INFRASTRUCTURE: Region (MRB Oct 01 2001): SA seeks finance and transport inroads in Uganda.

South Africa's Stanbic bank is hoping to make a significant entry into the Ugandan financial system by its planned US$11m purchase of a 49% equity stake in the Uganda Commercial Bank (UCB).

But this month the Ugandan parliament rejected UCB's sale to foreign investors, saying that the sale had not been properly organised, and that the dominance of foreign banks could undermine national interests and deny access to local investors. Only 3% of Ugandans use banks. Stanbic, Standard Chartered, Citibank and Bank of Baroda control 74% of Uganda's bank business.

East Africa rail link

On other fronts South Africa is also moving into Uganda. The South African company Makhosi Holdings is exploring the possibility of a rail connection to Uganda through Kasese, in Western Uganda. It is working on a feasibility study for the development of a network linking the Great Lakes Region to Southern Africa, a study sanctioned by Ministers of Transport and Communications in the Common Market for Eastern and Southern Africa (COMESA). Uganda Railways Corporation (URC) has a USAID-funded pre-privatisation study.

Kenya is concerned that the planned railway project linking Uganda to South African ports may lose it traffic. Uganda uses Mombasa port for 80% of its freight

Meanwhile a 50-50 consortium of Canadian and South African companies, Heritage Oil and Gas and Energy Africa, is to start oil exploration under the name Eagle Drill in Uganda's Rift Valley in March. Exploration will take place in a 3,100 sq km area near Lake Albert in western Uganda. A drilling rig being rehabilitated in South Africa will be shipped to Uganda before the end of the year.

South African investments in Uganda topped US$100m earlier this year, while exports to Uganda have reached $40m.