Uganda Attracts more More Investors than Kenya, Tanzania

By Eddyson Lugangwa Posted 17 October 2006 @ 03:42 pm EET     Print     Reprint     E-Mail     Comments

Kampala (IBTimes.com) - Uganda's foreign direct investment, in 2005 increased by $36 million from $222 million in 2004 to $258 million. FDI inflow indicated a 16 percent increase in 2005 up from the 14.7 percent in 2004.

According to the World Investment Report (WIR) 2006 survey carried out by the United Nations Conference on Trade and Development (Unctad) with a theme 'FDI from Developing and Transition Economies: Implications for Development' launched simultaneously world over yesterday, Uganda was ranked the front runner in the East Africa Sub-region.

This performance was attributed to the continuing macro-economic and political stability, which attracted small and Medium sized Transnational Corporations (TNCs) from other African countries like Egypt, Kenya, Mauritius and South Africa.

The Acting Executive Director Uganda Investment Authority Hajji Isa Mukasa said they registered 284 investment projects from mainly the tourism, manufacturing, construction, and real estate development sectors, which attracted FDI inflow with planned investment worth $878.6 million (Shs1.6 trillion) and 28,698 planned jobs into Uganda.

Despite the numerous constraints of namely expensive and inefficient energy supply, poor infrastructure, high costs of doing business and loans, investors still have hope in Uganda compared to her neighbour Kenya whose results fell to 0.8 percent from 1.8 percent.

East Africa

Much as the report indicated that Uganda performed well in East Africa, the sub-region's FDI inflows fell to $1.7 billion (Shs3.1 trillion) 2005 down from $1.9 billion (Shs3.4 trillion) in 2004 thus ranking the lowest in Africa at 5 percent.

The report indicated that inflows increased in 34 African countries and declined in 19 countries.

While launching the report at the Media Centre in Kampala, the Minister of State for Investments, Prof Ssemakula Kiwanuka, said; "There is a profound shift in the world economy today with some developing economies gaining economic and political weight.

For us in Uganda and Africa as a whole, this is beneficial because TNCs from developing economies are more inclined to use comparatively more labour intensive technologies in all industries, which serves to create employment for our people".

According to the WIR 2006 Africa's share of global FDI, which remained around 3 percent was tilted towards primary production, mainly in mining (oil and gas) even though there were significant increases in the services sector particularly banking.

Inflows in the manufacturing sector particularly the textiles and apparels industry declined following the end of the quotas established under the Multi Fibre Arrangement (MFA).

Reacting to the WIR 2006, Ssemakula said that if Uganda and Africa as whole is to become internationally competitive, it is essential that the necessary linkages between the export sector and the rest of the economy be strengthened.

He, however, challenged Ugandans that on many occasions the government has accessed markets but the question of sustaining the demand has failed many simply because people have failed to boost production.

"Stop blaming the government, progress will not be achieved unless production is boosted. The government has provided an enabling environment and access markets for you but you have failed to utilise and sustain these markets," Kiwanuka said.

Africa

Africa received record high FDI inflows in 2005 of $31 billion (Shs57 trillion) but this was mostly concentrated in few countries and industries. FDI remained the major source of investment as its share in gross fixed capital formation increased to 19 percent.

South Africa was the largest FDI recipient in the region experiencing a sharp jump in inflows to $6.4 billion from only $0.8 billion in 2004 and this accounted for about 21 percent of the region's total.

Globally, FDI in 2005 surged for the second consecutive year by another 29 percent reaching $916b and interesting feature of this surge all major regions participated in the increase.