By Our Reporters
· Uganda got the largest share with $10.2 billion in FDI , created 6,300 jobs
· Kenya remained by far the largest destination in East Africa when measured by number
Uganda has beaten neighbor Kenya and Tanzania by receiving the highest amount of Foreign Direct Investments (FDI).
With the Global North closing its doors on Uganda because of its stand against the promotion of Homosexuality and passing the Anti Homosexual Law, government led by President Yoweri Museveni has had to look elsewhere to bring the much needed investments for economic growth and national development .
Much of Uganda’s FDI is coming from France , the Arab world ,Asia and within Africa.
Uganda ,Kenya and Tanzania attracted over $13.3 billion worth of foreign direct investment (FDI) in 2022, helping them create thousands of new jobs.
The latest investment report by business advisory firm Ernst & Young shows that Uganda recorded a high of $10.2 billion — the highest in East Africa — creating 6,300 jobs.
Investment inflows into Kenya increased by 117 percent year-on-year, bringing in $2 billion in capital investment and generating 7,819 jobs, with most of the investment going into the business services, technology, and transportation and warehousing sectors.
In Tanzania, FDIs rose by 133 percent to reach pre-Covid-19 pandemic levels, with 21 projects worth $1.3 billion and creating Kenya is by far the largest destination in the region when measured by number of projects, while Uganda received the most capital via investment from France in the oil and gas sector,” says the report titled A Pivot to Growth. Africa returned as a top investment
Kenya though , remained the most attractive destination for investors when measured by the quantity of investments.
There were 63 projects undertaken in Kenya compared to nine projects in Uganda, which means that the projects in Uganda required massive capital investments.
France emerged as a significant investor in Uganda and Tanzania, particularly in the oil and gas sector, and Kenya stood as among the primary sources of regional investments in Tanzania.
According to the report , the nature of Africa’s FDI has changed over the last 20 years as the extractive industry, which once accounted for over 50% of the investments, is now at less than 10%.
Despite a devastating Covid -19 pandemic and taking longer than other regions to recover , given its delayed vaccine rollout (Uganda had one of the world’s longest lockdown ) and therefore its ability to reopen its 54 national economies; The report shows that African economies are building resilience by diversifying into sectors that stimulate local production and job creation.
Although 2022 was the first visible sign of the continent’s return to the investment arena, much remains to be done to ensure that its investment attractiveness improves so that it can build on the momentum.
The continent is significantly impacted by both monetary policy tightening and a strengthening dollar, as central banks across the globe fight to tame inflation.
“As interest rates rise, so growth slows, and there is fear that some countries may yet slip into recession following major hikes in interest rates,” says the report.
The report says Africa’s sovereign debt averaged 77 percent of GDP in six key African economies – Nigeria, Ghana, Ethiopia, Kenya, Zambia, and Mozambique— with South Africa not far behind. In addition to the high and rising inflation rates many countries are also confronted by depreciating currencies.
“For investors, both within and outside the continent, higher interest rates raise the cost of funding new investment, which could place a strain on investor appetite,” says the report.
“In addition, slower growth provides fewer opportunities for investors, at a time when Africa was just starting to recover from the impact of the pandemic.
”Across Africa, and with few and with few exceptions, central banks are increasing interest rates.
South Africa’s central bank rate has risen 500 basis points thus far, while Nigeria and Egypt have seen even sharper rate hikes, all designed to tame inflation, manage currency trading values, and provide economic stability.
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