Uganda

Politics:

• Analysis

  Uganda politics: Quick View - Uganda at risk of becoming a failed state?

  Event

  The US National Intelligence Council included Uganda in a list of countries at high risk of becoming failed states within the next two decades, in its Global Trends 2030 report, published in November.

  Analysis

  The report placed Uganda fourth in the list of countries at high risk of state failure by 2030, behind Somalia, Burundi and Yemen. The list was devised using a human resilience index that incorporates seven different factors: population growth, population density, caloric intake, renewable fresh water, arable land, median age, and population health (including infant and child mortality and life expectancy). Uganda, with its young, fast-growing population, is thus considered to be at high risk.

  The report did not speculate on what issues could provide the touch paper for instability in Uganda, but it seems that the main threat of instability is likely to be found in a re-emergence of ethnic tensions, particularly in the Kingdom of Buganda, an area of Uganda with a constitutional monarchy and a local parliament. With a population of around 6m (around 17% of Uganda's population), Buganda has a strong cultural and political identity. Buganda supporters resented the loss of status when the then president, Milton Obote, abolished Uganda's federal structure in 1967 and created an executive presidency. They cheered when the current president, Yoweri Museveni, re-established the Kingdom of Buganda in 1993, giving it some devolved, largely-superficial, powers.

  Pressure from Buganda for the reintroduction of federo (an independent Buganda within a federal Uganda) has only increased in the meantime. The message has been carried by hardline politicians such as Erias Lukwago, the mayor of Kampala, and Beti Kamya, a 2011 presidential candidate. Some have even called for full independence. However, Mr Museveni's popularity in Buganda-he polled 66% in Mpigi, a district in the Buganda heartland, compared to Ms Kamya's 3%-and his policy of placating local sentiment by promising to devolve some powers to regional level has been largely successful. The danger of Buganda causing significant political stability may increase if there is a power vacuum when Mr Museveni eventually leaves the presidency, particularly if youth unemployment continues to grow, creating conditions conducive to civil unrest.

  December 20, 2012

• Background

  Uganda: Key figures

  Yoweri Museveni

  The president of Uganda since 1986, when his rebel National Resistance Army (NRA) seized control. Mr Museveni dominates the national political arena, and central to his presidential longevity is his inherent pragmatism—he jettisoned left-wing ideology and espoused market economics when it became clear that Uganda needed IMF and donor support, and re-introduced party politics to consolidate their support when the political system he created, under the National Resistance Movement (NRM), was seen to represent a one-party state. A south-westerner, he shrewdly persuaded opponents from other regions to serve in his government in the early years. Mr Museveni likes the international spotlight, enthusiastically backing the East African Community and pushing hard for wider regional integration.

  Gilbert Bukenya

  Vice-president since 2003. He trained as a doctor and entered politics late, but his rise has been rapid. First elected to parliament in 1996, he soon became chairman of the NRM parliamentary caucus, where he developed a reputation for conciliation. After a short period as a minister of state he was promoted to vice-president. Mr Bukenya has a traditional southern background as a Roman Catholic from Buganda and is a popular regional chairman of the NRM there. Given his strong Baganda support, he is seen as a possible future presidential candidate.

  Amama Mbabazi

  Secretary-general of the NRM. A lawyer by training, Mr Mbabazi was one of the original members of the NRA, which took power in 1986. He is one of the president's closest allies and perceived by many as his choice for the succession. He has held several senior posts in government and is currently minister of security. Widely acknowledged as gifted and hard-working, he is nevertheless thought to have made numerous political enemies during his career, and the recent Temangalo land scandal was an attempt to discredit him and damage his presidential ambitions.

  Ruhakana Rugunda

  Uganda's permanent representative at the UN as it commences its two-year membership of the Security Council in 2009. Mr Rugunda trained as a doctor, with a master's degree in public health. He has been a constant member of cabinet since 1986, most recently as minister of the interior. He is well known for his diplomatic skills, and was the obvious choice to front the government's team at the Juba peace talks with the rebel Lord's Resistance Army (LRA). Like most of Mr Museveni's close allies he comes from the south-west.

  Kizza Besigye

  Chairman of the Forum for Democratic change (FDC) and the most significant opposition politician, probably the only politician apart from the president to have a claim to a national constituency. Like the president, Mr Besigye comes from the south-west. Trained as a doctor, he has held several ministerial positions and became political commissar to the NRM. He was one of a group of dissident members of parliament who broke away from the NRM, eventually forming the FDC. He stood twice against Mr Museveni for the presidency, in 2001 and 2006, winning respectable electoral support each time. His outspoken opposition to the government has resulted in periods of imprisonment and (in fear for his life) self-exile.

