This country profile was published in November 2008 in our annual 'Africa in 2009' issue. The next edition, 'Africa in 2010' will be on sale 23 November 2009.

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The apparent determination of President Yoweri Museveni to hold on to power for the indefinite future will not prevent further rounds of political and regional competition within Uganda in 2009. The president may hope to be able to neutralise new threats to his authority by claiming credit for the effective return of peaceful conditions in the long-troubled north, as well as for the rapid development of recently-discovered oil reserves around Lake Albert, but he is certain to face new tests with the opposition and also with the regions and kingdoms where resentment against the central government has been festering.


Museveni’s political vehicle, the National Resistance Movement (NRM), seems likely to fall in line obediently behind the demand for the president to stand again in elections in 2011. The party has no succession plan and debate on the matter is frowned upon. As a consequence, the NRM will no longer be as attractive as it once was to those with ambition and talent, simply because it has become over-identified with its leader. In case of splits within the NRM, the president’s primary source of confidence will be the continuing support of the Uganda People’s Defence Forces (UPDF) and his presidential guard. The latter has become an elite force of 12,000 troops, within which Museveni’s son, Lieutenant Colonel Muhoozi Kainerugaba, is building a team of special forces.


The opposition Forum for Democratic Change (FDC) will face very trying times in the next two years. Its candidate at the 2006 election, Kizza Besigye, has had to tread carefully because of the government’s continuing attempts to pin treason charges on him, while its other leading figures will find it harder than ever to project their message in a media environment that is biased heavily towards the ruling party. Another significant political contender could be Norbert Mao who hopes to become the Democratic Party’s presidential candidate, and if selected, he will be campaigning to represent a younger generation in politics.


The endgame to the long war fought between the UPDF and the Lord’s Resistance Army (LRA) could yet drag on into 2009 as the elusive LRA leader Joseph Kony continues to avoid a final signing of the peace agreements negotiated in 2006 and 2007. However, the government of southern Sudan has been indicating its impatience in the face of Kony’s intransigence and continuing LRA activity in its territory. The main LRA negotiator has said Kony was still willing to sign but that he would not allow his forces to be disarmed until Museveni asks the UN Security Council to remove arrest warrants issued by the International Criminal Court (ICC). But after a sharp upsurge of LRA attacks in the Democratic Republic of Congo in September 2008, causing tens of thousands of people to flee, the ICC stepped up its calls for Kony’s arrest.


The Museveni government’s international image will continue to be damaged by reports of corruption involving high-ranking ministers. The latest case to prompt an official inquiry implicated finance minister Ezra Suruma and security minister Amama Mbabazi in the purchase of some of the latter’s extensive land holdings by the state-owned National Social Security Fund (NSSF). The inquiry found that Suruma had exerted political pressure on the NSSF to undertake the transaction so that Mbabazi and his associate, Amos Nzeyi, could use the proceeds to buy shares in the National Bank of Commerce. It also found that Nzeyi had told the NSSF that both President and Mrs Museveni insisted that it should proceed with the purchase of Mbabazi’s land. In another recent case, former minister Jim Muhwezi, who was sacked in 2006 after being implicated in the diversion of donor funds, was again being questioned in connection with an attempted bank robbery in central Kampala in September 2008.


The economy has continued to perform well, with real GDP growth of 7% in 2007/08 and a projection of 8% in 2008/09. Inflation rose to 11% by mid-2008 under pressure from fuel and transport costs but seemed likely to moderate. Significant diversification has taken place to the extent that manufacturing’s contribution to GDP, at 25%, has now overtaken that of agriculture, at 21%. This does not, however, mean that agriculture is in decline; it too is undergoing a gradual transformation as large markets open up for Ugandan produce over the country’s borders. Higher food prices have been an incentive to increase output. The services sector has also been growing.


The government’s difficulties in generating new revenues left it dependent on foreign aid for at least 30% of its annual budget, although this is much less than in the early 1990s. It has, however, been successful in pushing ahead with infrastructure development through a combination of public and private spending. A major new roads programme was announced in 2008. The government has floated the idea of launching a $1bn infrastructure bond and has engaged in exploratory talks with international banks on the issue.


A new element in Uganda’s economic fortunes is the prospect of oil production in 2009, although initial levels of output will not be sufficient for export. Tullow Oil has begun construction of an oil refinery to produce diesel and to feed a power plant. Further contributions to the power grid will come from the Bujagali dam, although not until 2011 at the earliest, and the government will be hoping to finalise more dam construction projects in the year ahead.


There are better prospects for mineral production, which has not revived since the collapse of copper mining in the 1970s. The minerals already known to exist are gold, cobalt, wolfram, tantalite, vermiculite, limestone and phosphates. However, a major geological survey is now being conducted as a preliminary to commercial exploration. The energy and mining industries have said they expect export earnings to rise from the current level of around $20m a year to $350m within the next five years.


Another aspect of Uganda’s changing prospects has been the expansion of air services from Entebbe airport. Air Uganda, launched in 2007, now operates daily flights between Entebbe and Juba, providing stiff competition for Royal Daisy Airlines and Eagle Air Uganda. Another newcomer is Fly540, which has already launched air cargo operations between Entebbe and Nairobi and now expects to launch passenger operations too. 

Getting railway operations back on track

After the return to normality in transportation through Kenya after post-election violence and a shake-up at Rift Valley Railways (RVR), plans are emerging for $80m in new investment in the crucial railway link between Kampala and Kenya’s port city, Mombasa. The long-term deterioration of the line means that it can still take up to two weeks for trains to travel between the terminuses.


The former South African majority shareholder in RVR, Sheltam, which won the concession to run the 990km railway network three years ago, came under intense criticism for its failure to improve services but has now reduced its stake in favour of a Kenyan group of investors, led by Brown Ondengo, a former managing director of Kenya Ports Authority.


Ondengo has promised that new rails will be laid to ensure safety and to improve speeds along the line. Loans from the World Bank’s private sector affiliate, the International Finance Corporation, and Germany’s KfW totalling $50m will allow the purchase of new locomotives and rolling stock. Plans are to increase the number of locomotives in the next six months to at least 35 from the current average of about 20.