East African Business Week (Kampala)
23 October 2006
editorial
Last week the United Nations Conference on Trade and Development (UNCTAD) released the World Investment Report 2006.
It displayed some very interesting revelations, especially for East Africa.
Our region attracted the lowest (5%) Foreign Direct Investment (FDI) inflows in Africa in 2005.
Again our region never appeared in the top 10 African countries that realised increased FDI. FDIs dropped from US$1.9 billion to $1.7 billion.
However, Africa generally received record high FDI inflows in 2005 of $31billion, but this was mostly concentrated in a few countries and industries, says the UNCTAD report.
In fact, Uganda was among the 34 countries that saw FDI inflows rise by 16% to $258 million in 2005.
The report launched all over the world simultaneously by the UN agency, showed there was a skewed investment scenario in favour of the big boys on the continent like South Africa, Egypt, Nigeria, Morocco, Algeria and Tunisia.
The low FDI inflows, according to the report, lacked the capacity to engage in significant manufacturing, and, as a result, were among the least integrated into the global production system.
The report added that some countries had also experienced political instability during election time.
Apart from the election year, there was the long drought which led to a drop in water levels subsequently dealing a blow to power production.
But those negative factors not withstanding, developing countries stood out as emerging sources of FDI, and strengthened their global position in 2005, by investing $117 billion.
This represents a fundamental change in the global economy and will have substantial consequences for international economic and political relations, a senior UN official said.
For instance Kenya remains the highest investor in Uganda followed by South Africa.
Uganda Investment Authority (UIA) licensed 284 projects in 2005 valued at $878.6 million in planned investment creating 28, 698 jobs.
This just goes to show that we need to encourage more intra-African investment projects.
Why look very far when our economies and companies can be integrated to spur investment growth by themselves.
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