Uganda attracts largest share of foreign direct investment in East Africa
Deputy Speaker of Parliament Thomas Tayebwa (center) inspects a production line at Unisteel in Mbale District recently. The EAC report attributes Uganda's FDI posting to good policies and regulatory maturity of the digital economy. Photo / File
What you need to know:
- In the five years to 2023, Uganda attracted 24 percent of the total foreign direct investment that entered the East African region
Uganda attracted the largest share of foreign direct investment (FDI) in the five years to December 2023, a report by the East African Community (EAC) Secretariat shows.
The EAC Trade and Investment Report 2023, which highlights prospects for enhancement of trade and investment, indicates that between 2019 and 2023, the majority of EAC member states experienced an annual increase in FDI inflows, resulting into the creation of 677,575 jobs, of which 31.1 percent and 26 percent were created in Uganda and Rwanda, respectively.
Foreign direct investment remains key in job creation among East African member states, all of which continue to struggle with rising unemployment, especially among the youth.
Governments across the region have over the years put in place measures and policies, such as offering tax holidays, free land, and liberalisation of capital accounts to enhance their countries as investment hubs.
During the five years, the report notes that the seven EAC member states, including Uganda, Rwanda, Kenya, DR Congo, Tanzania, Burundi, and South Africa, attracted $37.2b (Shs136 trillion) worth of FDI, resulting in the creation of 677,575 jobs.
Uganda attracted the largest share, making the country a key investment destination in the region.
Computed data indicates that of the $37.2b (Shs136 trillion), at least $8.95b (Shs32.7 trillion) or 24 percent was invested in Uganda, resulting in creation of 211,220 jobs across manufacturing, agro-processing, and ICT, among others.
Uganda’s performance was largely driven by targeted policies such as the double taxation treaties the country has with three of the top 10 investment sources - India, United Kingdom, and Mauritius – and the regulatory maturity of the digital economy, which had encouraged the creation of a competitive, transparent and fair investment environment.
Ministry of Finance permanent secretary Ramathan Ggoobi, said at the weekend that Uganda is benefiting from President Museveni’s persistent promotion of private sector investment and maintaining consistent policies regarding foreign direct investment.
“President Museveni has arguably been the number one promoter of private sector investment in Africa and his government policy on [foreign direct investment] has been consistent for many years. Investors want policy consistency and predictability,” he said, noting that Uganda is also benefiting from its ambitious investment in energy, which has reduced the cost of electricity to $0.170 (Shs622.2) per kilowatt hour, proximity to key markets such as DR Congo, South Sudan, and Kenya, and the country’s comparatively cheaper labour.
FDI inflows and jobs created since 2019
Country | Value | Share | Jobs |
Uganda | $8.95b | 24% | 211,220 |
Rwanda | $6.99b | 18.7% | 176,410 |
DR Congo | $6.37b | 17.1% | |
Tanzania | $5.91b | 15.8% | 138,316 |
Burundi | $4.96b | 13.3% | 50,314 |
South Sudan | $4.68b | 12.5% | 53,331 |
Kenya | $3.54b | 9.51% | 47,984 |
Total | $37.25b | 677,575 |
Rwanda and DR Congo follow Uganda, attracting a percentage share of 18.7 percent and 17.1 percent, which is equivalent to $6.99b (Shs25.5 trillion) and $6.37b (Shs23.3 trillion), respectively.
The $6.99b investment capital resulted in 176,410 for Rwanda. However, no data was provided regarding the number of created jobs in DR Congo.
Tanzania and Burundi, which received $5.91b (Shs21.6 trillion) and $4.96b (Shs18.1 trillion), respectively complete the list of top five largest recipients of foreign direct investment in East Africa.
South Sudan and Kenya attracted the least amount among the seven East African member states, receiving a share of 12.5 percent and 9.51 percent, which was equivalent to $4.68b (Shs17.1 trillion) and $3.54b (Shs12.9 trillion), respectively.
