Country Report Uganda February 2009

Outlook for 2009-10

• The president, Yoweri Museveni, will need all his political skills to defuse growing regional pressures in Uganda and stabilise the ruling National Resistance Movement (NRM) as ambitious politicians bid to succeed him.
• Falling global demand will hurt Uganda’s open economy and hamper trade growth. The Economist Intelligence Unit forecasts economic growth of 5.1% in 2009, rising to 6% in 2010 as an economic pick-up begins worldwide.
• Real GDP growth rates of around 10% would be required to make a substantial impact on poverty, but Uganda is unlikely to achieve this over the forecast period, owing to infrastructure bottlenecks and the global downturn.
• We forecast a widening of the government deficit from 2.3% of GDP in 2008 to 3.4% of GDP in 2009 and 3.5% of GDP in 2010 as revenue growth fails to keep pace with expenditure growth.
• We expect a moderation in the inflation rate to an average of 7.2% in 2009 and 6.8% in 2010 as international food and oil prices ease.
• The trade deficit is expected to narrow in 2009 as oil prices fall, before beginning to slide in 2010 as import costs rise again. The current account is forecast to record deficits of 6.5% of GDP in 2009 and 6.6% of GDP in 2010.

Monthly review

• The joint military campaign against the rebel Lord’s Resistance Army (LRA) has progressed well, helped by the Central African Republic, which is deploying defence forces along its border.
• An opinion poll has confirmed support for the NRM in all regions of Uganda, suggesting that opposition parties need to win over uncommitted voters or unite behind one candidate to defeat the president in the 2011 election.
• The government has postponed the Peace, Recovery and Development Plan for northern Uganda until the 2009/10 financial year (July-June), which some view as evidence of systematic discrimination against the northern region.
• The economic slowdown has led to a shortfall in government revenue, which was 6% below target in the first half of 2008/09. This may be compensated for by underspending elsewhere, for example at the Ministry of Works.
• London-listed Heritage Oil has claimed to have hit more than 400m barrels of recoverable oil; the company reports that a number of parties are interested in financing a 1,300-km oil pipeline to Mombasa, despite tight credit markets.
• The government has warned that the Owen Falls road bridge on the crucial route linking the Indian Ocean with central Africa is no longer safe and it reportedly has only NUSh5bn (US$2.4m) of the NUSh9bn needed for repairs.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;47;80
NAICS Code: 22;48;62