Refurbishing and reconnecting
For many decades, Uganda’s economy suffered from destructive politics and instability, leaving it in a state of extreme poverty. Since the start of the 21st century however, the country has been on an upward swing.
As the national electricity distribution company, Umeme is indicative of the country’s transformation. During many years of neglect, its network of over 20,000 km of poles, sub stations and wires fell into disrepair. Termites and tropical temperatures rotted the poles leading to fallen wires along the network – often in hard-to-reach rural locations which sometimes posed safety risks to the population.
After Actis took over the ownership of Umeme following a privatisation process in 2005, the company went through a transformation phase, ramping up capital expenditure, improving the quality of management and formalising procedures. Since Actis invested in Umeme in 2009, the distribution network has been significantly improved, with 143,000 new customer connections recorded in the latest financial year of 2015, taking connections from 355,000 in 2009 to 794,000 in 2015, a reduction in energy losses from 35% to 19.5% across the same period, and an increase in sales from 1,401 GWh to 2,458 GWh.
Furthermore, no network-related fatalities were recorded in 2015, compared to 17 in 2008, helped by the introduction of a culture of safety throughout the organisation, the replacement of rotten poles (by the end of 2010, Umeme had replaced over 120,000 rotten poles as part of its refurbishment programme) and educating the population – mainly children – on the benefits and risks of electricity.
In November 2012, Umeme launched its IPO, opening up share ownership to its customers and employees. The share offering was 37% oversubscribed with very strong interest from retail customers and East African institutions.
In June 2014, a further, significant tranche of shares was sold by the firm’s subsidiary Umeme Holdings Ltd to institutional and retail investors. At the same time, a commitment was made to Uganda’s government to retain a minimum stake of 14% in Umeme for at least 24 months, in recognition of Actis’ strategic value to the business.