Socio demographics Analysis
Uganda has an area of 241,038 sq km (93,072 sq miles). The population is estimated at 27.6 million (UN, 2005) with an annual growth rate of 6%.
Kampala is the capital city and with rural urban migration mainly to Kampala , its population currently at 1.2 million is bound to increase. Life expectancy is increasing and currently stands at 46 years (men), 47 years (women) (UN). HIV/ AIDS prevalence rate is decreasing.
Access to basic services is still low but the government is addressing the problem. For instance only 20% of the population have decent housing, 30% of the population have access to power while access to health facilities is at 30% of the population. GNI per capita is at US $280 (World Bank, 2006)
Customers & Stakeholders Analysis
1. Government & Parastatals (80%)
2. Main European Contractors
3. Private Industry
Economic Analysis
Uganda is a free market economy. There are opportunities for investments in Industry, Agriculture, Infrastructure, Mining, Tourism & Fisheries. Currently, GDP growth averages 5.5% but the government is targeted annual GDP growth of 8 to 10%. It however faces logistical problems due to being landlocked. It is a member of the free trading block, COMESA.
In 2004, the demand for imports increased in line with economic activity. In particular, imports of building materials continued to reflect the boom in construction, while imports of transport and telecommunication equipment, especially vehicles and mobile phones, also grew strongly.
In 2003, the external debt increased and the sustainability of the debt burden now represents a major point of discussion with the development partners. At the end of 2003, Uganda's total external debt was $4.05 billion. About 90 per cent of this debt was owed to multilateral institutions, 9 per cent to non-Paris Club bilateral creditors, and 1 per cent to Paris Club creditors.
Agriculture accounted for about 38 per cent of GDP in 2004 but is limited by persistent structural problems and needs better implementation of the current Plan for Modernisation of Agriculture and the Medium Term Competitive Strategy (MTCS) for the private sector, which includes the Strategic Export Programme (SEP).
Agriculture is constrained by concentration on low-value crops and limited processing of raw produce. Limited access to support services such as crop and veterinary extension services and food processing technology, inadequate infrastructure such as electricity and water, lack of market information, and proliferation of local taxes all inhibit the development of a vibrant agricultural sector with linkages to other sectors of the economy.
The industrial sector accounted for about 19.5 per cent of GDP in 2003. Industrial output rose by an estimated 4 per cent in 2004, the same rate as in the previous year, driven mostly by electricity generation, which rose by an estimated 6.3 per cent in the year.
However, concern remained that the gain in industrial output in 2004 could turn out to be lower due to the shortage of power since September 2004. Electricity provision should improve as the government is progressing in the privatisation of power distribution, (possibly involving a partnership between the Commonwealth Development Corporation and Escom), scheduled for completion in 2005, and as a strategic investor is found for the two hydroelectric dams at Bujagali and Karuma Falls in 2005.
The service sector remains the largest contributor to GDP at 42 per cent in 2004. Continuing growth in the sector was spearheaded by the transport and communication sub-sector that gained from the large capital outlay in expanding and improving the Entebbe airport. Growth in this sector is expected to continue with the construction of the Northern Corridor highway up to Ethiopia being built, massive roads rehabilitation going on and the building of an industrial park. Support from Banks was 53% for construction industry (2006). It is now becoming easier to access funds from banks.
The recent discovery of oil in the country will spur further development. Oil production capacity by the year 2009 is expected to be 3 times the national expenditure.
Figure 2 - GDP Per Capita in Uganda and in Africa (current $)
Environmental Analysis
There is a regulatory frame work in place on environment governed by the National Environmental Management Authority (NEMA). There is also more public awareness on environmental issues. Carbon credit trading is also beginning to pick up.
Uganda is a land-locked country lying on the equator in central Africa. It shares borders with Sudan, DRCongo, Rwanda, Tanzania and Kenya. 20% of the country is covered by inland lakes. The rest ranges through tropical rain forest to savannah with mountains on the western border. The climate is tropical.
Political Analysis
Uganda's political situation appears quite stable. The so-called "movement system" under which traditional political parties are banned, continues to dominate the political process. However, Ugandans are expressing a growing desire for greater pluralism in the political process, and many opposition party candidates were successful in the 2002 local elections.
Security problems continue to threaten democracy. The long-running conflict in the north of the country and the Karamoja (in the northeast) show no signs of easing. While a concerted effort by the government to end the insurgency restored peace in some districts in 2003, even those districts where the insurgency subsided still suffered from spillover effects of internal displacement and rebel incursions in 2004. The government developed a draft on Internally Displaced Persons (IDP) Policy for consideration by parliament in 2005.
Technical Analysis
Availability of technical skills is limited. There is an expected shortage of technical skills within the region with regional integration with people moving into Kenya which has a more developed economy. There exists no sophisticated manufacturing machinery to operate. It also suffers from inadequate specialized educational facilities to develop vocational skills. Support and maintenance skills for sophisticated machinery are also not locally available.
Standard specifications for construction project: Although British Standards are generally used in the execution and supervision of buildings and housing construction work, these are normally interpreted to incorporate standards of other countries, e.g. Germany and U.S.A. The Government of Uganda has formulated some Ugandan standards. This task has been widely addressed in road and bridge construction, but much remains to be done for updating general and standard specifications for buildings, including housing works, railways and waterworks by the Uganda National Bureau of Standards (UNBS) and the ministry of works, Housing and Communication plus related professional bodies.
Industry Analysis
Uganda's transport infrastructure consists of roads, railways, airports and waterways. Transport as an economic activity contributes to GDP and it is among the most viable investment projects with an average of 22% economic return. This industry is growing way above GDP growth figures and its future is shaped by MDG goals.
New concepts of doing business like BOT (Build, Operate & Transfer) / PPP (Public Private Partnership) are emerging and offer attractive opportunities for Spencon.
The main challenge for the transport sector is the need to improve the infrastructure including its maintenance and safety. Provision of maintenance equipment and tools as well as construction forms an investment opportunity in this sub-sector.
All plant and machinery is imported duty and tax free. Investors who register as VAT Traders are allowed VAT refunds on all construction materials used on their projects within a period not exceeding 4 years of project implementation.
The industry however faces problems with power shortages and lack of manufacturing facilities (within the region) hence has to import equipments and materials from far.
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