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Uganda Ranked Most Attractive Nation For Foreign Investment In East Africa

Uganda has been ranked as the most attractive country for foreign investment according to the fifth edition of Absa Africa Financial Markets Index (AAFMI) 2021 in East Africa.

The Absa Africa Financial Markets Index which evaluated the financial market development among 23 countries, Uganda has been ranked 10th on the continent hence moving five places to overtake Kenya, as the best destination for foreign investment in East Africa.

According to the 2021 index, Kenya slumped to 11th position on the continent while Tanzania and Rwanda both dropped by one position to 13th and 14th respectively.
The index assessed countries according to six pillars: market depth; access to foreign exchange; market transparency, tax and regulatory environment; capacity of local investors; macroeconomic opportunity; and enforceability of financial contracts.

In the first pillar on market depth which evaluates the size and liquidity of domestic capital markets, Uganda ranked 8th on the continent, scoring 45 points out of 100, behind Kenya which ranked 7th with 46 points. Tanzania (9th) and Rwanda (18th) scored 45 and 30 points respectively.
In pillar two which evaluates markets’ accessibility to international investors, Uganda continued to do well ranking 4th position on continent with 61 points while Tanzania (5th) and Kenya (13th) scored 59 and 45 points respectively.
In this pillar however, Uganda dropped two places from second last year impacted by the global financial market turbulence in 2020 which saw Bank of Uganda intervene in the currency market by selling around $200 million in Foreign Exchange (FX), causing the shilling to appreciate.

“The Bank of Uganda authorized the inclusion of swaps in the monetary policy toolkit to increase access to FX and moderate exchange rate volatility” the survey highlighted whereas South Africa maintained its lead in this pillar.
An outlier with the most active interbank FX market, South Africa had annual turnover of $3.5 trillion while Egypt ranked 2nd with annual turnover of $55.2 billion.
However, Uganda’s regulatory environment for local and foreign investment is on focus again with respondents highlighting the less favourable tax regime in Uganda, where the withholding tax rate on interest and dividends for non-residents is at the higher end at 20% and 15%, respectively according to the index.
The survey also highlighted that Uganda’s local investor capacity is still small but with room for improvement.

The Absa Africa Financial Markets Index was produced by Official Monetary and Financial Institutions Forum (OMFIF) in association with Absa Group Limited.

OMFIF conducted extensive research using data from central banks, securities exchanges and international financial institutions. OMFIF surveyed over 50 policy- makers, regulators and executives from financial institutions operating across the 23 countries, including banks, securities exchanges, central banks, regulators, audit and accounting firms, and international financial and development.

Jolliebest Kasajja
Jolliebest Kasajja is a Ugandan Photo Journalist, Influencer, Photo and Videographer, News Editor and a critic in African Politics
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