DOING BUSINESS IN UGANDA AFRICA ROADSHOW, FEB 2016 GEO-POLITICS 30 YEARS 30 years of political stability under the NRM government. However, all under President Y.K. Museveni ELECTIONS, FEB 2016 Presidential and parliamentary elections scheduled for 18 February. Key issues include peace, service delivery and corruption VOLATILE NEIGHBOURHOOD South Sudan, DRC, Burundi and Somalia currently undergoing conflict – Uganda playing active roles in peacekeeping EAST AFRICAN COMMUNITY ‘Coalition of the Willing’ Kenya, Uganda and Tanzania fast-tracking Northern corridor infrastructure projects KEY ECONOMIC INDICATORS UK EXPORTS TO UGANDA UGANDA OIL INDUSTRY SNAPSHOT 2006 $3bn First Oil Discovery in Uganda Invested in Uganda to date $12-15bn Estimated Investment Required over the next 5 -7 years 60,000 bpd Size of Oil Refinery to be Constructed 1.2 – 1.7bn Barrels of Recoverable resources 1400 km Crude Export Pipeline to Lamu Over 80% Exploration Success Rate – World Industry Average 25% 800,000 Tonnes of Material to be Imported $50bn Estimated NPV to Government of Uganda SHORT TERM PIPELINE OF OPPORTUNITIES (1-2 YEARS) Opportunity Sector Value Comments Refinery Automation Oil and Gas £123.5m Q2 2016 Critical Oil Roads Infrastructure/Oil £97m Q2 2016 CNOOC Kingfisher FEED Oil and Gas £33m Q2 2016 Silos Drier Supply Agriculture £35m Q1 2016 Tullow-Total FEED Oil and Gas £33m Q1 2016 Hoima Airport EPC Infrastructure/Oil £130m Q2 2016 Crude Export Pipeline FEED Oil and Gas TBC Q2 2016 SOGA (partnership) Education £4m Q1 2016 SGR Project Management Infrastructure TBC Q1 2016 Buloba Terminal Masterplan Oil and Gas TBC Nov 2016 Jinja Express Way Infrastructure TBC Q4 2016 MEDIUM TERM – PIPELINE OF OPPORTUNTIES (3-5 YEARS) Opportunity Sector Value Comments Bus Rapid Transport Infrastructure £400m+ Q1 2017 CNOOC Kingfisher EPC Oil and Gas £400m+ Q1 2017 Tullow-Total EPC Oil and Gas £1000m+ Q1 2017 Oil Refinery EPC Oil and Gas £800m+ Q1 2017 Crude Export Pipeline EPC Oil and Gas £1000m+ Q1 2017 Sovereign Wealth Fund Financial Services TBC Q2 2017 Power Generation Energy TBC TBC Gas to Energy Project Oil & Gas/Energy TBC TBC Kampala City Light Rail Infrastructure TBC TBC CHALLENGES TO DOING BUSINESS IN UGANDA • Infrastructure gaps (both hard and soft infrastructure) • Red Tape • High capital and financial costs • Local/National Content regulation inconsistences • Security – surrounded by a volatile region • Occasional delay in accessing foreign exchange (Ethiopia) • Falling ‘shillings’ (Exchange rate volatility) UKEF PRODUCTS • UKEF’s role is to support UK exports, principally in the form of: • trade credit insurance to exporters against the risks of non-payment for amounts owed under export contracts; • guarantees to banks to support working capital financing and raising of contract bonds on behalf of exporters; • guarantees to banks, and investors in the debt capital markets, in respect of medium/long-term loans to overseas buyers who purchase goods and services from UK exporters; • lending directly to overseas buyers who purchase goods and services from UK exporters; and • political risk insurance for investments made overseas MEDIUM & LONG TERM FINANCING UKEF can either guarantee a loan from a commercial bank or, offer direct lending which would be administered by a partner bank THE BENEFITS OF USING UKEF FINANCING • Exporter, which has to be UK operating entity, gets payment on ‘Cash Terms’ • Additional source of funding for project sponsor / importer, in range of currencies (e.g. USD, GBP, Euro, Yen, RMB) • Finance for up to 85% of contract value • Credit period typically 2-10 years (with some sector specific exceptions); up to 14 years for project finance, plus construction period • Flexible in terms of UK content – minimum 20% (and up to 30% local) • Grace period may be considered for interest payments during construction period • Low interest rate (reflecting UK Government guarantee) CONCLUSION • Uganda presents significant opportunities for business to UK companies • Infrastructural development is on fast-track to spur growth • Challenges exist, but can be overcome through prudent strategies and risk management • UK Trade and Investment is ready to support UK companies in taking advantage of opportunities in the markets • UK Export Finance is a game-changer in increasing the competitiveness of UK companies in East Africa