  January 14, 2009

• Structure

  Uganda: Political structure

  Official name

  Republic of Uganda

  Form of state

  Unitary republic

  Legal system

  Based on English common law and the 1995 constitution

  National legislature

  Parliament of Uganda; 386 members: 238 are elected by universal suffrage; the remainder represent special interest groups, including women, the army, workers, youth and the disabled; all serve five years

  National elections

  February 2011 (presidential and legislative); next elections are scheduled to take place in February 2016

  Head of state

  President, elected by universal suffrage for a five-year term

  National government

  The president and his appointed cabinet; a new government was announced in May 2011, following the February elections

  Main political parties

  The National Resistance Movement (NRM) dominates the political scene and has a large parliamentary majority; the Forum for Democratic Change (FDC) emerged from within the NRM and is the largest opposition party; the other main opposition parties, the Democratic Party (DP) and the Uganda People's Congress (UPC), have declined in popularity

  Key ministers

  President & commander-in-chief: Yoweri Museveni

  Vice-president: Edward Ssekandi

  Prime minister: Amama Mbabazi

  First deputy prime minister & minister for East African affairs: Eriya Kategaya

  Second deputy prime minister: Henry Kajura

  Third deputy prime minister: Moses Ali

  Agriculture, animal industries & fisheries: Tress Buchanayande

  Communications: Ruhakana Rugunda

  Defence: Crispus Kiyonga

  Education & sports: Jessica Arupo

  Energy & minerals: Irene Muloni

  Finance, planning & economic development: Maria Kiwanuka

  Foreign affairs: Sam Kutesa

  Gender, labour & social affairs: Tarsis Kabwegyere

  Health: Christine Androa

  Information & national guidance: Mary Okurut

  Internal affairs: Hilary Onek

  Justice & constitutional affairs: Kahinda Otafiire

  Karamoja: Janet Museveni

  Local government: Adolf Mwesigye

  Security: Wilson Mukasa

  Tourism & wildlife: Ephraim Kamuntu

  Trade & industry: Amelia Kyambadde

  Water & environment: Ephraim Kamuntu

  Works & transport: James Byandala

  Central bank governor

  Emmanuel Tumusiime-Mutebile

  December 03, 2012

• Outlook

  Uganda: Key developments

  Outlook for 2013-17

  • The president, Yoweri Museveni, and his National Resistance Movement (NRM) have ruled Uganda since 1986 and will continue to dominate the political scene following a resounding victory in the 2011 elections.
  • The negotiation of oil contracts will prove controversial and the opposition will seek to stoke public resentment over the perceived inequity and corruption involved in the deals that are struck.
  • The fiscal deficit as a percentage of GDP is expected to narrow to 1.9% in 2013/14 (July-June), before widening in the lead-up to the election in 2016.
  • Real GDP growth is forecast to increase to an average of 6.9% in 2013-15 and to accelerate to 12.9% in 2016 as oil production starts, before easing slightly to 9% in 2017, as the one-off impact from oil production cannot be repeated.
  • Inflation is forecast to average 7.4% in 2013-15 because of stable commodity prices and fiscal tightening. It is forecast to increase to 15.4% in 2016 owing to pre-election spending and the start of oil production, before easing in 2017.
  • The current-account deficit is forecast to remain in double digits throughout the forecast period as import costs continue to increase, owing to demand for capital imports for infrastructure projects, notably in the energy sector.

  Review

  • The government has threatened to withdraw its troops from all foreign peacekeeping initiatives-including 6,500 troops in Somalia-after a UN report alleged that it is providing support to the M23 rebel group in the DRC.
  • Uganda will probably not withdraw its troops from abroad. The salaries of troops in Somalia are being paid by the African Union, while such an action could also damage relations with donors and affect future aid disbursements.
  • In Kampala on November 21st, Mr Museveni, along with the presidents of Rwanda and the DRC, called on the M23 to stop its offensive and withdraw from Goma, the capital of North Kivu, which it captured the day before.
  • A private member's bill against homosexuality, originally tabled by David Bahati, an MP, in 2009, will become law before end-2012, according to the parliamentary speaker.
  • The auditor-general has discovered the misuse and theft of up to USh50bn (US$20m) in aid being channelled through the Office of the Prime Minister. Five countries have suspended aid to the government as a result.
  • The IMF has issued a statement indicating that it sees a favourable economic and inflation outlook for Uganda, with some downside risks, following a visit to discuss the fifth review under the policy support instrument (PSI).

