Uganda Business Forecast Report Q1 2009

Publication Date	November 2008
Publisher	Business Monitor
Product Type	Report
Pages	55
ISBN Number	not applicable
Product Code	BMI03040

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Summary

Challenges Mount in 2009

Despite robust growth of around 6.7% expected in 2009, Uganda will not be immune to the looming global economic slowdown. With renewed risk aversion hitting global financial markets the country has seen a significant outflow of portfolio investment previously attracted by the country's stable political environment and reformist direction of the president, Yoweri Museveni. The shilling has been a major casualty of this selloff, depreciating initially to a fiveyear low before recovering slightly. A weaker shilling may support exports, but weaker global conditions will weigh on export and tourism demand. Furthermore, a weaker currency could mute some of the disinflationary effects of falling commodity prices, affecting both consumers and businesses. That said, our outlook for the country remains generally favourable.

With external conditions worsening, a key challenge facing the government is trying to attract as much overseas aid and foreign direct investment (FDI) as possible. Indeed, the country has recently lost out on around US$12mn of pledged support for AIDS and malaria prevention. Despite a relatively stable political environment, corruption remains a significant problem. The recent dispute surrounding the major purchase of land by the National Social Security Fund from the Security Minister, Amama Mbabazi, will only reinforce concerns over corruption, especially since the government adopted the report that exonerated two senior ministers of all charges of conflicts of interest.

While real GDP growth is set to slow across the continent in 2009, Uganda should still see economic expansion in the region of 6.7%. A weakening of global demand, however, will put pressure on the country's current account, while the financial account will potentially suffer from a slowing of FDI and portfolio inflows. The Bank of Uganda could be expected to make use of the country's relatively large foreign reserves to finance future gaps and help guard against too great a depreciation of the shilling, although a weaker shilling will boost exports.

The government of Uganda is seeking greater levels of privatesector participation in infrastructure to increase the competitiveness of its economy which, among other factors, is being severely affected by poor infrastructure. Boosting national competitiveness was the theme of the National Competitiveness Forum in Kampala, which sought to address structural weaknesses in the country's economy. The government is to set up a privatisation unit in the Ministry of Finance to coordinate projects. In October 2007 the Uganda Investment Authority announced a new fiveyear plan to attract more than US$20bn in FDI by 2012. Infrastructure, as well as power, remains one of the key challenges for the landlocked country.

Content

Executive Summary
Challenges Mount In 2009
Chapter 1: Political Outlook
- Swot Analysis
- Bmi Political Risk Ratings
- Politics
- Ministers Controversially Cleared Of Wrongdoing
- With The Adoption Of A Report That Has Exonerated Top Ministers From Various CorruptionRelated Charges, We
- Believe That The Episode Risks Compromising Both The Countrys Image In Terms Of Corruption, As Well As The
- Presidents Bid For A Fourth Term In 2011
List Of Tables
- Table: Uganda Political Overview
- Regional Trade Bloc
- First Step Towards Merging Of Trade Blocs
- The Agreement Proposing The Merger Of The SubSaharan Africas Three Main Trading Blocs Eac, Sadc And
- Comesa Into A Single FreeTrade Area Faces Immense Administrative Hurdles In Terms Of Aligning The Bodies
- Varying Trade Agreements, As Well As The Different Economic Partnership Agreement (Epa) Trade Negotiation
- Tracks Of Individual Countries With The Eu. As Such, And Given The Varying Degrees Of Institutional Capacity
- Among The Regional Governments, We Would Not Expect Concrete Progress Any Time Soon
- Chapter 2: Economic Outlook
  - Swot Analysis
  - Bmi Economic Risk Ratings
  - Economic Activity
  - Robust Growth, But Heightened Risks
  - Weakening Global Demand Is Likely To Weigh On Ugandas Real Gdp Growth In 2009
List Of Tables
- Table: Economic Activity
- Balance Of Payments
- Current Account Deficit Vulnerable To Further Widening
- The Pace Of Widening Of The Trade Deficit Has Eased With The Latest Data Release For August, Putting Increasing
- Pressure On A Growing Current Account Deficit
List Of Tables
- Table: Balance Of Payments
- Currency Forecast
- Risk Aversion Hits Shilling
- Knocked By A Rush Of Risk Aversion, The Shilling Has Sold Off Considerably Recently
- Commodities Forecast
- Coffee: Further Downside Ahead, But Market Still Tight
- Chapter 3: 10Year Forecast
  - The Uganda Economy To 2018
  - Growth To Weather Exogenous Risks
  - We Are Forecasting Robust Real Gdp Growth Of 67% Over Our 10Year Forecast Period As Agricultural Exports
  - Continue To Grow And The Country Starts Producing Oil And Electricity Which Together Have The Potential To Stimulate
  - NonAgricultural Sectors And Reduce The Countrys Energy Import Bill
List Of Tables
- Table: Uganda LongTerm Macroeconomic Forecasts
- Chapter 4: Special Report
  - Why The Us Can Remain World Superpower
  - Wealth Is Shifting East
  - The Uss Current Financial Woes Will Not Necessarily Undermine Its Position As A Global Superpower
List Of Tables
- Table: Geopolitical Power Index
Chapter 5: Business Environment
- Swot Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
List Of Tables
- Table: Bmi Business And Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Infrastructure
List Of Tables
- Table: Middle East & Africa Annual Fdi Inflows
- Market Orientation
List Of Tables
- Table: Bmi Trade Ratings
- Table: Top Export Destinations
- Operational Risk
- Chapter 6: Bmi Global Assumptions
  - Global
List Of Tables
- Table: Global Assumptions
- United States
- Eurozone
- Japan
- China
- Commodities