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: Uganda has favourable trade and investment policies and after nearly three decades in power, the current government has never expropriated an asset from the private sector. This allows private companies to invest confidently in the country, which relies increasingly on foreign investment to drive economic growth. Operating in Uganda has major risks however, and logistics and availability of skilled labour are primary concerns. Investors must also contend with corruption, as they do everywhere in the region, while terrorism is the top security concerns. Looking at the four pillars of operational risk, Uganda performs poorly across the board by global standards. However, many of the operational challenges to doing business are ubiquitous to Sub...

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Uganda Crime & Security

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BMI View: Uganda has been successful in quelling security threat s posed by domestic rebel groups over the last two decades, co -o p t ing some groups and weakening others. While these groups still pose an insurgency threat, the greatest risk now threatening the country is that of a terrorist attack by al-Shab a ab, a highly capable Somali Islamist group. This significantly increase s security risk in Uganda , which has otherwise enjoyed relative stability...

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Uganda Labour Market

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BMI View: Owing to l ax regulation of the labour market, employers in Uganda enjoy high levels of flexibility and low labour costs. However, there are significant downside risks regarding the availability of skilled labour and the competence of the unskilled workforce. As a result, employers will struggle to recruit adequately skilled locals, who have low productivity levels and will require significant in-house training. Looking at the three pillars of labour risk, the greatest threat stems from inadequacies in the national education system, which also weighs upon the availability of labour. Meanwhile, Uganda is globally competitive with regards to labour costs. As such, Uganda scores 40.9 out of 100 in BMI 's Labour Market Risk...

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Uganda Logistics

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BMI View: Businesses in Uganda face a variety of high level logistics risk, varying from a lack of direct connectivity to international ports, a limited transport network, 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 hig h 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 logistics competitiveness. Additionally, the beginning of oil production will significantly increase exports, thereby facilitating the expansion of...

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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 a significant risk 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. Of the three pillars, Legal Risk presents the greatest threat to business, followed by Government Intervention, and...

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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 a n 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. T...

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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 13.4% year-on-year in the first five months of 2014. This has occurred despite an improving inflation and private consumption outlook, government commitment to improve 'productive infrastructure' and the development of Uganda's substantial oil reserves.

BMI believes this is largely due to the supply shock effects stemming from the re-introduction of the Pre-Export Verification of Conformity. 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 comply may lose their...

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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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 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 expect to continue over the forecast period. This primarily reflects the growing role of the army in Uganda's domestic political landscape, which we attribute to Museveni's increasing domestic political isolation, as well as the need to maintain the country's status as a strategic ally of the US. 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.

A key driver behind Uganda's continued desire to maintain its arms capability is its continued military involvement in South Sudan. Following the breaking out of fighting in Juba in December 2013, Uganda intervened, deploying two battalions into the country. Uganda Peoples' Defence Force (UPDF) spokesperson has stated that the army's mission...

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Food & Drink

Uganda Food & Drink

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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, in part, to the effects of the intensifying crisis in South Sudan and a weaker-than-expected recovery in credit growth.

For a number of reasons we believe that the outlook for the Ugandan economy over the coming months has dimmed slightly since our last update and this has prompted us to make some modest downward revisions to our forecasts for headline growth in 2014 and 2015. We now predict that real GDP growth in the East African country will expand by 6.3% this year and 6.4% next year, compared with our previous projections of 6.6% and 6.8% respectively, and we believe that risks are weighted to the downside.

Private consumption will be the...

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Infrastructure

Uganda Infrastructure

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BMI View: The Ugandan government remains committed to the country's infrastructure development, and Uganda's growing economy and continued progress towards bringing the country's oil reserves online are eliciting private interest in the market. As such we are maintaining our positive outlook for construction industry growth.  

For 2015 we are maintaining our forecasts at 7.3% for year-on-year real growth.

Key Trends And Developments

  • The planned 10% increase in government spending in FY2014/15 - compared to the 20% annual expenditure growth averaged between FY09/10 and FY13/14 - suggests that the government is mindful of these pressures on revenue generation - which is a key downside risk to our forecasts.

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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 be come an oil producer. However, w e forecast first oil in Uganda by late 2019 at the earliest , with risks firmly to the downside. A series of limitations, notably infrastructural constraints , delays in license approvals  and an unattractive above-ground environment will see upstream developments proceed slowly, making a 2016/2017 first oil target unrealistic, and a 2019 target optimistic. 

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Headline Forecasts (Uganda 2012-2018)

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Pharmaceuticals & Healthcare

Uganda Pharmaceuticals & Healthcare

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BMI View:   The US government has placed further - mostly financial - sanctions on Uganda in response to the anti-homosexuality bill. This, and the lack of universal healthcare coverage which results in most Ugandans being unable to afford medicines, is placing a high level of strain on the country's ability to provide adequate healthcare. Uganda also faces the threat of an Ebola outbreak spreading from neighbouring countries which are in the grip of an epidemic.

Headline Expenditure Projections

  • Pharmaceuticals: UGX824.35bn (USD320mn) in 2013 to UGX933.57 (USD357mn) in 2014; +13.2% growth in local currency terms and +11.6% in US dollar terms.

  • Healthcare: UGX4,388.70bn (USD1.70bn) in 2013 to UGX4,836.55 (USD1.85bn) in 2014; 10.2%...

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Power

Uganda Power

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BMI View:   The outlook for Uganda ' s power sector is good. The country is investing in both thermal and renewable energy and generation will double over the next decade. Demand for electricity will also double as the economy and population grows, and as investment in the electricity grid gives more people access to power. However, market opportunities are limited by a hazardous investment environment.

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 both thermal and renewable energy. This will underpin a near doubling in electricity generation over the next decade from 3.2TWh in 2014 to 5.8TWh by 2023. During the same...

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Telecommunications

Uganda Telecommunications

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BMI View : The change s in market dynamics in Uganda's mobile sector, with market consolidation and the entry of new players, will boost competition and attract much needed capital into the sector. This will drive subscriptions growth in the short term through competitive pricing and network expansion to underserved areas. That said, we retain our view that rolling out high value services will remain the main objective of the country's major players 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, thus limiting their ability to reinvest in network upgrades and expansion. ...

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