By James Karuhanga

Senior Researcher, Uganda

Great Lakes Centre for Strategic Studies

2007 Political and Security Forecast

 

Peace and security concerns in the northern and north-eastern regions plus political rallies by opposition political parties will undoubtedly dominate most of the headlines this year.

 

Last year, army chiefs from Uganda and the Democratic Republic of Congo (DRC) and commanders of the United Nations Observer Mission in Congo (MONUC) met and discussed threats posed by various rebel groups to Uganda. Such efforts will go on but Uganda’s primary concern will remain the Lord’s Resistance Army (LRA) in the DRC.

 

A comprehensive peace agreement between government and LRA rebels is a significant achievement expected to assure total peace in northern Uganda. This however, considering the slow pace of negotiations with the LRA rebels, is still some way off.

 

Despite substantial achievements in the northern peace talks hosted by the South Sudan government, a comprehensive peace deal with the Lord’s Resistance Army (LRA) rebels will still be elusive if the International Criminal Court’s (ICC) indictments are not dropped. The ICC indictment of top LRA commanders will remain an obstacle.

 

The Juba peace talks will remain in a fragile state if the international community and especially the regional and directly affected countries – the DRC, the Government of South Sudan (GoSS) and the Sudan – do not commit to disarming the LRA. However, further progress will be registered in ending the LRA reign of terror in northern Uganda. The government is determined to prevent the rebels from infiltrating back into the country and terrorizing people in northern Uganda, after they were forced to flee into DRC’s north eastern Garamba National Park.

The Great Lakes Center for Strategic Studies (GLCSS) observes that Karamojong warriors are also unlikely to disarm completely. Insecurity in this sub-region will continue to hamper development initiatives despite various efforts to restore security.

The 20th Commonwealth Heads of Government Meeting (CHOGM)  

 

The Commonwealth Heads of Government Meeting (CHOGM) in November will significantly benefit Uganda. It will showcase Uganda’s diverse opportunities to the world and thus market the country’s potential. The CHOGM budget expenditure will have a significant positive impact on Uganda’s welfare.

 

Hotels and services will be built and others reconstructed, boosting the tourism sector far beyond the conference in November. The conference will also provide additional opportunities for attracting more foreign investment. Last year, investment doubled (from $878m in 2005 to $1.67billion) and this is expected to improve in 2007 as the government is committed to improving the investment climate.

However, GLCSS observes that the Commonwealth Summit will come with some measure of political turbulence. The high stakes surrounding the 20th CHOGM cannot be ignored.

 

Most opposition political parties will increase their activities in the run-up to the CHOGM conference, prompting the police to use tear-gas and rubber bullets to disperse political rallies. In this scenario, the opposition will find much needed political capital and achieve their goal of tarnishing the government’s image. Headlines such as, ‘’Police blocks DP rally’’, ‘’DP to sue government for blocking rally’’ or  ‘‘DP supporters charged, get bail’’ at the start of 2007 already offer a glimpse of what is most likely to be highlighted in the local press.
The opposition, especially the FDC, will rally the public toward increased confrontation with the authorities, proposing demonstrations and other measures in efforts to discredit the National Resistance Movement (NRM) government. President Museveni’s NRM will be pressurized, and moves to crush the opposition and the media are likely to become a common occurrence.

 

Disputes in the Uganda People’s Congress (UPC) will continue. Members will continue to defy the authority of the late party president Milton Obote’s widow, Miria Kalule Obote, who is the current party president. This crisis will continue to weaken the party unless it unites.

 

2007 Economy Forecast

 

Despite a steady economic growth record coupled with increasing investment, infrastructure and energy worries will burden the economy in 2007. Unpredictable changes in climate will again be a serious threat to Uganda’s sustainable development.

 

Uganda’s rapid population growth will also be a challenge as it will continue growing at a faster rate than the economy can sustain. High population growth will affect national saving rates, per capita income, employment rates, and the environment.

Uganda will continue to face energy challenges and there will be more investment by government and private investors in the energy sector. Private and public-private power companies will venture in but the ever-increasing energy demand will remain a problem to contend with.

 

The persistent drought challenges in the region and the resulting negative economic impact on Uganda will continue. Prolonged drought, coming into the first half of 2007 and even beyond, will act as a harbinger of even more power blackouts for Kampala, affecting business and the economy despite the many efforts by government and private investors to alleviate the power shortage.

 

The effect of unpredictable poor weather conditions on the economy’s agriculture sector and food prices cannot be ruled out. Persistent inflation in Uganda has been caused by a fluctuation of food prices caused by different factors, most of which are beyond the control of the Bank of Uganda (BoU). 

 

Inflationary pressures, which have built up mainly due to considerable increases in food crop prices, will continue. Export of foodstuffs to South Sudan where prices are relatively high due to high demand will also impact food inflation. In spite of the discovery of substantial petroleum deposits, Uganda has not started to exploit them for its benefit and any increases in oil prices on the international market will continue to affect the economy.

 

The government’s export promotion strategy is bearing fruit and export performance is likely to continue improving. Investments into the country doubled last year and this is expected to progress. Ugandans will continue leading the way in investing in their country but foreign investment will also increase. However, the power crisis will continue to affect the investment climate in the country.

 

GLCSS believes persistent power cuts have increased the cost of doing business, affecting the number of projects which would have been licensed in the country. The same scenario will be played out in 2007, despite efforts to improve. Uganda’s competitiveness in the business environment is also bound to further decline if steps are not taken to check weaknesses, especially in health and education. Failure to make significant improvements in these basic requirements is likely to continue hampering growth.

 

Access to financing remains a critical constraint to firms that do business in Uganda, followed by corruption and inadequate infrastructure. This will continue to damage the economy.

Trade in the region and the EAC expansion

 

Uganda will benefit greatly from the enlarged East African Community. Exports, especially agricultural products to regional neighbors, will continue to increase.

 

Improved relations with Rwanda will also be crucial, both economically and politically. The Common Market for Eastern and Southern Africa (COMESA) members have invested in 40 projects worth $172,804,000 and trade within the COMESA block is increasing.

 

Trade between Uganda and COMESA states has doubled in the last five years and will improve even more. Uganda’s exports to the region in the recent past have continuously risen and this is predicted to improve. Uganda’s biggest export markets are Kenya and the Democratic Republic of Congo (DRC), where trade has grown from $9m to $60m.

 

Uganda has great potential to access and expand its share of the regional market given its diverse resource base. Opportunities do exist for collaboration in investment and joint ventures in agriculture, tourism, manufacturing, trade, service and many other sectors.

 

Exports to South Sudan have increased since the signing of the peace agreement in January 2005 between the Khartoum government and the SPLA. This improved following the withdrawal of the LRA rebels from South Sudan and much more trade with the northern neighbor is expected despite the continuous ambushes on Uganda-South Sudan trade routes.

 

The discovery of petroleum will continue raising concerns over its proper use and the issue of oil revenue sharing between the government and Bunyoro Kingdom will come up again. As already reported by GLCSS, Uganda’s oil presents the possibility for additional regional or tribal conflict. 

 

William Church is director of the Great Lakes Centre for Strategic Studies, a London-based think tank with offices in Central and East Africa. You may contact William Church at wchurch@glcss.org” wchurch@glcss.org. GLCSS trains African journalists, offers an on-siteinternship to foreign African studies students, and manages an exchange program withjournalists from the United Kingdom, the United States and Europe.

 

 

 

 

 

 

 

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