New Construction market report from Business Monitor International: "Uganda Infrastructure Report Q3 2013"

Boston, MA -- (SBWire) -- 08/14/2013 --Last year was disappointing for Uganda's construction market, which was badly affected by high interest rates, causing Uganda's construction market to expand by just 3.5% in real terms in 2012. However, in the last year interest rates have been progressively eased, with the latest easing taking place in January 2013 when the Central Bank Rate (CBR) was reduced by 3%, to 12%. A further easing of monetary policy, together with the impetus generated by the impending construction of the 600-megawatt Karuma power project and other public sector initiatives that are likely to come gradually on-stream, should then ensure a return to robust sector growth from 2013, particularly given the impending start of oil production.

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The key developments in the sector over the last quarter were:

- There are upside risks to our core forecast scenario, particularly in light of a faster-than-expected reduction of inflation (with September 2012 generating a substantial fall in both core and headline prices), which indicates that interest rates may come down at a faster rate than we anticipated. With regard to downside risks, Uganda will face several challenges over our 10-year forecast period to 2022, including popular unrest related to one-party rule, the need to overcome the legacy of civil war in the North and a lack of jobs for its youthful population. Despite this, we maintain a cautiously positive outlook on Uganda and foresee a relatively successful resolution to these challenges going forward.
- The government has pledged to tackle power shortage in the country, and presented a long list of hydro and renewable power stations that have been lined up for construction. That said we note that risks remain prominent with corruption are likely to delay and or stall efforts. In addition, reliance on hydropower will increase the country's exposure to weather conditions.
- The Uganda Development Bank (UDB) has called on the government to empower it to carry out one of its core mandates of advancing infrastructure funding. Currently, in contrast to other developing countries, the bank - the country's lone development finance institution - does not have a lead role in infrastructure financing.
- The start of operations at the 250-megawatt (MW) Bujagali hydropower project in 2012 represented a welcome and much awaited development for the country. Yet, we highlight that the project does not provide a solution to the problem of drought-induced shortages.
- China Road and Bridge Cooperation has won a tender to Tarmac the road from Moroto to Nakapiripiriti in the Karamoja region.

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