Identifier
Created
Classification
Origin
09KAMPALA281
2009-03-17 13:01:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kampala
Cable title:  

UGANDA PRIORITIZES ROAD CONSTRUCTION, BUT SO FAR PROGRESS

Tags:  ECON ELTN PGOV PREL ETRD UG 
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VZCZCXRO1612
RR RUEHGI RUEHRN RUEHROV
DE RUEHKM #0281/01 0761301
ZNR UUUUU ZZH
R 171301Z MAR 09
FM AMEMBASSY KAMPALA
TO RUEHC/SECSTATE WASHDC 1241
INFO RUCNIAD/IGAD COLLECTIVE
RUEHXR/RWANDA COLLECTIVE
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 02 KAMPALA 000281 

SENSITIVE
SIPDIS

STATE PLEASE PASS TO USTDA for K. DORMINEY,
USTR FOR W. JACKSON
TRANSPORTATION FOR C. HUNTER
TREASURY FOR R. KLEIN

E.O. 12958: N/A
TAGS: ECON ELTN PGOV PREL ETRD UG
SUBJECT: UGANDA PRIORITIZES ROAD CONSTRUCTION, BUT SO FAR PROGRESS
IS SLOW

REF: (A) KAMPALA 475

UNCLAS SECTION 01 OF 02 KAMPALA 000281

SENSITIVE
SIPDIS

STATE PLEASE PASS TO USTDA for K. DORMINEY,
USTR FOR W. JACKSON
TRANSPORTATION FOR C. HUNTER
TREASURY FOR R. KLEIN

E.O. 12958: N/A
TAGS: ECON ELTN PGOV PREL ETRD UG
SUBJECT: UGANDA PRIORITIZES ROAD CONSTRUCTION, BUT SO FAR PROGRESS
IS SLOW

REF: (A) KAMPALA 475


1. (SBU) Summary: The Government of Uganda (GOU) has made road
works its top priority for the 2008-2011 period, spending more on
the sector than on education, health, energy, or public sector
management. Despite unprecedented funding allocations, recent
budget figures show that the GOU spent only one-quarter of the
available funds for the July-December 2008 period, though this is in
part understandable given the long lead time required to design,
contract, and build new roads. However, with elections approaching
in 2011 and a new budget being formulated, President Museveni is
putting even greater pressure on the Uganda National Roads Authority
(UNRA) to move more quickly on road construction, and this could
lead to even greater corruption and shoddy construction in the
sector. Museveni likewise continues to overlook the questionable
competence of Transport Minister John Nasasira, who survived a
recent government shakeup. End Summary.

--------------
Long Road to Progress
--------------


2. (U) President Museveni announced that infrastructure development,
and particularly roads construction, maintenance and improvement,
was one the GOU's highest priorities during his annual State of the
Nation Address on December 31, 2008. Roads topped all other sectors
in the 2008/2009 budget, with $550 million (1.1 trillion Ugandan
Shillings),outranking education, health, energy, and public sector
management. Roads spending will also top all other sectors in
2010/2011, with more than $450 million allocated. The record
expenditures involve the GOU dipping for the first time into its
Central Bank reserves for national development.


3. (U) No one doubts the GOU's good intentions here - road
infrastructure has long been neglected and is critical to faster
growth and development across all sectors of the economy. But in
reality, such spending has not had the intended impact because most
of it hasn't really happened yet. According to July-December budget
figures, UNRA spent just 26% of the roughly $200 million allocated

to it in the first half of the 2008/2009 fiscal year. Of all 37
major road projects, by far the most important is the Northern
Transport Corridor from Kenya to Rwanda via Uganda. Accounting for
75% of UNRA's budget, the Northern Corridor saw the least progress
of all, with just 19%, or about $31 million, disbursed of a budget
of $162 million. Another key project, a "Northern Bypass," or ring
road around Kampala, has been delayed by more than two years due to
a dispute between the Italian contractor, Salini Construtorri Spa,
and the government over the project's specifications. (Note: The
project was financed by the European Union. End note.)


