March 1, 2011 / 2:49 PM / in 7 years

FACTBOX-Key political risks to watch in Uganda

KAMPALA, March 1 (Reuters) - President Yoweri Museveni, one of Africa’s longest serving leaders after 25 years in power, won a huge election victory this month in a presidential poll the opposition called a “sham”.

Kizza Besigye, his closest rival who won just 26 percent of the vote to Museveni’s 68 percent, says the polls were marred by widespread bribery, ballot box stuffing and intimidation. He has called for peaceful protests.

Museveni was for years considered one of Africa’s standout leaders, astute on the economy and able to stabilise a country with a long history of strife.

He has come under increasing fire, however, for what critics see as an authoritarian streak and mounting levels of corruption which some analysts say reaches the highest levels of government, hampering economic progress.

Museveni remains at the helm of east Africa’s third largest economy to shepherd Uganda through its emergence as an oil producer and tackle the persisting security threat posed by al Qaeda-allied Somali militants, as well as local rebel groups.

Here are some of the factors to watch:


Besigye’s call for peaceful protests has so far gone unheeded. Most analysts think he is losing momentum. Some, though, say small protests could still erupt and trigger clashes with security forces.

The 54-year-old, who was Museveni’s field doctor during a five-year civil war that overthrew a military dictator, says he will not rule out armed revolt against Museveni but that he will exhaust other avenues first.

His words will raise concerns he could be jailed, which would spark fury among his supporters. Museveni has threatened to arrest him if he provokes public protests and the police have banned demonstrations against the poll result.

The opposition leader says with Museveni back in power, corruption will render oil a “total disaster” for the country.

For many investors, however, his re-election will mean a large degree of political continuity.

What to watch:

-- Any street protests and the reaction of security forces. A heavy soldier and police presence in Kampala since polling day has unnerved foreign donors and investors. They hope Besigye’s call for peaceful protests results in little or no action.

Protests are rarely peaceful. Ugandan security forces shot 33 people dead during demonstrations in 2009.

-- If Museveni follows through with his threats to have Besigye arrested, it could provoke anger on the streets.

-- A proposal by a member of the ruling National Resistance Movement to extend the presidential term to seven years from five years. If parliament passes such an act, it will fuel suspicions that Museveni wants to remain president for life, worrying potential oil and gas investors.


Somalia’s al Shabaab rebels have threatened more attacks on Uganda after their twin suicide-bomb attack on Kampala in July last year claimed 79 lives. The latest warning came on Dec. 23.

Three days earlier, one person was killed in a grenade blast on a Kampala-bound bus in Nairobi. Kenyan and Ugandan police said the explosion may have been linked to al Shabaab’s threats.

On Dec. 10, Ugandan police, acting on intelligence, seized suspected bomb making materials from another bus in Kampala.

Al Shabaab has vowed to strike Uganda and nearby Burundi until they withdraw their peacekeeping troops from Somalia’s capital, Mogadishu. The troops are all that stop insurgents from toppling the weak Somali government, many experts say.

Uganda tightened security in Kampala before the elections and has had a number of intelligence successes against al Shabaab.

What to watch:

-- More attacks by al Shabaab. Further strikes could deter foreign investment inflows, send the shilling UGX= south, disrupt the business tempo, hurt tourism and knock the economy.

-- Continued foiling of al Shabaab plans by Ugandan security forces may convince some that they are on top of the threat.


    The dispute over the tax owed on the sale of Heritage Oil’s HOIL.L Ugandan assets to Tullow Oil (TLW.L) rumbles on.

    Tullow now expects to start producing oil and gas in 2012, a significant delay on earlier plans due to the tax row. This may worry other potential investors eyeing Uganda’s energy sector.

    Though no official figures are yet available, donor sources have told Reuters they are concerned by how much money the ruling National Resistance Movement spent on the election campaign and by allegations of rampant bribery.

    The International Monetary Fund this month said it had not completed a recent evaluation of Uganda’s economy because the country’s economic policies were “inconsistent” with those previously agreed with the fund.

    The IMF did not say which policies it was unhappy with, but said a mission would visit Uganda in March.

    The Ugandan shilling plunged to a record low of 2,395/2,400 to the dollar in January as importer demand for dollars rose and both corporate clients and aid groups held on to their greenbacks ahead of the elections. The Central Bank has intervene several times, selling tens of millions of dollars to prop up the local unit.

    There is also international outrage over a bill that would impose the death penalty on homosexuals deemed “persistent offenders”. If passed it could hurt aid flows, which would have a negative impact on the shilling.

    What to watch:

    -- Uganda plans to open a new petroleum exploration licensing round for blocks in its oil-rich Albertine Rift basin in 2011. Investors will be watching how the tax dispute plays out and any changes to legislation.

    -- Personal interventions from Museveni, who wants the final say on all oil and gas deals. Opposition leader Besigye says that spells disaster for the industry.

    -- Donors cutting funding back over the election spend.

    -- Sustained post-election calm might help engineer a rally in the shilling, helping to check a rising inflation rate in the import-heavy economy.

    -- Persistent opposition rhetoric of protests and rebellion might however unsettle the market, sending it back towards record-low levels. (Editing by Richard Lough)

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