Road construction and maintenance
Road construction and maintenance
Business Model Description
Construct and maintain road transport infrastructure like roads, pavements, tunnels and bridges through public-private partnership (PPP) schemes.
Expected Impact
Facilitate grater social mobility and positively contributing to livelihood opportunities especially for remote and low income communities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Uganda: Teso
- Uganda: Central
- Uganda: Karamoja
- Uganda: Western
Sector Classification
Infrastructure
Development need
Inadequate infrastructure was one of the 5 key areas ‘problematic to Uganda’s progression’.(II) Accessible and modern infrastructure is crucial for developing other sectors of the economy. Thus the government will strengthen the link between infrastructure development and growth of those sector to attain the synergy effect.(III)
Policy priority
The Third National Development Plan III 2020/21 – 2024/25 prioritizes investment in resilient urbanization with affordable houses and proper waste management as well as transport infrastructure. The aim is to enhance transformation, improve living standards of citizens of Uganda and create workplaces to keep pace with the country's rapid population growth.(III)
Infrastructure
Development need
Transport infrastructure and services and urban development are mentioned as the key sectors for accelerating Uganda's economic growth in the Vision 2040 strategic plan, and are therefore policy priorities for the government.(IV)
Policy priority
The Works and Transport Sector Development Plan (WTSDP) 2015/16 – 2019/20 explicitly outlines the government's emphasis on developing roads and transport.(V)
Engineering and Construction Services
Pipeline Opportunity
Road construction and maintenance
Construct and maintain road transport infrastructure like roads, pavements, tunnels and bridges through public-private partnership (PPP) schemes.
Business Case
Market Size and Environment
20,000 km of Uganda's roads require pavement by 2030.
20,000 km of roads require pavement by 2030, with another 20,000 km by 2050.(14) Uganda's road network measures 144,785 km, only 5,016 km of which are paved (in 2018/19).(13)
Uganda plans to increase the proportion of paved roads to total national road network - as a roads category - to 36% (7,500 km) by 2024/25. The government's ambition is to have 35,250 km of paved road by 2030 and 65,700 km by 2050.(14)
In 2017/2018, around 60% of Ugandan roads were in fair to good condition. Government wants to increase that number to 80% by 2024/25.(15)
Indicative Return
> 25%
Investors active in this space in Kenya expect an internal rate of return (IRR) of 24%.(34)
The road maintenance report from Ghana provides an IRR of around 30% - 35%.(35)
A report prepared for the UK Government’s Department for International Development on profitability of infrastructure investments in Africa estimated highway construction projects may generate an average IRR of approximately 32%.(36)
Investment Timeframe
Long Term (10+ years)
A private sector stakeholder estimated contracts for road construction and maintenance are usually organized for around 10 years.(39)
According to sources, the timeframe usually depends on the length of the road and the scope of work for maintenance. For unpaved roads, it's 4-5 years, while for paved roads it's 8 - 10 years. Contracts may be signed for more than 10 and up to 30 years.(40)
According to appraisal reports from the African Development Bank (AfDB), constructing a road takes 2 - 3 years. Financial analysis was prepared for 20 years (37),(38), similar with the designed life of the same period.(36)
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Business - Supply Chain Constraints
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Uganda's road network measures 144,785 km. The National Road Network category covers 20,856 km (2019).(1) The overall network is considered to be one of the poorest in east Africa.(2)
83% of households in Uganda indicated experiencing constraints when using the nearest roads. Regardless the type of the road, potholes, bushy roads and poor drainage are the most common constraints reported, caused by poor maintenance.(4)
In 2019, 12,858 road traffic accidents occurred (14,690 casualties); 47% of them were serious and 27% were fatal crashes.(5) Ugandan roads carry 95% of freight traffic (facilitating export) and 99% of passenger traffic. They contribute 3% to the country’s gross domestic product (GDP).(7)
Gender & Marginalisation
Women are expected to be particularly affected by limited mobility options, which negatively impact livelihood opportunities.
Women are expected to be particularly affected by limited mobility options, which negatively impact livelihood opportunities.
