Uganda Growth Seen Accelerating to 5.5% on Oil-Industry Spending

KAMPALA (Capital Markets in Africa) – Growth in Uganda may accelerate to 5.5 percent next fiscal year, helped by increased spending on the oil industry, the Finance Ministry said.

The growth rate may increase from a projected 5 percent in the current fiscal year and may reach 6 percent in 2018-19, the ministry said in the National Budget Framework Paper e-mailed to reporters on Monday in the capital, Kampala, by the Civil Society Budget Advocacy Group. Amos Lugoloobi, the chairman of the Ugandan parliament’s budget committee, confirmed the authenticity of the document.

Private-sector credit growth, enhanced agriculture and industry output, an expected recovery in the global economy in 2018, and “increased activity in the oil sector following issuance of production licenses and public investment, are all expected to improve the growth prospects,” the ministry said.

Uganda has an estimated 1.7 billion barrels of recoverable oil at fields in the western Lake Albert basin that the government expects Tullow Oil Plc, Total SA and China’s Cnooc Ltd. to start pumping by 2021. The government has estimated that oil companies will spend $8 billion in the country ahead of production by 2021, and that it will receive $43 billion of revenue from the resource over 25 years.

The country is also seeking a new lead investor for a planned 60,000 barrels-per-day refinery after two offers to Russia’s RT Global Resources LLC and SK Engineering & Construction Co. of South collapsed. In addition, Uganda is planning a 1,445-kilometer (898-mile) crude-export pipeline through Tanzania.

The government’s total budget for the coming fiscal year may climb to 30.2 trillion shillings ($8.36 billion) from 25.7 trillion shillings in 2016-17, the ministry said. Donor project support may decline by $482 million to $1.69 billion because of the difficulty of securing “commitments from project financiers,” the ministry said, without elaborating.