Business

Uganda least risky for business in East Africa, says global report

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Traders go about their business in downtown Kampala. A survey has found

Traders go about their business in downtown Kampala. A survey has found Uganda to be least risky to do business among its East African neighbours. PHOTO BY RACHEL MABALA 

By Monitor Correspondent

Posted  Thursday, April 24   2014 at  01:00

In Summary

AON measures political risk in 163 countries to assess the risks associated with exchange transfer, sovereign non-payment, political interference, supply chain disruption, legal and regulatory regimes, political violence, ease of doing business, banking sector vulnerability and governments’ capability to provide fiscal stimulus.

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Kampala-The ongoing legal and regulatory reforms mostly in the oil and financial sectors are making it less risky to do business in Uganda, drawing investors’ attention to the country, according to a global risk survey released recently by global risk management Firm, AON.

The 2014 Political Risk Map shows Uganda has a lower risk rating of ‘Medium’, compared to neighbours Kenya, Tanzania, Rwanda all rated at ‘Medium-High risk’ and South Sudan rated at ‘Very High risk’.

AON measures political risk in 163 countries to assess the risks associated with exchange transfer, sovereign non-payment, political interference, supply chain disruption, legal and regulatory regimes, political violence, ease of doing business, banking sector vulnerability and governments’ capability to provide fiscal stimulus.

“Uganda’s legal and regulatory risk is lower than that of peers and its recent energy sector legislation is a step in the right direction,” said Mr Maurice Amogola, the chief executive officer of AON Uganda.

“Uganda having adjusted to lower aid levels exchange transfer, its sovereign non-payment risks are improving slightly,” the global risk report adds.

However, Uganda continues to face high levels of political violence risk, which is exacerbated by instability in neighbouring eastern Democratic Republic of Congo and South Sudan.

According to AON, in East Africa, terrorism stands out as the predominant peril particularly after internationally high profile attack on the Westgate mall in Nairobi last year.

This has seen the interest of players in political risk covers increase especially among operators in the manufacturing sector, retail sector, banking and hospitality industry.

The report identifies massive investment opportunities in infrastructure, especially within the energy sphere.
Another area with huge potential is agriculture, which can help reduce the risk of supply chain disruptions and food price

Mr Amogola says the lower political risk of doing business in Uganda is favourable for investors in terms of the insurance premium rates they incur.