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In mid-2011 Uganda was in a relatively shaky position, with high levels of inflation, high prices, a weak currency and social instability. In a sign of social tension, the government acted to ban public protests while so called a 'walk-to-work' protest campaigns hit the streets in April 2011....

In mid-2011 Uganda was in a relatively shaky position, with high levels of inflation, high prices, a weak currency and social instability. In a sign of social tension, the government acted to ban public protests while so called a 'walk-to-work' protest campaigns hit the streets in April 2011.

The country, says commentators, has had "a bit of a roller coaster ride this year because of the elections [in February 2011], some things have gone absolutely upside down and there was a fear of ending up like Libya. So much money was pumped into the elections, into the campaigns, and then the government spent $750 million buying military jets..." These lavish expenditures have played havoc with inflation. "There is a reluctance to do major dollar projects due to the volatility of the currency and until it is stable there will be uncertainty," says a partner.

On this backdrop, there are some veyr positive signs in terms of investment potential. The key development in Uganda has been the discovery and, confirmation of the discovery, of commercial quantities of oil in the Albertine region of the country. "It is exciting, everyone is recruiting very heavily in oil and gas now," says a local partner.

Firms note that there is a rush for land in the surrounding area while oil companies lay the ground for establishing refineries. Tullow Oil is currently in negotiations with the government to develop the oil fields and commercial exports are expected in the next three to four years, estimates one partner. The oil has also drawn the attention of Chinese oil company CNOC.

Local banks, say partners, will have to pool resources to be able to service the new demands for financing from the sector. "Local banks are expanding but because of expectations of oil they have raised capital requirements to 25 billion shillings. The banks need to be bigger to support the economy," says a partner.

Telecoms has also been vibrant. Bharti Airtel's acquisition of Zain Telecom, which affects all of East Africa, was completed in June 2010 for $8.97 billion while locally in Uganda there has been a restructuring in the telecom sector, with telecom companies selling communication towers to specialised companies. "Now there are telecom companies and then owners of the telecom towers, which lease towers to the companies, making it is easier for a company to set up and more competitive," says a partner.

Partners note that the Ugandan Stock Exchange was one of the best performing in the region and point to energy and power as a source for future work. "Energy is still active and has remained the most consistent, with ups and downs but the fact is that we don't have enough power to light up the country and do everything the government wants us to do, there is a shortage, there is encouragement for mini-hydro plants, the opportunities are limitless in power".