Uganda tops East Africa for Foreign Direct Investment

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Uganda tops East Africa for Foreign Direct Investment
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Uganda has emerged as the premier destination for Foreign Direct Investments (FDI) within the East African Community, according to the 2024 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD).

The report highlights that Uganda attracted an impressive Shs10 trillion in foreign investments in 2023, significantly outpacing Kenya, which garnered Ksh193 billion (about Shs5 trillion).

UNCTAD attributed Uganda’s attractiveness to its investor-friendly environment, particularly the ease of establishing businesses.

A standout feature is Uganda's adoption of the digital single window model, which simplifies business registration, clearances, and tax payments.

This seamless integration facilitates a more efficient and appealing investment process.

In contrast, while Kenya has implemented similar technology, it falls short in its coverage.

The Kenyan system does not extend to county governments, where investors must also apply for licenses.

This gap creates additional hurdles for investors, as highlighted by UNCTAD.

"Although some applications can be completed online, the lack of integration among systems adds significant barriers for investors and entrepreneurs," the report noted.

"There is a pressing need for enhanced facilitation to elevate investment levels sufficiently to address interconnected economic, health, security, and climate challenges."

Kenya Investment Authority does offer valuable one-stop, in-person services, including assistance with foreign taxpayer registration, electrical grid connections, and work permits.

However, its services do not cover essential permits and licenses at the county, sectoral, or environmental levels, further complicating the investment process.

Uganda's streamlined, investor-friendly approach starkly contrasts with the fragmented system in Kenya, underscoring why it has become a more attractive destination for FDI.

This trend reflects the broader economic strategies and infrastructural efficiencies that different countries within the East African Community are adopting to attract global investors.

As Uganda continues to leverage its digital single window model and other investor-friendly policies, it sets a benchmark for the region, demonstrating how streamlined processes can significantly enhance a country's investment appeal.

In doing so, Uganda not only boosts its economic growth but also positions itself as a key player in attracting international business within East Africa.

Kenya, while still a significant player, faces the challenge of addressing these bureaucratic inefficiencies to remain competitive.

By integrating systems at all levels of government and simplifying the licensing process, Kenya could potentially reclaim its standing as a leading destination for FDI in the region.

Uganda’s rise as the top destination for foreign investments in East Africa highlights the critical importance of efficient, integrated systems and investor-friendly policies.

It serves as a potent reminder for neighboring countries to streamline their processes and reduce barriers to attract and retain global investors.

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