Uganda’s Ambitious Infrastructure Plan Set to Boost Economy

SUMMARY

A ten-year, multibillion-dollar plan to upgrade Uganda’s transportation network and power generation is poised to benefit the east African nation’s citizens and those of neighboring countries, IMF economists say in their regular review of the Ugandan economy.

 
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  • Infrastructure investment is government’s top medium-term economic priority
  • Upgrade plan to be backed by sound fiscal policies, efficient project management
  • Targeted social protection to help those not benefiting directly from upgrade
  • In their regular review of the Ugandan economy, IMF staff said that the planned infrastructure overhaul—an $11 billion program over the next ten years through public investment and public-private-partnership arrangements—will have positive spillovers on agro-processing, manufacturing, and trade.

    Upgrading the transportation network and electricity generating capacity is now Uganda’s top economic priority. Over three fourths of Ugandans live in rural areas with most involved in agriculture, and only 14 percent of households use electricity. A comprehensive road network and widespread access to electricity will connect farmers to trading centers, add value to production, and improve the population’s welfare.

    Upcoming oil production, expected to come on stream around 2021, requires new infrastructure that will be led by government investment with participation of the private sector, and will include the construction of roads, a crude oil pipeline, a small-scale refinery, and product pipelines.

    Electricity surplus

    Infrastructure improvements will also allow Uganda to maximize the benefits of regional integration with other East African Community partner states. Uganda’s expected electricity surplus will be exported to neighboring countries; and better roads, bridges, railways, and new pipelines will facilitate the movement of citizens across countries and the transportation of goods to seaports.

    The question of how to scale up infrastructure investment while maintaining strong and sustainable economic growth, enhanced inclusion, and price stability was analyzed by the Ugandan authorities and IMF staff in preparation for the 2015 review of the economy known as the Article IV consultation.

    The review concluded that favorable existing conditions should allow Uganda to embark safely on its ambitious infrastructure plan. To ensure success, however, consistent policy implementation, sound project management, and a business-friendly environment will be required.

    Strong safeguards

    The report found that Uganda has been able to gradually build buffers that have put the economy on a sound footing from which to launch the infrastructure program and secure its financing.

    At less than 5 percent in May, the country enjoys...

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