Uganda, Tanzania attract most foreign cash

Uganda and Tanzania are, for the third year in a row, among the top 12 recipients of foreign direct investment in sub saharan Africa, according to the latest United Nations Conference on Trade and Development (Unctad), World Investment Report.

Investment in Uganda has surged over the past three years from $733 million in 2007 to $799 million last year.

In Tanzania investment has remained steady at between $645 million and $680 million.

The two countries were not affected by the global downturn in foreign investment, as well as commodity price falls — in marked contrast to their neighbours in Kenya.

FDI in Kenya shrank dramatically from $729 million in 2007 to just $96 million in 2008, recovering a little to about $141 million last year.

While the slump resulted mainly from the political unrest in Kenya following the disputed presidential elections of December 2007, it is a reminder of how the country’s economic fortunes are tied to resolving the ongoing political uncertainties.

Only eight countries — Angola, Congo, the DRC, Equatorial Guinea, Ghana, Mozambique, South Africa and Zambia — received higher levels of FDI than Uganda in 2009 as total FDI on the continent grew from just three per cent in 2007 to 5.3 per cent in 2009.

Unctad says that the global economic recovery remains fragile, threatened by emerging risks, constraints in public investment and other factors.

It says that for the recovery to remain on track, private investment is crucial for stimulating growth and employment and that FDI has a major role to play.

The World Investment Report 2010 remains optimistic about future prospects saying that after a significant global FDI downturn in 2009, flows worldwide are expected to recover slightly this year, with a stronger recovery in 2011 and 2012.

This year’s Report focuses on climate change, and in particular the role of transnational corporations.

Unctad says that for developing countries, low-carbon foreign investment by TNCs can facilitate the expansion and upgrading of their productive capacities and export competitiveness, while helping their transition to a low-carbon economy.

However, it acknowledges that this investment also carries economic and social risks.

Unctad expects global inflows to reach more than $1.2 trillion this year, rise to $1.3–$1.5 trillion in 2011, and $1.6–$2 trillion in 2012.

However, it adds that these FDI prospects are fraught with risks and uncertainties, including the fragility of the global economic recovery.