Bernard Busuulwa
26 October 2009
Despite Uganda domestic investments overtaking Foreign Direct Investments during the third quarter of 2009, total planned investments between July and September came to $266 million, a 36 per cent drop from $415 million registered in the second quarter, thanks to biting effects of the global economic recession.
This happened even with a growing interest from overseas Ugandans and returning Asians.
According to the latest figures from the Uganda Investment Authority (UIA), domestic investments accounted for $153.7 million of total planned investments equivalent to 7,565 jobs.
Leading sources of FDI in Uganda include the United Kingdom, India, China, Kenya, Russia, Virgin Islands, Nigeria and Sudan. Much of the FDI flows were attributed to Ugandans working overseas and returning Asians that were expelled from Uganda in 1972 and in some cases, their relatives who are reportedly eager to re-establish their business interests in Uganda, according to UIA.
The manufacturing sector claimed the largest share of FDI during the period in question, with $93.4 million in planned investments, equivalent to 4,000 jobs and a 35 per cent share of planned employment.
"Ugandans in the diaspora are actively investing back home," said Prof Maggie Kigozi, executive director of UIA.
But some local analysts believe that FDI growth generated by Ugandans in the diaspora and returning Asians might not be sustainable because of persistent exposure to external shocks.
Strong appetite for investments in the manufacturing sector was driven by consistently growing demand for Ugandan food products, soap, plastic utensils, beverages and building materials in regional markets particularly Southern Sudan, the Democratic Republic of Congo, Rwanda and Burundi.
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