Tuesday 13 April 2021
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Uganda: At The Heart Of Sub-Saharan Africa

Uganda: At The Heart Of Sub-Saharan Africa


Africa is one continent that is double-faced when it comes to elections. It focuses more on the quantity of elections while overlooking the quality aspect and as Uganda realised in the aftermath of the contentious 2016 presidential elections, elections are the pathway to economic prosperity.

After years of economic boom, everything came to a halt early last year after political skirmishes emerged between the incumbent, Yoweri  Museveni, and the opposition. In the end, Museveni increased his 30-year stay in power by another 5 years after the Supreme Court of the country threw away the challenge of the combined opposition parties. Unlike in other African countries, this did not spark violence but it severely crippled the economy.

According to official figures released by the Ugandan government in January 2017, it was revealed that Uganda’s stock of Foreign Direct Investments (FDIs) declined by 40 percent most of which came in 2016 after the contentious elections. In total, Uganda received $541 million in foreign capital last year, which equates to 0.6 percent of what the Netherlands received in the same year. Considering that, the Netherlands is a developed country; this paints a bleak picture on Uganda as it is supposed to be competing for more foreign capital as its still developing.

The tell-tale signs of the distressed economy led Yoweri  Museveni, the President of Uganda to embark on a path of recovery. Museveni prioritised reinvigorating Uganda’s FDI prospects as a way of bringing back the country’s better days.

As the first step in attracting more foreign capital in the year to come, Museveni identified the following as the priority sectors for investment, commercial agriculture, and agro-processing, adding value to minerals, oil, and gas, information communication technology, tourism, packaging, pharmaceuticals, education, finance, and health.

Of the above priority sectors, commercial agriculture and agro-processing possess, have the highest potential for generating quick returns. Figures from the Ministry of Finance, Planning and Economic Development for 2016 revealed that the telecommunications sector contributed 44.3 percent of the country’s Gross Domestic Product despite employing just 1 percent of the population. On the other hand, agriculture contributed 23 percent of the country’s Gross Domestic Product though it employs 76 percent of the population.

These figures show that there are huge discrepancies in the Ugandan economy, which are subsequently contributing to the poor performance of the economy. The sector that is supposed to induce broad-based growth and create employment opportunities, agriculture, is failing to do so even if it is economically endowed. What this means is that the largest group of workers, those directly and indirectly employed in the agriculture sector (over half of the population) remain in the low-income category, therefore, inhibiting them from providing a sizeable market that can anchor future growth.

The above underlies the poor structuring of the Ugandan economy. To fix this, the economy has to be restructured and this means providing long-term financing for various subsectors involved in agriculture. Foreign capital is therefore needed to improve the country’s agriculture mechanisation, value addition, research, land access, production infrastructure, marketing, irrigation, fertilisers, and seeds.

Potential investors considering Uganda need to know that Uganda is a highly liberalised economy, all of the country’s economic sectors are open for investment besides agriculture, which has been discussed above. There is free movement of capital to and from Uganda. Labour is highly skilled and it is English speaking.

Setting up a business in Uganda is easy and fast. In under a month, all processes will be over and the business up and running. Uganda opened a One Stop Centre (OSC) at the Uganda Investment Authority meant for helping investors, among its duties is to register and license new companies. The minimum investment capital in Uganda is $100 000.

In addition, Uganda is strategically located at the heart of Sub-Saharan Africa. It shares its borders with some of Africa’s economic powerhouses including the Democratic Republic of Congo, Rwanda, Tanzania, and Kenya.