Focus shifts to local investors

Apr 30, 2009

ANALYSIS<br><br><b>By Ibrahim Kasita</b><br><br>Local investors, long ignored as authorities focussed on their foreign counterparts, have become a focal point as the state lures domestic investments under a new strategy.

ANALYSIS

By Ibrahim Kasita

Local investors, long ignored as authorities focussed on their foreign counterparts, have become a focal point as the state lures domestic investments under a new strategy.

In the face of high unemployment rates, the Government is trying to promote local investors as official statistics confirm their value to the economy.

“We have seen them grow strong because there has been tremendous improvement in bookkeeping, access to finance, customer care and sales skills,” Dr. Maggie Kigozi, the Uganda Investment Authority (UIA) chief executive officer, said in a telephone interview this week.

In its recent investment figures, UIA revealed that local investors pumped $177m (about sh393b) into the economy, creating 4,503 jobs in a period of four years.

In the same period, foreign investors brought in only $100m.

This means that local investors became the major source of investment.

Kigozi said increased training and sensitisation led to a surge in local investments.

The reduction in foreign direct investments (FDIs) comes at a time the world is facing an economic crisis that has forced investors to hold back their money.

Although the full impact of the world financial crisis has not yet been determined, competition for FDIs is expected to get stiffer.

The United Nations Conference on Trade and Development (UNCTAD) indicates that global FDI inflows fell by 21% in 2008 to an estimated $1.4 trillion. UNCTAD expects this to fall further in 2009.

Because of the global economic recession, tighter credit conditions, falling corporate profits and gloomy prospects and uncertainties for global economic growth, many companies have announced plans to curtail production, downsize the workforce and cut capital expenditures. All these reduce FDI inflows.

“The impact of the crisis varies widely depending on region and country, with consequently varying impacts on the geographic patterns of FDI inflows,” UNCTAD said in its statistics released in January.

Kigozi insisted that the economic meltdown had not affected the country’s FDIs because “clear and regulatory framework has been put in place, making it easier to do business.

“I do not think that investments will go down because many countries are interested in investing in Uganda.”

“The Government is also targeting other places which have not been hit hard by the crisis like India, Libya, Saudi Arabia, and United Arab Emirates.”

Kigozi said Uganda’s mineral resources and food production play a great role in attracting investments.

Indeed FDI flows to Africa were expected to have grown further during the year to more than $60b despite the slowdown in global economic growth and its negative consequences for the region.

(adsbygoogle = window.adsbygoogle || []).push({});