  December 03, 2012

Economy:

• Background

  Uganda: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	32.4	32.2	32.7	30.2	28.6
  Industry	21.2	21.2	24.8	24.8	24.4
  Services	46.4	46.6	42.5	43.8	45.0
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  January 14, 2009

• Structure

  Uganda: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 03, 2012

• Outlook

  Uganda: Country outlook

  Uganda: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Political stability is expected to continue over the forecast period, although regional tensions will spark occasional protests and outbreaks of violence. The president, Yoweri Museveni, and his ruling National Resistance Movement (NRM) party strengthened their grip on power in February 2011, with overwhelming victories in the presidential and parliamentary elections. Mr Museveni will continue his policy of placating local sentiment by promising to devolve some powers to regional level while retaining control of key issues at central government level. The issue of federo (an independent Buganda within a federal Uganda) will re-emerge from time to time but is unlikely to threaten wider stability in the medium term.

  ELECTION WATCH: The next presidential and parliamentary elections are due in 2016, and the president has indicated that he wants to stand again. Mr Museveni and the NRM have ruled Uganda since 1986, and their resounding victories in the elections of February 2011 reflected several factors: financial and logistical advantages provided by access to state resources; a lacklustre campaign by a divided opposition; and low inflation. As it seeks to rebuild itself in order to make a more coherent challenge in 2016, the opposition will focus, as usual, on recruiting charismatic personalities and attacking the government's record rather than offering alternative policies.

  INTERNATIONAL RELATIONS: Uganda faces two significant problems with international partners that have the potential to deteriorate badly in the coming months. The first concerns the volatile eastern region of neighbouring Democratic Republic of Congo (DRC). Relations have come under strain in recent months as a leaked report by the UN Group of Experts on the DRC--which monitors compliance with the arms embargo and sanctions regime on the DRC--accused Uganda and Rwanda of supporting the M23 rebellion in that country. The Ugandan government has firmly denied the allegations and has threatened to withdraw its troops from peacekeeping missions abroad unless the UN amends the report. We believe that this was simply an intensification of diplomacy and do not expect Uganda to withdraw its peacekeeping troops. Fighting in eastern DRC will continue to undermine peace in the wider region and given the advances made by rebel forces against the regular Congolese army--they captured Goma, the capital of North Kivu province in November--and the risk of a wider conflict in the region has increased.

  POLICY TRENDS: Economic growth was sluggish in 2012, but the ability to impose countercyclical fiscal policy in 2013 will be restricted by the government's desire to control the fiscal deficit. The impact of government spending will therefore be fairly neutral and provide no stimulus to the near-term economic outlook. There is unlikely to be much new spending, and the government will maintain the focus of public spending on tackling bottlenecks in transport and energy infrastructure in order to boost employment and reduce poverty. Support for economic growth will, however, come from looser monetary policy in 2013-14. The government plans to construct an oil refinery, an oil distribution network and several hydroelectric power projects that would increase capacity by 3,500 mw in the next decade, from its current level of around 600 mw.

  ECONOMIC GROWTH: Economic growth in 2012 is estimated at a relatively lacklustre 5.3%, owing to stagnation in public spending, low external demand and high commercial bank interest rates. That level of growth is not high enough to enable significant progress in poverty reduction, given the high population growth rate. The economy is expected to expand at a more robust pace in the forecast period, supported by increased activity in construction, transport, telecommunications, financial services and the burgeoning oil industry. The loosening of monetary policy in 2012-13 will also start to feed through to lower commercial bank interest rates over time. The performance of agriculture, which accounts for a declining proportion of GDP but employs around 70% of the labour force, will depend on weather conditions. Construction activity will be strong, driven by donor-funded and privately financed building projects. Growth is forecast to pick up in 2013-15 to an average of 6.9% as foreign investment and external demand rise, more than offsetting the disruption from power shortages. It is then expected to accelerate to 12.9% in 2016 as oil production starts, before easing to 9% in 2017, as the one-off impact from oil production cannot be repeated.

  INFLATION: Inflation eased significantly in 2012 and price pressures are expected to remain low through to 2014. The year-on-year inflation rate has already fallen during 2012, from 25.6% in January to 4.5% in October. Although monetary policy has been loosened, the impact of this on inflation will be relatively weak; supply-side factors, such as global commodity prices, have a greater impact. Food accounts for 27.2% of the consumer price index and any fuel price increase hits landlocked Uganda hard in terms of transport costs. Lacklustre economic performances in the US and Europe, together with a slowing of growth in China, will reduce demand for commodities, and prices are unlikely to rise quickly in the coming years. We therefore forecast that inflation will average 7.4% in 2013-15 before increasing to 15.4% in 2016, owing to higher pre-election spending and the impact of oil revenue hitting the local economy. It is then expected to ease in 2017 as the government tries to bring the fiscal deficit under control. A large caveat with this forecast is that of prevailing weather conditions; it is reasonably likely that at some point in the next five years there will be a drought and a consequent increase in food prices.

