Uganda Infrastructure Report Q4 2009

Uganda’s infrastructure is getting a much-needed boost, with a large number of projects in the transport and utilities sectors under way and in the pipeline. As such, in BMI’s Q409 Uganda Infrastructure Report, we are forecasting the construction industry to grow by 4.41% in 2009 to reach a value of UGX4trn (US$2bn).

News on Uganda’s transport infrastructure sector has been dominated by the controversy over Entebbe Airport. Local news sources reported in July that Singapore’s Changi Airport Group was in the final stages of negotiating a contract for a 10-year concession for the airport. Later in the same month it was reported that an offer from the Dodsal Group to expand and upgrade the airport was being assessed. The news caused an outrage as little had been said about plans to privatise the airport previously. The news, which in itself has been both inconsistent and unverified, highlights issues with transparency in Uganda’s business environment.

At the same time, the issue of Rift Valley Railways, the company that operates Kenya’s and Uganda’s railways, has become no clearer since last quarter. The company was reportedly taken to court by Kenya and Uganda in order to end the concession early. However, it was reported by All Africa in August that the company was given more time to run the railways as the Kenya Railways Corporation did not have the capacity to take over the concession.

In the utilities sector, news emerged on the two big hydropower projects that are planned to cater for Uganda’s future power demand. The Bujagali hydropower project, which was reported to be on track in February 2009, is now going to be delayed due to unforeseen technical difficulties that have led to the project being redesigned. The first turbine for this project is now due to come online in mid-2011. The Karuma hydropower project, on the other hand, made progress – although how much is not totally clear – after awarding the consultancy contract to an unnamed company. The project will be carried out as a public private partnership (PPP) and a number of companies have reportedly registered interest.

In the Q409 Uganda Infrastructure Report we have new data from the Uganda Bureau of Statistics (UBOS), with our forecasts now starting from 2009 and extended to 2014. In addition, we have revised our historical data in line with a data revision by the UBOS.

The new data show that Uganda’s construction industry grew by 9.73% in 2008, which aligns almost exactly with our estimate from last quarter for 9.72% y-o-y growth. Between 2009 and 2014 we are forecasting the construction industry to post real growth of 7.1% on average per year. This will reach its peak in 2010 with 14.11% growth y-o-y, gradually declining over the years to reach 4.6% y-o-y in 2014.