In regards to investments, there is a general perception among Ugandans that an investor is a foreigner or the very rich Ugandans who invest in big projects.
This perception has led to continuous disregard for small and medium investors/ domestic investments who continue to be outcompeted by the foreign investors/ foreign direct investments FDI who are given priority in investment resource allocation like land and tax incentives.
However, financial experts have warned that focusing on FDI’s while ignoring the domestic investments is the reason to why developing countries will continue to have an imbalanced economy with a stunted GDP growth of not above 5%.
Morrison Rwakakamba, a former financial assistant on investment and the current CEO of Agency for Transformation, says that as much as FDI bring into the economy; capital, technology, advanced labor skills and machinery, these alone cannot help the development of the economy.
Rwakakamba says “in the end, these foreign investors are not particularly interested in the countries strategic development and are only here to make profits.”
“Foreign investors are businessmen who are only interested in making the maximum profits. That is why at any stage if they feel that they are not making money or there is economic or political insecurities, these companies will immediately pull out and go to look out for green pastures,” Rwakakamba said.
He added; “in 2015 FDI was at $1billion, a fall from $1.2billion in 2014. 70% of these investments are in mining and quarrelling and communication. These two areas are not significant or beneficial for the economic development of the average Ugandan. Even the jobs offered in these sectors are limited to mainly foreigners.”
Rwakakamba advised government to shift their focus to the domestic investors who will invest in long term projects and in the risky sectors like agriculture and manufacturing because they understand the country’s economy and are patriotic about making their country better both socially and economically.
This was during the investment and consultative conference that took place at hotel Africana.
The conference which was organized by Ugandan investment Authority as part of the ongoing investment week was intended at unaveiling investment opportunities to domestic investors sharing information on how government can help domestic investors to create more jobs and improve the country’s GDP.
David Sseppuuya, a renowned business journalist and an investment adviser says Uganda’s economic problems are due to the fact that the economy lacks tradable goods to export to other countries hence the imbalance between export and import earnings.
This, according to him is due to limited investments in industrialization or manufacturing that would help the country produce goods that are traded.
“The problem with FDI is that these foreign investors dictate where they want to invest money and that’s why you find them in communication and mining because they know that is where quick money is. However, these kind investments cannot help this country grow its GDP ,” he said.
He added; “It is very important for Uganda as a country to strategically start encouraging domestic savings investment by availing investment opportunities and support to local investors through easing capital access and mentorship of these projects. Government needs to put up an investment bank that will particularly offer funds not loans to projects that are intended to produce export goods.”
However UIA has insisted that they are already helping domestic investments by providing tax incentives which are for both domestic and foreign investors.
Fred Opolot, who represented the chairman board of directors UIA said the Authority is going to reserve 22 industrial banks with 4 already in assistance and 20% of this land will be reserved for small and medium projects.
“We still have challenges of domestic projects failing to work out because of the high interest rates on loans and high electricity charges. However we are concerned about the development of SME’s and we include them in our plans,” Opolot said
Headded “This feeling that foreign investors are favored is misinformed because the tax incentives provided for by Uganda Revenue Authority are for all investors. Even land is equally given out to local and foreign investors, small and big. The foreign investors may seem to be favored because they are the ones who are bringing in big money and are doing big visible investments.”
UIA Executive Director Jolly Kaguhangire also pledged to continue working on issues that are affecting domestic investors so as to help them improve.
According to statistics from UIA, of the 6540 investments that are registered per year, only 49% are Ugandan investments.