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Uganda Infrastructure Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7317 Description Uganda’s infrastructure is getting a much-needed boost, with a large number of projects in transport andutilities under way and/or in the pipeline. As such, in BMI’s Q309 Uganda Infrastructure Report, we areforecasting the construction industry to grow by 7.18% in 2009 to reach a value of UGX3.1trn(US$1.41bn).Uganda presents great opportunities for infrastructure development with the government working hard todevelop the country’s power and transport sectors. Uganda is a key transit route to other countries in EastAfrica, acting as a corridor connecting Kenya and its port of Mombasa to other countries in the regionsuch as the DRC and Sudan. As such, investing in the country’s transport network is essential to the moreefficient transport of goods, especially as a land-locked country. The country has in place an ambitiousplan to develop transport infrastructure - the 15-year National Transport Plan, which is expected to costUS$900bn over the next few decades to 2050. It will cover all modes of transport including road, rail, airand water. The road sector has been the main emphasis of this plan, as the country’s rail network lags far behind.Roads continued to be the focus of the transport industry over the past quarter. In May, the governmentlaunched the road fund with a budget of US$128mn. The fund will obtain revenues from road users andwill allocate funds for road maintenance. Rail plans are in the pipeline, but progress has been slow, withno significant progress made over the last quarter. Issues with Rift Valley Railways are continuing tohamper development in the sector. The government has also pledged its commitment to boosting electricity supply and access. Electrification rates (i.e. the percentage of the population with access to electricity in the home) fall farbelow the regional average and shortages in supply are impacting the business environment. In June 2009,President Museveni announced that Uganda would double its energy capacity by the end of 2010 throughthe completion of two hydropower projects, the Bujagali and the Karuma Falls. Progress was announcedfor the Karuma falls, which has been in the pipeline for over a decade and has been subject to majordelays related to the ex-contractor, Norpak, which withdrew in 2008. In April the project underwent a redesign,expanding planned capacity to 750MW, making it the largest planned project in Uganda, andincreasing costs to US$1.2bn. The government has noted that it has already raised some of the funding,and although it will be developed under a public private partnership (PPP), the country could startconstruction before the contractor secures financing using its own funds. Although the construction industry is continuing to register strong activity, BMI notes that the riskscontinue to be to the downside owing to the global financial environment. Uganda’s GDP is expected topost real growth of 3.8% in 2009, down from 9.8% in 2008. This suggests that the government will haveless in its coffers for infrastructure projects. In addition, private sector investments will be reduced overthe short term owing to risk aversion and difficulty in accessing finance. However, one upside is thepresence of the African Development Bank, which has historically supported Uganda’s infrastructuredevelopment over recent years, and will continue to be a key source of funding. Table of Contents
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