit, which has come under further strain as infrastructure spending reaches a record high.
Latest Updates And Structural Trends
We forecast the industry to expand 7.1% in real terms in 2016 and 7.7% over our forecast period up to 2025. Around USD11bn has been earmarked for the development of the country's infrastructure over the next 10 years through public and private...
Oil & Gas
Uganda Oil & Gas
BMI View: We forecast first oil in Uganda in 2020 with risks increasingly to the downside given limited progress on the key infrastructure projects required for first oil. 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....