Expected Development Outcome
Transport cost reductions; input price reductions, by minimizing unexploited opportunities; increased access to a diverse base of inputs such as raw materials, energy or labor
Improved access to markets adding to economies of scale in production, distribution and consumption; social mobility benefits due to broader access to e.g. education, health and administration services as well as employment opportunities.
Reduced negative effects resulting from isolation, improved time of delivery and reduced losses and damage to transported goods (e.g. agricultural sensitive products); increased complementary economic benefits due to businesses or other activities attracted to the area
Gender & Marginalisation
Greater mobility options for women to support household needs, especially through improved market needs and emerging income generation opportunities
Primary SDGs addressed
3.6.1 Death rate due to road traffic injuries
9.1.1 Proportion of the rural population who live within 2 km of an all-season road
9.1.2 Passenger and freight volumes, by mode of transport
11.2.1 Proportion of population that has convenient access to public transport, by sex, age and persons with disabilities
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
The most critical aspects of roads construction and maintenance relate to land use change and its adverse effects on air, soils, water, and aquatic and terrestrial wildlife.(20)
Increased traffic and potential congestion, as well as increased CO2 emissions from cars and transport (22)
Impact Classification
What
Reduced transport costs, improved access to markets, multiple social mobility benefits and better social inclusion as well as reduced delivery time and losses in transported goods
Who
Urban and rural households, small and medium-sized farms and isolated communities who are aggrieved due to the limited and poor quality integrated transport infrastructure network
Risk
High costs of land acquisition may hinder the roll out of projects. Negative environmental impacts of road construction and its other life cycle stages need to be addressed and minimized.
Impact Thesis
Facilitate grater social mobility and positively contributing to livelihood opportunities especially for remote and low income communities.
Enabling Environment
Policy Environment
3rd National Development Plan (NDPIII): This plan announced sequential and coordinated infrastructure investments in roads to increase productivity, and in turn expand exports and the production of goods for the internal market.(9)
Works and Transport Sector Development Plan 2015/16 - 2019/20: This plan sets out a framework for developing the Works and Transport sector. It presents sector priorities, interventions and cross-cutting issues for investment and interventions.(10)
National Transport Master Plan 2008-2023: This plan provides analysis and a sector investment plan, while emphasizing the key role that transport plays in facilitating economic and social development.(11)
Uganda Vision 2040: This strategy states the urgent need for integrated transport infrastructure network to spur Uganda`s economic growth. The goal is to develop road infrastructure (100 km per 1000 sq. km), which is the equivalent of the infrastructure built in developed countries.(12)
Financial Environment
Fiscal incentives: Earth moving equipment is free from import duty by tariff and value added tax (VAT) is deferrable.(30). Surveying equipment is free from import duty by tariff and VAT is payable. (31). Goods carrying vehicles come with 10% import duty or are free from import duty for one year.(32)
Regulatory Environment
Traffic and Road Safety Act 1998: This Act regulates matters related to registering and licensing motor vehicles, driving permits and licenses for public service as well as traffic control (including road closures).(23)
Access to Roads Act 2000: Under this Act, a private landowner who has no reasonable means of access to a public highway, may apply for leave to construct a road of access to a public highway.(24)
