Uganda

Politics:

• Analysis

  Uganda politics: Quick View - Threat of a military takeover

  Event

  The president, Yoweri Museveni, has reportedly said that if the recent "confusion" in parliament continues, the army could take over.

  Analysis

  The intent of Mr Museveni's mid-January remarks, at a caucus retreat for the ruling National Resistance Movement (NRM), was disputed. A party spokesperson, Evelyn Anite, tried to qualify the story, saying that the president was simply trying to tell MPs to stop confusing the country. She denied that the army would take over if parliamentary confusion continues. However, a few days beforehand, the defence minister, Crispus Kiyonga, warned that soldiers might intervene if they felt that the country was "in the hands of wrong politicians". Shortly afterwards, the chief of defence forces, General Aronda Nyakairima, said that the president's message was "deliberately sent out" and that those for whom it was intended should "stand warned".

  Mr Museveni's words highlight how he has lost popularity within his party and the country since comfortably winning the presidential and parliamentary election in February 2011. The NRM has been defeated in most parliamentary by-elections since then, and direct action groups have staged some moderately popular demonstrations, such as the "walk to work" protests. Moreover, a rebel NRM faction has joined with opposition MPs in challenging the authority of the president on several issues, including oil legislation, allegations of corruption in the public sector and, most recently, the death of an MP, Cerinah Nebanda, which sparked a demand for the recall of parliament to debate the circumstances of her death.

  It remains unclear whether Mr Museveni will run for re-election in 2016. He has outlined his intent to do so, but facing the most significant challenge to his rule since taking power in 1985, he is not assured of the NRM nomination. His remarks raise the question of what would happen should he win the NRM nomination but lose in the national poll. In the past, the army has insisted that it would back any democratically elected leader, but it is not difficult to imagine a scenario in which the NRM claims that the polls were rigged and the army asserts its control. The comments has also raised the (admittedly small) possibility that the army could step in if it looks like the president has lost his authority before then.

  January 28, 2013

• 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

  President & commander-in-chief: Yoweri Museveni

  Vice-president: Edward Ssekandi

  Prime minister: Amama Mbabazi

  First deputy prime minister & minister for East African affairs: Vacant

  Second deputy prime minister: Henry Kajura

  Third deputy prime minister: Moses Ali

  Key ministers

  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

  March 22, 2013

• 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 Economist Intelligence Unit expects the fiscal deficit as a percentage of GDP to narrow to 2% in 2013/14 (July-June), before widening to 4% as the 2016 election looms.
  • Real GDP growth will be subdued in 2013 owing to a stagnation in public spending. It is forecast to accelerate to 6.8% on average in 2014-16 as foreign investment and external demand rise, and 12.6% in 2017 as oil production starts.
  • Inflation is forecast to average 6.9% in 2013-15 owing to stable commodity prices and fiscal tightening. We expect it to increase to 15.4% in 2016 on the back of pre-election spending, before easing in 2017.
  • The current-account deficit as a percentage of GDP is forecast to remain in double digits as import costs continue to increase owing to demand for capital imports for infrastructure projects, notably in the energy sector.

  Review

  • A group of Acholi MPs launched a campaign calling for northern Uganda to secede and form an independent state. The campaign aim is unrealistic, but it reflects the discontent felt in the region about its perceived marginalisation.
  • Andiru Nebanda has been elected MP for Butaleja. The NRM had lost seven of the previous nine by-elections held since the 2011 general election, and, despite the victory, divisions within the party will continue to fester.
  • The central bank left its main policy rate unchanged at 12% in March after year-on-year inflation fell to 3.4% in February. It expects core inflation to increase in 2013, partly owing to the impact of base effects in the index.
  • A bill governing the midstream petroleum sector was passed in February, the second major piece of oil legislation enacted in two months. The new legislation will remove some of the uncertainty that has slowed investment.
  • An agreement over the size of an oil refinery and a proposed pipeline to Kenya is required in order to avoid further delays to commercial production.
  • Importers have taken measures to mitigate the risk of disruption from the Kenyan presidential election, including examining the logistics of using a longer, more expensive route through Tanzania to the port at Dar es Salaam.

  March 22, 2013

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

  
  

  

  March 22, 2013

• 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) 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, with varying success. A campaign launched in mid-February by a group of members of parliament (MPs) from Acholi calling for northern Uganda to secede is unrealistic, but is a measure of the discontent felt in some regions about their perceived marginalisation, which will continue to fuel resentment. 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 they will benefit again at the next elections from the financial and logistical advantages provided by access to state resources. As it seeks to rebuild itself in order to make a more coherent challenge in 2016, the opposition will focus on recruiting charismatic personalities and attacking the government's record, rather than offering alternative policies. The Forum for Democratic Change (FDC), Uganda's main opposition party, elected a retired major-general, Mugisha Muntu, as its new president in November. If Mr Muntu can unite the party and boost its finances, he could be a credible presidential candidate, but this will be difficult. His predecessor as party leader, the thrice-defeated presidential candidate, Kizza Besigye, has made it clear that his political ambitions remain alive and that he would be prepared to contest the presidency again.

