UGANDA

RISK RATING
Elevated
Default High Risk Score 5.50
Normal Average 4.65
Weighted Average 4.23
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

The run-up to the January 2021 election is already more deadly than the previous one five years ago. Despite his vocal support base among urban youths, opposition challenger Bobi Wine will struggle to attract the all-important rural vote, while his campaign faces a concerted challenge from security agencies. Meanwhile, long-time incumbent President Museveni is counting on the nascent oil economy to secure his re-election bid and stimulate economic recovery next year. Political instability and associated contract frustration risks are thus increasingly likely to threaten power and transport infrastructure projects and the banking sector. Uganda’s economy will need continued IMF balance of payments and budget support to weather the storm of the coronavirus, especially as tourism revenues drop. The government is expected to become more interventionist in key sectors as it seeks to increase its tax take as the economy threatens to slow in coming years. Plans for oil production have been waylaid by record low global demand.

  • The president‚Äôs power extension ambitions are triggering resistance from the opposition and his own party. Popular musician and opposition lawmaker Bobi Wine drives an energetic campaign to oppose Museveni‚Äôs power extension plans. Within the ruling NRM party, concerns have also grown over Museveni‚Äôs succession plans since there are indications that a gradual transition to Museveni‚Äôs son, Major General Muhoozi Kainerugaba, are underway. This is likely to trigger a broader backlash from the political opposition and civil society, as well as from within the NRM party. There has also been a growing mistrust between the president and traditional kingdoms, particularly the Buganda and Bunyoro kingdoms, over the division of power and eventual oil revenues.
  • Socio-economic grievances and resistance to power extension plans drive risk of civil and military unrest. Protests against power extension plans are likely to continue, particularly in Kampala, where they will elicit a crackdown by security forces. Mounting socio-economic grievances among frustrated youth communities are likely to precipitate more sustained agitation and are anticipated to remain drivers for broader anti-government unrest. The loyalty of the military is also in question as officers question dynastic succession plans. Moreover, disputes between the traditional kingdoms and government have intensified, particularly over land ownership, oil revenue distribution, and the role of traditional leaders.
  • IMF support is required to help cushion Uganda‚Äôs economy from the impact of the new coronavirus. Key sectors such as tourism have taken a heavy blow from the crisis. Foreign exchange reserves will decline to the equivalent of 3.5 months‚Äô worth of imports from 4.2 months‚Äô worth as exports slump. The weakening economic conditions emanating from the pandemic have put significant pressures on revenue collection, expenditure, reserves, and the exchange rate, creating urgent large external and fiscal financing needs. The IMF‚Äôs emergency financial support, along with the additional donor financing, will help address Uganda‚Äôs urgent balance of payments and budget support needs. Low global demand has put on hold plans for oil production, which imperils Uganda‚Äôs debt servicing position as debt accumulation has been based on eventual oil revenue expectations.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
3.5
Expropriation, Nationalisation, Confiscation & Deprivation
4.0
Contract Frustration & Breach
5.0
Taxation
5.0
Bribery & Corruption
5.5
Regulatory Burden
4.5
Strikes, Riots & Civil Commotion
5.5
Security
4.0
Sovereign Default
4.5
Economic Volatiliy
5.0

Risk Rating Scale (small)

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