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 
 
¶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