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Cablegate: Scenesetter for Transportation Deputy Secretary's Visit To

VZCZCXRO3299
RR RUEHROV
DE RUEHKM #0475/01 0950908
ZNR UUUUU ZZH
R 040908Z APR 08
FM AMEMBASSY KAMPALA
TO RUEHC/SECSTATE WASHDC 0184
INFO RUCNIAD/IGAD COLLECTIVE
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC

UNCLAS SECTION 01 OF 02 KAMPALA 000475

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EAIR ELTN ETRD EAID PGOV UG
SUBJECT: SCENESETTER FOR TRANSPORTATION DEPUTY SECRETARY'S VISIT TO
UGANDA (APRIL 16-18)

1. As requested, the following message provides an overview of the
transport sector in Uganda for the visit of the Deputy Secretary of
Transportation (April 16-18).

2. SUMMARY: The Ugandan transport sector is experiencing a period
of rapid growth, due to Government of Uganda (GOU), private sector,
and donor community investments. President Museveni views Uganda's
land-locked status as a major impediment to development, and is
preoccupied with increasing routes to the sea. Unrest in Kenya
earlier this year blocked Uganda's primary route to the sea,
demonstrating its dependence on a single dilapidated road/rail
route. Air traffic has increased substantially, alleviating some
international travel and transport challenges for high-value goods.
Uganda has partnered with the East African Community (EAC) countries
to meet International Civil Aviation Organization (ICAO) standards
with the help of Safe Skies for Africa, a U.S. initiative. Uganda
is investing in the development of its railroad, ferry, and road
links with its neighbors to provide alternative transport routes to
the sea. U.S. programs, such as Safe Skies, are viewed favorably in
Uganda, because they link Ugandans and Ugandan products to
international markets and opportunities. END SUMMARY.

3. Major transport infrastructure deficiencies remain throughout
Uganda, despite the transport and communication sector's annual
average growth rate of 19.2 percent since 2002. The sector's
contribution to GDP increased to 9.6 percent in 2006, from 5.2
percent in 2001. The International Monetary Fund predicts seven
percent economic growth rate in 2008, driven largely by GOU, private
sector, and donor community commitment to construct and upgrade
regional transportation networks.

4. For almost two months following the announcement of the Kenyan
election results in late December 2007, trade links that connect
Uganda, Rwanda, Burundi, eastern Democratic Republic of Congo (DRC),
and Southern Sudan to the sea were halted frequently by road blocks
and violence in Kenya, and fear on the part of truck drivers
crossing Kenya en route to Mombasa. In Uganda, the public decried
the country's reliance on a single trade route, as well as the
Government's inability to respond quickly to the crisis. Though
trade routes through Kenya have since reopened, the Government of
Uganda is working with Tanzanian authorities to develop an
alternative trade route for petroleum products and other goods. The
goal is to increase the percentage of trade flowing through Tanzania
to 30 percent, from the current share of around ten percent.

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Air Transport Takes Flight
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5. The EAC countries (Uganda, Kenya, Tanzania, Rwanda, and Burundi)
are working together as a regional block, in partnership with the
U.S., to improve aviation infrastructure and meet ICAO standards.
In Uganda, the Safe Skies for Africa initiative has resulted in
notable safety improvements, especially in the lead up to the
Commonwealth Heads of Government Meeting (CHOGM), held in Kampala in
November 2007. A new digital CCTV system and control room have been
added to the airport and will be upgraded over time to improve
surveillance of the airport terminal area. Uganda Civil Aviation
Authority (CAA) employees have access to upgraded communications
equipment. The CAA plans to provide more training to safety and
security personnel as they develop their oversight programs in
coordination with Uganda's EAC partners.

