Country FilesEast & HornUganda Country Profile 2015: Marching towards another ballot

Sun,15Jul2018

Posted on Friday, 20 November 2015 11:00

Uganda Country Profile 2015: Marching towards another ballot

By The Africa Report

altIn the East African arena, President Yoweri Museveni wants to make his mark as the elder statesman of a so-called new "coalition of the willing"
that is intended to forge stronger relations with Rwanda and Kenya, leaving the more cautious Tanzania on the sidelines.

The three presidents penned a joint opinion letter ahead of the US-Africa summit in Washington justifying the need for regional projects in realising their "African dream".

In it, they allocated Uganda the tasks of building an oil refinery to supply the region with petroleum products and of spearheading the development of communications technologies.

Museveni's fortunes in Uganda in the year ahead are more likely to be influenced by his controversial decision in early 2014 to intervene in support of President Salva Kiir's army in the South Sudan conflict.

Although the deployment of the Ugandan military may have strengthened Museveni's profile as a master tactician, it blew yet another hole in Uganda's depleted coffers and put further pressure on the public debt just ahead of what would normally be a spending bonanza when campaigning warms up for elections in early 2016. 

Rival removed

For much of 2014, Museveni was preoccupied not only with the South Sudan crisis but also with attempting to stamp out divisions within his ruling National Resistance Movement (NRM).

In September, his dismissal of powerful prime minister Amama Mbabazi was designed to end just such a split, although it also carried the risk of encouraging a potential challenger to come forward. Mbabazi was building up his support as a rival to Museveni.

As NRM secretary general since 2005, he has valuable inside knowledge of its structures and financing, and is clearly someone not easily cowed into submission. Although his name has appeared in connection with several high-profile scandals, evidence has so far been tenuous.

The secretary general's post is set to be highly contested ahead of the 2016 polls.

As the NRM prepared for the upcoming elections in 2016, it discussed how to conduct its primary elections in 2015 in a way that would avoid the infighting and recriminations of past attempts.

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An investigation into the previous primaries revealed claims that the process was unfair and opaque. In power since 1986, Museveni is seeking to brush off the Mbabazi affair and to stand defiantly yet again.

Former Forum for Democratic Change (FDC) president Kizza Besigye is the only politician ever to have offered Museveni serious competition, but he decided in late 2013 not to run again in the planned 2016 polls.

 

Call for term limits

Mugisha Muntu now leads the fractious opposition party and has yet to show that he can outdo his predecessor. The FDC has lambasted the government's vast public spending and was preparing to select its flag bearer for 2016 in February 2015. The party has continued to call for the imposition of presidential term limits and says the majority of the public supports such a move.

For the second year running, the government intended to issue more than USh1trn ($384m) in securities to finance its public expenditure in 2014/2015.

"The fiscal deficit expansion is a matter of serious concern for us, as it led to an unplanned increase in issuance of government securities," noted the government in its letter of intent to the International Monetary Fund in June 2014.

The overall level of debt could rise even higher in 2015 as the government seeks to finance its share of major infrastructure projects, especially two energy plants costing nearly $3bn – the 600MW Karuma and 180MW Isimba power schemes.

The government hopes to provide more than $400m for those two plants through a petroleum fund and an energy fund, which are yet to be established.

There is also the refinery project for which the government has invited companies from South Korea and Russia to bid. The estimated cost is $2bn, with investors offered a 60% stake.

Current infrastructure spending plans also include financing the construction of 1,700km of roads. Museveni's administration plans to launch a bid for a public-private partnership for the construction of a toll road linking Kampala to Jinja in 2015.

Oil production is not expected to start before 2018. Although some 6.5bn barrels have been discovered, only 1.4bn barrels are thought to be recoverable. Gas has some potential, with companies already applying for licences to put up power plants. 

So far, some 500bn ft3 of non-associated gas has been found, but developments depend on the progress of oil production. The government has waited several years to award new licences and has planned a bidding round for 2015. Ahead of the oil era, the government has to look at other export options.

Tourism has for the first time surpassed workers' remittances to become Uganda's top foreign exchange earner. The sector earned $1.4bn in 2013/2014 compared to $800m from remittances.

The Uganda Tourist Board and the Uganda Wildlife Authority have placed more focus on domestic tourism by promoting cheaper accommodation facilities and publicising national religious and cultural events.

 

Exports soar in war

South Sudan is still an important export market, with the Ugandan army helping to keep the trade corridor open. Exports to South Sudan were $74.5m in the first quarter of 2014, at a time when the war was almost peaking, compared to $40m during the same period a year earlier. Building materials, foodstuffs and beverages are some of the key products exported.

However, not all Ugandan businesses operating in South Sudan have thrived, and Juba's declared intention to expel foreign workers – which was quickly withdrawn – was badly received in Kampala.

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Many banks are expected to remain cautious about their lending in the coming year. Trouble hit the financial sector when Global Trust Bank, owned by Nigeria's Industrial and General Insurance, had its licence cancelled by the Bank of Uganda in mid-2014 after years of loss-making and weakening balance sheets.

Many banks from West Africa operating in Uganda continue to make losses, with the central bank warning that some financial institutions are in need of urgent recapitalisation.

The urgency applies to the central bank too, which is undergoing a systematic recapitalisation over a four-year period.

Government says the recapitalisation programme is meant to "enhance monetary policy independence and central bank credibility" and also to "contain operational and administrative costs".

Not for the first time, the Uganda Revenue Authority has been falling short of its collection targets, complaining that the poor performance by the banks partly affected its tax collection drives.

The revenue shortfall and the aid cuts from donors, who remain disturbed by Uganda's debate over its harsh anti-homosexuality legislation as well as a spate of corruption allegations, place more financial pressure on the state.

In response, the finance ministry has introduced a raft of tax measures, targeting sectors such as agriculture, which employs three-quarters of the population, and kerosene, a key commodity for many poor rural households.

The country's progress on the Millennium Development Goals has been patchy. It had already reduced poverty levels by 50% in 2013, but its health and education performance has been mixed.

It is on course to achieve 10 of the 15 goals by the end of next year, with the spread of HIV/AIDS being one of the areas requiring the most attention.

Stirrings across the restless kingdoms

As politicians prepare to kick off their campaigns in 2015, many will face the delicate act of juggling their party interests and those of their regions of origin.

The cultural institutions that embody Uganda's ancient kingdoms have for the most part worked closely with the ruling national resistance Movement, but several are becoming disgruntled at what they see as high-handed decisions by the central government.

In July 2014, near the border with DRC, 20 people died in bloody clashes over the installation of a new Bwamba king.

The Rwenzururu kingdom had attacked, claiming Bwamba was part of its territory. The army intervened and arrested a number of Rwenzururu kingdom officials.

The Tooro kingdom was not amused either, considering the new Bwamba kingdom part of its territory.

Tooro King Oyo Nyimba Kabamba Iguru went on a one-week hunger strike. Elsewhere, the Bunyoro kingdom is demanding 12.5% of the revenue from any oil produced in its territory bordering lake Albert, rejecting the 7% the government offered.

The Buganda kingdom – the highly populated heartland around Kampala and the centre of power – continues to demand a federal system of government, a step that the central government rejects outright.



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