Uganda and UAE ramp up economic deals

Alamy via Reuters

The landlocked East African nation of Uganda is set to claim the title of oil producer at the end of 2026. 

A $5 billion, 1,443km pipeline is under construction that will take crude oil from projects being developed by TotalEnergies and China National Offshore Oil Corporation in the Lake Albert region to an export terminal north of Tanga port in Tanzania. 

Oil production of 230,000 barrels a day (bpd) is expected to provide a major fillip to Uganda’s economy, driving growth into double figures. But becoming an oil producer is just the start of the government’s ambitions.

Five-year development plan

Kampala wants to double the size of the economy in the next five years and achieve 10-fold growth in the next 15 years, increasing GDP from $53 billion last year to $500 billion by 2040. The plan is to increase production and value addition in agriculture, manufacturing, minerals and energy, while also expanding transport, tourism, real estate, ICT and financial services. 

The cost of executing Uganda’s next five-year development plan is estimated at $160 billion; about a third of this is expected to come from the private sector. 

It is against this backdrop that in December Dubai Chambers led a trade mission to Kampala, organising 308 business meetings for 29 Dubai-based companies with the aim of helping them expand into this East African market. The companies were drawn from diverse industries including construction and building materials, engineering, food and beverages, energy, healthcare, agritech and IT – sectors all seen as ripe for investment. 

A month earlier, Sharjah Chamber of Commerce and Industry also took a delegation of business leaders to Uganda, where government officials sought to woo investment from the UAE-based companies. And previously, in November 2023, a group of Abu Dhabi firms headed to Kampala for discussions, among them representatives of Etihad Rail, E20 Investment, Adnoc, G42, IHC and Masdar.

Uganda’s President Yoweri Museveni reinforced the appeal for investment at the Abu Dhabi Sustainability Week Summit on 16 January, rather than addressing his assigned topic of Uganda’s green transformation.

“We invite investors from around the world to come and help us do this rapid transformation of our economy and society,” he said.

In October, Turkey’s Yapi Merkezi was awarded a $3 billion contract to design and build a 273km standard gauge railway from Kampala to the Kenyan border. When finished in four years’ time, the new line will reduce travel time to the Port of Mombasa in neighbouring Kenya to 24 hours, from the 14 days it takes using the dilapidated colonial era metre-gauge railway.

Another vital transport project underway is the construction of the $318 million Kabalega International Airport in the Hoima district. The airport, which is about 96 percent complete, will support the development of the adjacent oil and gas industrial park.

Energy development

Kabalega Industrial Park is planned to be home to a $5 billion refinery, petrochemicals plants, fertiliser production, agro-processing facilities and a host of other industries. In December 2023, the Ugandan government signed a memorandum of understanding with Alpha MBM Investments – the private investment office of Dubai’s Sheikh Mohammed bin Maktoum bin Juma Al Maktoum – to build the 60,000 bpd refinery, placing the UAE at the heart of Uganda’s ambitions.

To support the 10-fold expansion of the economy, Uganda is looking to add 50 gigawatts of electricity generation capacity by 2040, including geothermal, wind, hydro, solar, nuclear and hydrogen, at an estimated cost of $250 billion. Regulations allow for unsolicited bids for power projects.

Here, too, the UAE is onboard. In August, Dubai-headquartered Amea Power began construction of a 24 megawatt solar project across 52 hectares in Uganda’s West Nile region which is due for completion in the third quarter of this year. And Masdar has agreed to develop 1 GW of solar capacity at Bulambuli in eastern Uganda in phases. 

Grid infrastructure is a bottleneck in Uganda’s energy system, but the government is now addressing this through the country’s first independent transmission project. It is estimated that $3 billion of investment is needed by 2040 to upgrade and extend the transmission and distribution network to achieve universal access to electricity. Private capital is also being sought for the roads sector and to improve sanitation and water delivery. A new petroleum exploration licensing round is due to be launched in 2025/26.

The tourism sector, too, is attracting UAE investment. Sharjah Chamber of Commerce is leading a project to build an international airport and 15 five-star hotels to boost tourism to Kidepo National Park in the north-east of the country.

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African leaders are always inspired when they visit the UAE and see the transformation the country has undergone over the past 50 years with the help of hydrocarbons revenues. But they should not let themselves get blinded by the bling.

It is easier to start from a clean page, turning empty swathes of desert into burgeoning metropolises. The challenge Uganda faces is altogether different. About half of the country’s 46 million population lives without access to electricity. Most people still use solid biomass for cooking, and less than a third have access to safely managed drinking water and sanitation. 

Uganda’s population set to more than double by 2050. Its priority as an oil producer must be to lift people out of poverty rather than creating a new wealthy elite. That could mean less emphasis on building five-star hotels and more emphasis on expanding high-value food and agricultural exports to the UAE.

Liz Bains is a projects-focused business journalist covering Africa and the Middle East