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Road construction and maintenance

Road construction and maintenance

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Road construction and maintenance

Compare IOA
Country
Uganda
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
20,000 km of Uganda's roads require pavement by 2030.
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Industry, Innovation and Infrastructure (SDG 9) Sustainable Cities and Communities (SDG 11)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12)

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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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Uganda
Region
  • Uganda: Teso
  • Uganda: Central
  • Uganda: Karamoja
  • Uganda: Western
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

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)

Sub Sector

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)

Industry

Engineering and Construction Services

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Road construction and maintenance

Business Model

Construct and maintain road transport infrastructure like roads, pavements, tunnels and bridges through public-private partnership (PPP) schemes.

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

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

IRR
Describes an expected annual rate of growth of the IOA investment.

> 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

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

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

Inadequate funding for infrastructure development projects (16), high costs of land acquisition (19)

Business - Supply Chain Constraints

Institutional challenges and human resource gaps (17)

Business - Supply Chain Constraints

Weak local construction industry (18)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

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

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.6.1 Death rate due to road traffic injuries

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

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

Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

11.2.1 Proportion of population that has convenient access to public transport, by sex, age and persons with disabilities

Secondary SDGs addressed

1 - No Poverty
8 - Decent Work and Economic Growth
12 - Responsible Consumption and Production

Directly impacted stakeholders

People

Ugandan population at large, especially those in rural and remote areas, travellers, tourists

Gender inequality and/or marginalization

Women benefitting from greater economic and social mobility

Corporates

Farmers and agricultural growers and exporters, micro, small and medium enterprises, logistics companies, traders

Indirectly impacted stakeholders

Corporates

Vehicles manufacturers, other service providers

Public sector

Governments, healthcare systems due to less traffic accidents and better supply chains, public transportation

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

B—Benefit Stakeholders

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

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.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

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)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

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)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Uganda: Teso

The lowest distributions of households by the nearest trunk roads (tarmac/murram) were recorded in the subregions of Teso (4.2%), Central (6.5%), Karamoja (7.6%), Tooro (9%) and Bunyoro (10%). However, interventions are needed countrywide.(8)
urban

Uganda: Central

The Works and Transport Sector Development Plan prioritizes constructing oil roads, expressways and fly-overs in the Greater Kampala Metropolitan Area. (41)
rural

Uganda: Karamoja

The lowest distribution of households by the nearest trunk roads (tarmac/murram) has been recorded in the subregions of Teso (4.2%), Central (6.5%), Karamoja (7.6%), Tooro (9%) and Bunyoro (10%). However, the interventions are needed countrywide (8).
semi-urban

Uganda: Western

The lowest distribution of households by the nearest trunk roads (tarmac/murram) has been recorded in the subregions of Teso (4.2%), Central (6.5%), Karamoja (7.6%), Tooro (9%) and Bunyoro (10%). However, the interventions are needed countrywide (8).
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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