Uganda National Roads Authority Act 2006: This Act establishes the Uganda National Roads Authority, the body responsible for developing, maintaining and managing the national roads network. The Act defines the Authority's functions and regulates its operations.(25)
Uganda Road Fund Act 2008: This Act establishes the Uganda Road Fund, which finances maintenance of public roads and facilitates the delivery of road maintenance services.(26)
Roads Act 2019: This Act appoints the Uganda National Roads Authority, local government councils, urban councils and city authorities as roads authorities, which are responsible for developing, maintaining, controlling and managing public roads, road reserves, and facilitating applicable laws.(27)
Marketplace Participants
Private Sector
OPEC Fund for International Development (OFID), KASTHEW Construction Company Uganda Ltd, Mutoni Construction Uganda Ltd, Amandec Tarmac Uganda Ltd, Stirling Civil Engineering Ltd
Government
Ministry of Works and Transport (MWT), Uganda National Roads Authority (UNRA), National Road Safety Council (NRSC), Community Road Empowerment (CORE), Institute for Transportation and Development Policy (ITDP)
Multilaterals
International Monetary Fund (IMF), World Bank (WB), African Development Bank (AfDB), KfW, World Economic Forum (WEF), United Nations Economic Commission for Africa (UNECA)
Non-Profit
United States Agency for International Development (USAID), German Corporation for International Cooperation (GIZ), Agence Française de Développement (AFD)
Target Locations
Uganda: Teso
Uganda: Central
Uganda: Karamoja
Uganda: Western
References
- (I) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press. (II) Schwab, K. (2016). The Global Competitiveness Report 2015–2016. http://www3.weforum.org/docs/gcr/2015-2016/Global_Competitiveness_Report_2015-2016.pdf (III) National Planning Authority (2020). National Development Plan III (NDPIII) 2020/21 – 2024/25. (IV) Government of Uganda. Uganda Vision 2040. https://consultations.worldbank.org/sites/default/files/materials/consultation-template/materials/vision20204011.pdf (V) Ministry of Works and Transport. Works and Transport Sector Development Plan (WTSDP) 2015/16 – 2019/20. (VI) Ministry of Finance, Planning and Economic Development. Strategic Plan 2016-2021. https://www.finance.go.ug/sites/default/files/Publications/MOFPED%20STRATEGIC%20PLAN%202016_2021%20printed.pdf
- (1) Uganda Bureau of Statistics (2020). National Road Network In Uganda (km) 2012/2013 - 2018/2019. https://www.ubos.org/explore-statistics/29/
- (2) Adiki, G. (2015). Uganda’s Poor Road Network Is Threatening Regional Trade And Development. Development and Cooperation D+C. https://www.dandc.eu/en/article/ugandas-poor-road-network-threatening-regional-trade-and-development
- (3), (4), (8) Uganda Bureau of Statistics (2015). National Service Delivery Survey 2015 Report.https://www.ubos.org/wp-content/uploads/publications/03_20182015_NSDS_report.pdf
- (5) Uganda Bureau of Statistics (2020). Statistical Abstract 2020. https://www.ubos.org/wp-content/uploads/publications/11_2020STATISTICAL__ABSTRACT_2020.pdf
- (6) Muzira, S. and Hernandez de Diaz, D. (2014). Rethinking Infrastructure Delivery: Case Study Of A Green, Inclusive, And Cost-Effective Road Program In Nicaragua. Transport Papers. http://documents1.worldbank.org/curated/en/643741468053329295/pdf/886640NWP0TP430Box385228B00PUBLIC0.pdf
- (7) Thompson, T. and Eijbergen, B. (2020). Uganda: Building Resilient And Community-Responsive Road Infrastructure. World Bank Blogs. https://blogs.worldbank.org/nasikiliza/uganda-building-resilient-and-community-responsive-road-infrastructure
- (9) National Planning Authority (2020). Third National Development Plan (NDPIII) 2020/21-2024/25. http://www.npa.go.ug/wp-content/uploads/2020/08/NDPIII-Finale_Compressed.pdf
- (10) Ministry of Works and Transport (2017). Works And Transport Sector Development Plan 2015/16 - 2019/20. Republic of Uganda. http://npa.go.ug/wp-content/uploads/2018/01/W_T-Sector-Development-Plan-Final.pdf
