Sustained economic growth averaging 7 per cent has boosted foreign direct investment (FDI) in Uganda in particular and the region as a whole, a report authored by audit firm Ernst & Young (EY), indicates.
The report, code-named EY Attractiveness Survey 2019, which measured FDI inflows among indicates that Uganda attracted FDI worth 6,000 new jobs in the period ended December 31, 2018.
However, the report did not indicate the actual amount of FDI attracted in the period. The report also measured FDI inflows in Kenya, Rwanda, Tanzania and Ethiopia.
With an economy currently worth $265b, the wider eastern Africa region is projected to become more influential in attracting investors over the next decade. Foreign investors, the report indicates, are pumping resources mainly in retail, finance, telecoms, media, technology, business service and leisure.
Kenya was the biggest beneficiary of FDI in the region, attracting investments worth $2b that resulted in 16,000 new jobs in the period.
Ethiopia, which the report measured as part of the East African region, attracted investments worth $7 billion, creating 16,000 new jobs while Tanzania attracted investments worth $1b that saw the creation of 3,000 jobs.
Cross-border mergers and acquisitions are among the factors driving FDI, according to the Common Market for Eastern and Southern Africa (Comesa) head of mergers and acquisitions, Willard Mwemba.
“The mergers are signals of the increasing attractiveness of the region as an investment destination, both within and outside Comesa,” he said, noting that cross-border deals increased sharply over the past two decades, partly as a result of financial liberalisation policies, government policies and regional agreements.
Share of other regions
According to the EY report, FDI into Africa in 2018 remained largely steady. Africa attracted investments worth $75.5b.
Over the year, there were 710 projects coming into the continent that generated 117,000 new jobs. North Africa led in FDI in 2018, with Egypt and Morocco attracting the bulk at $12b and $5b, respectively.
Although southern Africa was the next major FDI destination, the majority of the projects, amounting to $5b, went to South Africa.