  EXCHANGE RATES: The currency has been fairly stable in 2012, as the exchange-rate fluctuations that have plagued the economy in the past did not reappear, despite a series of interest-rate cuts by the Bank of Uganda (the central bank). It appears that the inflation-targeting framework introduced by the central bank in mid-2011 has increased the transparency of monetary policy and improved the efficiency of the foreign-exchange market. Beyond 2012, positive factors such as steady economic growth and strong inflows of foreign exchange will be partly offset by large fiscal and current-account deficits, inflation and strong corporate demand for US dollars. We forecast that the average exchange rate will weaken from USh2,485:US$1 in 2012 to USh2,984:US$1 in 2016. A larger depreciation is expected in 2015 than in the other years owing to election-related uncertainty, before the currency starts to appreciate during the second half of 2016, following the elections and as oil export revenue starts to flow. It is then expected to revert to a steady depreciation in 2017. More significant devaluations could occur if volatility were to increase in the global financial market or if progress in the development of the oil sector were held up significantly.

  EXTERNAL SECTOR: Uganda's external deficit as a percentage of GDP is expected to remain in double digits throughout the forecast period, owing primarily to a large trade deficit. Export growth will be supported by regional trade, which accounts for more than one-half of total exports. Re-exports to South Sudan should remain robust but could be hurt if the country is unable to reach a durable agreement with Sudan on exporting its main source of revenue, oil. Coffee output will increase as Uganda raises production of the higher-quality arabica bean, but earnings will be restricted by low global prices. Export earnings are expected to double between 2015 and 2017 as oil production starts in 2016. Imports will continue to increase, owing to demand for capital imports for infrastructure projects, notably in the energy sector. The current transfers balance will post a large surplus as donors remain engaged, despite reservations about channelling funds through the government because of corruption concerns. We forecast that the current-account deficit will peak at 14.8% of GDP in 2015 as import growth accelerates, before narrowing slightly as oil production starts. This will be financed by a surplus on the capital account, particularly as investment in the oil sector picks up.

  December 01, 2012

• Forecast

  Uganda: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	5.3	6.3	6.9	7.4	12.9	9.0
  Consumer price inflation (av)	14.7	8.0	7.0	7.2	15.4	9.4
  Consumer price inflation (end-period)	5.5	8.0	6.5	10.0	12.0	5.0
  Lending rate (av)	20.7	18.7	17.7	16.8	21.9	20.8
  Government balance (% of GDP)c	-4.2	-3.1	-1.9	-3.9	-3.7	-3.4
  Exports of goods fob (US$ m)	2,733	2,948	3,324	3,809	6,425	7,884
  Imports of goods fob (US$ m)	5,544	6,244	7,132	8,156	10,061	12,367
  Current-account balance (US$ m)	-2,552	-3,086	-3,697	-4,329	-4,119	-5,683
  Current-account balance (% of GDP)	-11.6	-12.8	-13.8	-14.8	-11.3	-12.6
  External debt (end-period; US$ bn)	4.1	4.9	5.8	6.8	7.9	9.2
  Exchange rate USh:US$ (av)	2,485	2,602	2,668	2,794	2,984	2,884
  Exchange rate USh:US$ (end-period)	2,548	2,612	2,679	2,903	2,766	2,908
  Exchange rate USh:¥100 (av)	3,131	3,149	3,076	3,140	3,238	3,155
  Exchange rate USh:€ (end-period)	3,287	3,279	3,308	3,643	3,483	3,656
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Fiscal years (July 1st-June 30th). Ratio calculated using government/IMF figures of GDP for the fiscal year.

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  Download text file (csv format)

  December 03, 2012

View detailed map

Country Briefing

Land area

197,000 sq km

Population

36.1m (2012, IMF estimate)

Main towns

Population in '000 (2012 estimates, World Gazetteer)

Kampala (capital): 1,604

Kitgum: 105

Gulu: 255

Jinja: 100

Lira: 219

Mbarara: 99

Kasese: 108

Mbale: 83

Climate

Tropical

Weather in Kampala (altitude 1,312 metres)

Hottest month, January, 18-28°C (average daily minimum and maximum); coldest month, July, 17-25°C; driest month, July, 46 mm average rainfall; wettest month, April, 175 mm average rainfall

Languages

English, Swahili, Luganda and other local languages

Measures

Metric system

Currency

Uganda shilling (USh)

Time

3 hours ahead of GMT

Fiscal year

July 1st-June 30th

Public holidays

January 1st; January 26th (National Resistance Movement Victory Day); March 8th (Women's Day); Good Friday; Easter Monday; Id al-Fitr; May 1st (Labour Day); June 3rd (Martyrs' Day); June 9th (Heroes' Day); Id Adhuda; October 9th (Independence Day); December 25th; December 26th

March 13, 2012