- (11) Ministry of Works and Transport (2009). National Transport Master Plan 2008-2023. Republic of Uganda. http://www.works.go.ug/documents/national-transport-master-plan-2008-2023/
- (12) National Planning Authority (2013). Uganda Vision 2040. The Republic of Uganda. https://www.greengrowthknowledge.org/sites/default/files/downloads/policy-database/UGANDA%29%20Vision%202040.pdf
- (13) Uganda Bureau of Statistics (2020). National Road Network In Uganda (km) 2012/2013 - 2018/2019. https://www.ubos.org/explore-statistics/29/
- (14), (15) National Planning Authority (2020). National Development Plan III (NDPIII) 2020/21 - 2024/25. http://www.npa.go.ug/wp-content/uploads/2020/08/NDPIII-Finale_Compressed.pdf
- (16), (17), (18), (19), (41) Ministry of Works and Transport (2017). Works And Transport Sector Development Plan 2015/16 - 2019/20. Republic of Uganda. http://npa.go.ug/wp-content/uploads/2018/01/W_T-Sector-Development-Plan-Final.pdf
- (20) Daigle, P. (2010). 'A Summary Of The Environmental Impacts Of Roads, Management Responses, And Research Gaps: A Literature Review', BC Journal of Ecosystems and Management. https://cascadiapartnerforum.org/wp-content/uploads/2013/10/38-107-1-PB_PatrickDaigle.pdf
- (21) Marzouk, M., Abdelkader, E. and Aboushady, A. (2017). 'Assessing Environmental Impact Indicators In Road Construction Projects In Developing Countries', Sustainability. https://www.mdpi.com/2071-1050/9/5/843
- (22) Ugochukwu, S., Mbakwe, C. and Ajator, U. (2017). 'Construction Externalities: A Theoretical Insight And The Nigerian Scenario', International Journal of Developing and Emerging Economies. http://www.eajournals.org/wp-content/uploads/Construction-Externalities-A-Theoretical-Insightand-the-Nigerian-Scenario.pdf
- (23) Government of Uganda (1998). Traffic And Road Safety Act 1998. https://ulii.org/ug/legislation/consolidated-act/361
- (24) Government of Uganda (2000). Access To Roads Act 350. https://ulii.org/node/23771
- (25) Government of Uganda (2006). Uganda National Roads Authority Act. https://ulii.org/ug/legislation/act/2015/2006-16
- (26) Government of Uganda (2008). Uganda Road Fund Act. https://ulii.org/ug/legislation/act/2015/15
- (27) Government of Uganda (2019). Roads Act. https://ulii.org/ug/legislation/act/2019/16
- (28) Ministry of Works and Transport (2020). Our Philosophy. https://www.works.go.ug/our-philosophy
- (29) Uganda National Roads Authority (2020). Who We Are. https://www.unra.go.ug/who-we-are/
- (30), (31), (32), (33) Uganda Revenue Authority (2019). A Guide On Tax Incentives/Exemptions Available To The Uganda Investors. https://www.ebiz.go.ug/wp-content/uploads/2020/03/TAX_INCENTIVES_GUIDE_FOR_INVESTORS_IN_UGANDA_October_2019.pdf
- (34) UKAid (2015). Ghana country case study: Mobilising Finance for Infrastructure - A Study for the UK Department for International Development (DFID). https://library.pppknowledgelab.org/documents/3567/download
- (35) Forster, A. and Mensah, C.A. (2013). Enhancing Urban Roads Maintenance in Ghana: Implications for Sustainable Urban Development, Civil and Environmental Research. https://core.ac.uk/download/pdf/234677645.pdf
- (36) Luiu, C. , Torbaghan, M.E. and Burrow, M. (2018). 'Rates of return for railway infrastructure investments in Africa', K4D Research. https://assets.publishing.service.gov.uk/media/5c7013c1ed915d4a3306533c/422_Rates_of_Return_for_Railway_Infrastructure.pdf
- (37) Africa Development Fund (2003). Road Infrastructure Project (Eastern and Wester Region) - Appraisal Report. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Ghana_-_Road_Infrastructure_Project_-_Appraisal_Report.pdf
- (38) African Development Fund (2019). Project: Eastern Corridor Road Development Programme - Phase 1. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Ghana_-_Eastern_corridor_road_development_programme_-_phase_1_-_Appraisal_Report.pdf
- (39) UNDP/PwC stakeholder interviews, 2020.
- (40) Asian Development Bank (2018). Guide to performance-based road maintenance contracts. https://www.adb.org/sites/default/files/institutional-document/415301/guide-performance-based-road-maintenance-contracts.pdf