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Uganda’s central bank forecasts 6.3 percent
economic growth in medium term

KAMPALA Uganda (Xinhua) -- Uganda’s central bank, the Bank of Uganda, on Monday said the country’s economy will grow at 6.3 percent in the medium term.

Emmanuel Tumusiime Mutebile, the bank’s governor, told reporters that economic growth continues to strengthen, while the real gross domestic product (GDP) growth for financial year 2017/18 is estimated at 5.5 percent compared to 3.9 percent in 2016/17.

“Economic growth is projected to strengthen further in financial year 2018/19 to 6 percent and to an average of about 6.3 percent over the medium term,” Mutebile said.

He said the growth is supported by public infrastructure investments, improving agricultural productivity, recovery in foreign direct investment, and strengthening private sector credit growth. He noted that this is partly a result of the easing monetary policy.

Mutebile said there are however downside risks to the growth outlook including challenges relating to financing of public investment programs and weak external balance position coupled with escalation of global trade tensions.

“Although public investment programs could substantially raise output and be self-financing in the long run, transitional challenges of funding these investments can be formidable, and may crowd out private investment and consumption, thus delaying the growth benefits of public investment,” he said.

About the core inflation forecast, Mutebile said it will continue rising and peak in the range of 6-7 percent in the second half of financial year 2018/19 but will stabilize around the medium-term target of 5 percent by end of 2019.

He said the rise is a result of a combination of several factors that include increase in fuel prices, the closure of the negative output gap and the increased taxes.

“Key risk to the inflation outlook is the shilling exchange rate which remains vulnerable to the domestic market conditions and possibility of tighter global financial conditions. The weaker shilling exchange rate combined with higher oil price assumptions could result in a more elevated inflation trajectory,” he said.

“Food prices are projected to remain low in the forecast horizon and are not seen as a major risk to the inflation outlook, but this can quickly change depending on the weather conditions,” Mutebile said.

Stephen Kaboyo, managing director of Alpha Capital, a private financial firm, told Xinhua that the central bank will have to balance the growth outlook and the incipient risks of higher than usual inflation against a backdrop of volatility in oil prices, weakening shilling, and the impact of the recently introduced fiscal measures.

“Because of these upside inflationary risks, including supply shocks if oil prices continue to climb as well as possible further currency depreciation, the central bank will have to keep a watchful eye and maintain a neutral stance,” he said.



Construction of Uganda’s largest power plant enters final phase

KIRYANDONGO Uganda (Xinhua) -- Construction of Uganda’s largest hydropower plant has entered its final phase, with installation works taking over physical building.

Working in tunnels below River Nile in the northern Ugandan district of Kiryandongo, Chinese engineers and their Ugandan counterparts carefully install machinery for the 600 MW plant.

They work in day and night shifts to ensure that the 1.688 billion U.S. dollar Karuma Hydro Power Plant is completed within the next year.

“More than 85 percent of the work is complete. It’s not an easy job because it involves designing the structure, installation and connecting cables,” Li Huiting, the deputy project manager, told Xinhua in a recent interview.

Li is optimistic that by the end of this year, the installation of the first out of the six units would be complete.

Construction of the plant, the first in east and central Africa to be built underground, started in August 2013.

In addition to the anticipated capacity of 600 MW, the project has had a major skills transfer, especially among the youth, according to the government.

Chinese engineers and technicians work closely with their Ugandan counterparts, Li, the deputy project manager, said.

More than 6,000 youths have been employed at the construction site, according to Sinohydro, a Chinese company contracted to build the plant.

Andrew Kamagara, a local engineer, told Xinhua that he was originally a water engineer but has since expanded his knowledge base.

“I used to be scared of the structural bit, but when I came to Karuma Hydro Power Project I gained that information and it increased my confidence in structural design,” he said.

Tezita Muzahamu, another employee, told Xinhua that he has gained skills in metal welding besides rock blasting.

“I had a rough idea about welding, but right now I am an expert,” Muzahamu said. “Even if Synohydro goes and there is no blasting job yet, I can make my own workshop and start making my things.”

Development in villages near the construction site has also shown the positive effects.

Severino Opio, the local council leader of Karuma village, told Xinhua that some of the youths employed at the construction site have been able to buy land and build houses.

Karuma is a major stopover of buses to the central and northern part of the east African country. Supermarkets, saloons, hotels have sprung up, thanks to the construction of the power plant.

At the national level, the power plant is seen as a major investment that will address the country’s rising demand for electricity.

Since 2005, the share of Uganda’s population with access to electricity has increased from 9 percent to 22 percent, with the total number of customers having grown from 292,000 to more than 1.1 million, according to government figures.

The country’s power generation and installed capacity is estimated at 930 MW, according to government data.

It is estimated that 1,131 MW will be required to meet the national electricity demand by 2020.


Uganda launches mobile application to fight fall army worm

By Ronald Ssekandi MUKONO Uganda (Xinhua) -- Ernest Bongole, a farmer in the central Uganda district of Mukono, almost lost his entire one acre maize garden to the devastating fall army worm (FAW).

Bongole had anticipated that he would have a bumper harvest so that he could give some of the maize to the school where his children go.

“That caterpillar affected my maize garden a lot, I struggled to get enough maize to give to the school to allow my children to study,” he told Xinhua on Monday.

Out of desperacy, Bongole resorted to the use of pesticides, which had side effects on his skin as he did not have protective gear.

He is among the 3.6 million farmers or 9 percent of the country’s population that lost an estimated 450,000 tonnes of maize or an equivalent to 192 million U.S. dollars during the first cropping season of 2017, according to government figures.

The country on Monday launched the FAW Monitoring and Early Warning System (FAMEWS), a mobile application that can be used as a monitoring and early warning tool.

Speaking at the launch in the central Ugandan district of Mukono, Charles Owach, an official from the UN Food and Agriculture Organization (FAO), said the move is critical in ensuring food security and economic livelihood of farmers.

He said FAMEWS works as an early warning system that policy makers and government can use to warn farmers and also devise means of combating the worm that eats the leafy parts of crops like maize and rice.

Owach handed over 126 smart phones installed with the application to the Ugandan government, noting that they will be distributed to 100 villages across the country, especially in 15 districts that have had the worst effects.

Owach said it is a pilot project that will eventually be rolled out to all parts of the country to curb the threat that the worm presents to food security.

John Bahana, a specialist in FAW, said that working through farmer groups, their leaders would be provided with the phones. When they open the application, the feed in the data from the garden for instance how many worms they have seen and then send the information to a national data center.

At the data center, the information will be analyzed and basing on the results, appropriate actions will be taken at country and continental level.

Bahana said that when the devastating transboundary caterpillars pupate into a moth, they can fly up to 500 km in a day depending on the speed of wind.

He said each moth has the capacity of laying over 2,000 eggs which can hatch in a short time.

FAO also gave farmers traps lured with a chemical that attracts male months.

Bahana said once the farmers notice an increase in the number of the moths trapped, they have to start managing their gardens by spraying with insecticide.

Stephen Byantwale Tibeijuka, commissioner for crop protection at the ministry of agriculture, animal industry and fisheries said there are other methods that are still under investigation to fight the FAW.

He said preliminary research has showed that there are flies that feed on the worm and therefore can help in decimating it. Research is also ongoing on fungus and nematodes.

He urged farmers that although the destruction rate of the FAW has reduced, they should not get tired of monitoring their gardens, noting that once they notice that 2 of 10 crops are affected, they must destroy the worm.


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