6. Air traffic has increased substantially in the past several
years with a number of daily direct flights to regional and European
hubs. There are 26 airports in Uganda, four of which have paved
runways, including Uganda's international airport in Entebbe.
Passenger air traffic grew about 22 percent in 2007, compared to a
16.6 percent growth rate in 2006, to an estimated 350,000 passengers
entering the country via air. Kenya Airways, Ethiopian Airways, Air
Tanzania, South African Airways, and Rwanda Air Express have added
flights to Uganda. In 2007, KLM began offering four direct flights
a week between Amsterdam and Entebbe. British Airways now has
direct flights between London and Entebbe. As of 2007, Air Uganda,
a domestic carrier, started operating daily regional flights to
Juba, Southern Sudan, and to Kenya and Tanzania. The main cargo
carrier in Uganda, DAS Air, closed in January.

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Rail Network: Getting Back on Track
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7. The main railway line runs from Kenya, through Kampala to
Kilembe, in western Uganda. The rest of the approximately 800 miles
of rail track in Uganda is inoperational. In September 2007, the
Government of Uganda announced plans for a large network of
additional railway lines within the EAC. The Government is
considering building and improving rail links between Uganda and
Southern Sudan, Ethiopia, and the Democratic Republic of Congo
(DRC).


KAMPALA 00000475 002 OF 002


8. The Government of Uganda privatized the Uganda Railways
Corporation in November 2006. This line is a key part of East
Africa's transport and trade infrastructure. The Rift Valley
Railways Consortium (RVRC), led by a South African firm, paid USD
288 million for a 25 year concession to manage and operate the
railway, which links Uganda with the sea at Mombasa, Kenya. At the
time of privatization, the government-owned railway company had
almost totally collapsed. The new management reduced the work force
from 1,300 to 550 to ensure efficiency. The Rift Valley Railways
Consortium estimates that it will be four years before it
reestablishes passenger services. In late 2007, the RVRC announced
that it planned to invest USD 130 million over the next five years
in the railway line. On completion, the share of cargo that is
moved by train between Mombasa and Uganda is expected to surge to 75
percent from the current share of 9 percent. The railway transports
60,000 tons of cargo, primarily raw materials, into Uganda each
month. It exports about 20,000 tons of cargo per month.

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Water Transport Needs: Shape Up to Ship Out
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9. Formerly, steamships carried cargo and passengers along the
country's major lakes and navigable rivers. Today, Lake Victoria
has a limited capacity to transport commercial traffic, and there is
no regular service on the Nile or other lakes. Two freighters,
Motor Vessel (MV) Pamba and MV Kawa, which transported goods across
Lake Victoria from Tanzania, collided in 2005 and were rendered
inoperable. The Government has secured funds to repair the two
vessels, as part of an effort to increase traffic on Lake Victoria
by the end of the year. The first privately owned ferry company to
transport goods on Lake Victoria, Kamanga Ferry Limited (KFL), was
commissioned in March 2008. KFL has a fleet of three ferries with a
capacity of 270 tons each. Water transport is three to four times
cheaper than road transport from Tanzania to Kampala.

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On the Road to Improvement
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10. The roads in Kampala were significantly improved for CHOGM, but
road repair, maintenance, and rehabilitation are needed in the
cities and outlying areas. In the capital and in rural areas, many
roads are impassable during the rainy season. 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. The number of traffic accidents throughout
the country is high due in part to poor road conditions.

11. The Lagos-Mombasa Highway, part of the Trans-Africa Highway
network that aims to link East and West Africa, runs through
Kampala. However, part of the route across DRC and the Central
African Republic requires reconstruction in order to reach West
Africa. The European Union recently signed a USD 110 million grant
to Uganda for the rehabilitation of parts of the Northern Transport
Corridor, which runs from Mombasa, Kenya through Uganda into Rwanda
and the DRC. The corridor connects the interior landlocked
countries to the Mombasa port.

- - - -
Comment
- - - -

12. Transport needs in Uganda are vast. As a land-locked country,
which relies on poorly maintained roads and rail system for trade
links to the sea, Uganda stands to benefit greatly from an improved
transport network. Aviation infrastructure is by far the most
advanced of all the transport infrastructure, thanks in part to U.S.
engagement, and GOU prioritization leading up to CHOGM in 2007.

BROWNING

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