Uganda economy to grow 5 pct 2016/17, 5.5 pct 2017/18, IMF says

KAMPALA (Capital Markets in Africa) – Uganda’s economy will grow by 5 percent in the 2016/17 (July-June) fiscal year, the International Monetary Fund forecast on Wednesday, trimming the forecast from 5.5 percent after state revenues missed targets and some major projects faced delays.

The IMF also predicted Uganda would grow 5.5 percent next fiscal year, boosted by rising spending on infrastructure.

Uganda has been pressing ahead with several major projects, including new dams and roads. It also plans to build a new standard gauge railway line to connect with a track being built in Kenya, replacing a narrow gauge line built a century ago.

“Uganda’s economy performed well in a complex environment. The February 2016 elections, muted global growth, and regional developments weighed on sentiment, and growth declined … in FY15/16,” IMF advisor at the African department, Axel Schimmelpfennig, told a news conference.

He said revenue collection in the year had climbed but was lower than expected. He also said some projects lagged behind schedule, although he did not give details.

“Growth is projected at a solid 5 percent this fiscal year and 5.5 percent in FY17/18, supported by the scaling up of infrastructure spending,” he said at the end of an IMF mission to Uganda.

In April, the fund had forecast a 5.5 percent growth for 2016/17, picking up from 4.8 percent in 2015/16.

Schimmelpfennig also praised what he called swift action last week by Bank of Uganda (BoU), the central bank, to take control of Crane Bank, the country’s third largest, after it was deemed be undercapitalised.

BoU governor Emmanuel Tumusiime-Mutebile said a buyer for Crane Bank was now being sought, adding there had been initial discussions with potential buyers although he offered no names.

“We have successfully managed to find investors for most of the banks we have taken over and am sure that, even for Crane, we shall get investors soon,” he said. “We have six months to do this and am sure we shall do it.”

Local newspaper Daily Monitor on Wednesday quoted Finance Minister Matia Kasaija saying the government was talking to three potential investors in Crane.

The bank, which reported assets worth 1.810 trillion shillings ($523.58 million) at the end of 2015, is controlled by businessman Sudhir Ruparelia, who controls 48.67 percent of the voting rights, based on shares he and family members hold.

Ruparelia is listed by Forbes magazine as one of Africa’s 50 richest men.

Source: Reuters Africa News