4. (U) In a recent meeting with EconOff, UNRA Executive Director
Peter Ssebanakitta defended the lagging expenditures, noting his
Finance Ministry budget planners had given him just two weeks
warning before finalizing the 2008/2009 budget. With such little
time to prepare for the windfall, UNRA was unable to plan, design,
tender and contract the many road projects in its portfolio, he
said.


5. (U) Ssebanakitta noted, however, that his agency recently
contracted the Northern Corridor project, which he hoped would allow
for significant progress soon. Several other significant roads,
meanwhile, had also seen important improvements. Travelers going in
every direction from Kampala report faster drive times than a year
ago. Despite being unable to spend its budget, UNRA has contracted
improvements to the road to Gulu in northern Uganda, the road toward
Jinja east of Kampala (the only completed portion of the Northern
Corridor project),and the roads toward Fort Portal and Bushenyi in
western Uganda.

--------------
Dangers of Speeding
--------------


6. (SBU) Roads experts note that given the weak capacity of roads
authorities, throwing money at construction and maintenance firms
without proper attention to planning, design and contracting
procedures will only lead to increased corruption and shabby
workmanship. While hefty funding is necessary, they warn that the
President needs to temper his eagerness for quick construction and
allow UNRA to do its job methodically. To Ssebanakitta's credit,
UNRA has publicly emphasized the need for patience and pushed back
against the President and Transport Minister John Nasasira, the

KAMPALA 00000281 002 OF 002


latter of whom has bypassed tendering rules in favor of faster
construction in the past. As Kampala's roads attest, flouting these
rules in favor of quick contracting before the Commonwealth Heads of
Government (CHOGM) meeting in the fall of 2007 led to roads which
were in need of repair by January 2008. Kampala's roads remain
riddled with large, traffic-stopping potholes today, a result of
poor original work creating roads that need constant maintenance.
Authorities have not pressed corruption charges related to CHOGM
roads, but much of the general public, business community, and media
believe the last-minute contracting of CHOGM roads was intentional
on the part of the GOU, so that firms aligned with government
insiders could profit.

--------------
Bad Roads Keep Economy in a Rut, Too
--------------


7. (U) The improvement of Uganda's weak transport infrastructure
remains one of the country's largest economic vulnerabilities and is
highlighted by President Museveni in nearly all of his public
statements. Officials have estimated that Uganda's traffic growth
is about twice as large as the GDP growth, i.e., between 15-20%.
Uganda has about 28,000 miles of roads of which 6,213 miles are main
roads and 21,747 miles are feeder roads. Paved roads extend
primarily from the capital to Uganda's main cities and to its
borders with Kenya, Rwanda, and Tanzania.


8. (U) The Northern Corridor is Uganda's main trading artery, and
connects the interior landlocked countries of Rwanda, the Democratic
Republic of Congo, Sudan, and Uganda to the port in Mombasa. Though
some 80% of Uganda's total trade volume passes along this route, the
highway is just a two-lane road where large fuel trucks share the
road with animal herders, slow-moving agricultural machinery, and
pedestrians on foot. At least half of the trucks on the route are
overloaded, adding undue stress to this route.


9. (U) The importance of this route was demonstrated during several
months in late 2007 and early 2008 when trade to and from Kenya was
halted amid that country's post-election turmoil (reftel). The
route reopened in February 2008, but the blockage caused a
several-month spike in prices, adding as much as one percentage
point to Ugandan inflation for the year, and forcing most businesses
to rely on inventories.

--------------
Comment
--------------


10. (SBU) Many observers believe that the new urgency behind the
push for new roads is the result both of President Museveni's desire
to see faster economic growth, as well as the need to generate voter
support prior to the 2011 elections. Democracy in action. At the
same time, the President is aware of the public outcry against
corruption in road contracting, shoddy construction, and slow
progress on roads. But he remains unwilling to remove Transport
Minister Nasasira, who has been in the job since 1999 and is
Museveni's most loyal minister. As a result, though Nasasira has
claimed that 2009 will be Uganda's "year of no potholes," Ugandans
expect little short-term improvement. Over time, however, the large
allocations for Ugandan roads should lead to a substantial
improvement in the country's road network, which in turn should
generate substantial economic dividends both at home and for
Uganda's EAC neighbors.

BROWNING