  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 the neighbouring Democratic Republic of Congo (DRC). Relations have come under strain in recent months as 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 there, allegations firmly denied by both countries, although the evidence appears compelling. 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, the risk of a wider conflict in the region has increased. The second important international issue concerns corruption allegations, which could worsen diplomatic relations with several strategic partners. The auditor-general recently reported the misuse and theft of US$13m in donor funds being channelled through the prime minister's office. Several donors, including the EU, suspended aid to the government pending further investigations. In response to the scandal, the government froze the assets of some of those accused of embezzling, initiated audits into the public finances and reimbursed some of the donor aid. We expect relations with donors to gradually thaw a little, but there is a risk that the anti-homosexuality bill currently before parliament and the accusation that Uganda is supporting the M23 rebels in the DRC could contribute to a worsening of these ties.

  POLICY TRENDS: The ability to impose countercyclical fiscal policy in 2013 will be restricted by the government's desire to control the fiscal deficit, as well as the suspension of aid from some donors. The impact of government spending will therefore provide little stimulus for the economy. 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. 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. The government generally adopts a free-market approach to policymaking, but it banned iron ore exports in January and temporarily suspended import duty on sugar in late 2011. However, it resisted calls for market intervention several times in 2011-12--there was considerable pressure to push down commercial bank lending rates, support the shilling and reduce petrol prices--and we expect economic policy to remain relatively liberal and direct government intervention to remain rare.

  ECONOMIC GROWTH: Economic growth will be subdued in 2013 owing to stagnation in public spending, low external demand and the long delay in commercial banks passing on the central bank interest-rate cuts. We forecast real GDP growth of 5%, supported by increased activity in construction, transport, telecommunications, financial services and the burgeoning oil industry. 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. Electricity shortages will be less frequent, as the 250-mw Bujagali hydroelectric dam has bumped national supply up to around 600 mw. Peak demand is currently around 450 mw and is increasing by 10-15% annually; it will therefore outpace supply by 2014, at which point frequent power outages will return.

  INFLATION: Inflation eased significantly in 2012 and price pressures are expected to remain low through to 2014. 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 global growth will reduce demand for commodities, and prices are unlikely to rise quickly in the coming years. We therefore forecast that inflation will average 6.9% in 2013-15, before increasing to an average of 15.4% in 2016, owing to higher pre-election spending. It should then ease in 2017 as the government tries to bring the fiscal deficit under control. A large caveat to this forecast is the nature of prevailing weather conditions; it is 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 impact on the currency of positive factors such as steady economic growth and robust inflows of foreign exchange will be partly offset by large fiscal and current-account deficits, and strong corporate demand for US dollars. We forecast that the average exchange rate will weaken from USh2,506:US$1 in 2012 to USh3,189:US$1 in 2016. It is then expected to appreciate slightly in 2017 as large-scale oil production starts.

  EXTERNAL SECTOR: We expect Uganda's external deficit as a percentage of GDP to remain in double digits in 2013-17, owing primarily to a large trade deficit. Export growth will be supported by regional trade, which accounts for more than 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 lower global prices. Export earnings are expected to almost double in 2017 as oil production starts. 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 most 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 14.2% of GDP in 2016 as import growth accelerates, before narrowing in 2017 as oil production starts. This will be financed by a surplus on the capital account, particularly as investment in the oil sector picks up.

  March 28, 2013

• 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	3.4	5.0	6.9	6.6	6.8	12.6
  Consumer price inflation (av)	14.0c	6.5	7.0	7.2	15.4	9.4
  Consumer price inflation (end-period)	5.3c	8.5	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)d	-3.5	-3.3	-2.0	-4.0	-3.3	-1.7
  Exports of goods fob (US$ m)	2,733	2,963	3,320	3,733	4,203	7,128
  Imports of goods fob (US$ m)	5,469	5,833	6,652	7,460	8,613	10,802
  Current-account balance (US$ m)	-2,452	-2,467	-2,990	-3,371	-4,208	-4,128
  Current-account balance (% of GDP)	-11.5	-11.3	-12.3	-12.8	-14.2	-10.6
  External debt (end-period; US$ bn)	4.5	5.2	6.1	7.1	8.2	9.5
  Exchange rate USh:US$ (av)	2,506c	2,727	2,796	2,929	3,189	3,070
  Exchange rate USh:US$ (end-period)	2,686c	2,738	2,808	3,042	3,200	3,045
  Exchange rate USh:¥100 (av)	3,131c	2,940	2,959	3,043	3,271	3,182
  Exchange rate USh:€ (end-period)	3,528c	3,614	3,664	3,818	4,034	3,834
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Actual. d Fiscal years (July 1st-June 30th). Ratio calculated using government/IMF figures of GDP for the fiscal year.

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  March 22, 2013

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

January 01, 2013