Despite US advice, Ugandan economists say the country is still a destination for investments

Economists and government representatives in Uganda conveyed optimism about the nation’s economy and advised investors to disregard a warning from the US government about potential hazards associated with doing business there.

The advise highlighted the financial and reputational concerns associated with Uganda’s pervasive corruption in the U.S. 2023 Investment Climate Statements.

The letter also mentioned Uganda’s adoption of the Anti-Homosexuality Act in May, a measure that LGBTQ+ activists around the world have denounced.

According to groups like the Oxford University Centre of African Economies, Uganda has one of the least hazardous economies on the continent, according to Morrison Rwakakamba, chairperson of the Uganda Investment Authority, a government body tasked with encouraging investment in the nation.

Additionally, Uganda was listed as one of the best East African investment destinations in the African Development Bank’s 2023 report.

Assuming a brief slowdown in global growth, Uganda’s GDP is expected to expand by 6.5% in 2023 and 6.7% in 2024, according to the African Development Bank.

According to Rwakakamba, present investors are sane and aware that they will continue to profit from Uganda.

Money follows investors. Geopolitics is not followed by investors,” he claimed. “They don’t adhere to the cultural conflicts that appear to be the core of that recommendation. We also persist in urging our American investors that there is potential for financial gain in Africa. Because of the market and the return on investment, Uganda offers opportunities for financial gain. Regarding these cautions, we have no concerns.

Over the past four years, direct foreign investment into Uganda has increased exponentially, according to the Uganda Investment Authority. Investors have come from a number of countries, including the Netherlands, China, Germany, Japan, and the United Arab Emirates.

But Corti Paul Lakuma, senior research fellow and head of the department of macroeconomics at the Economic Policy Research Centre in Kampala, stated that Uganda still wants to draw in investors, thus the advisory is a drawback for the nation.

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According to Lakuma, Uganda cannot ignore the fact that the United States continues to be the largest social and public investor in the fields of health and education, even in spite of investments from China, India, and Europe.

“Yes, those other countries are trustworthy and good, but the kinds of investments they make are not the same as what America does,” Lakuma remarked. “Investments made in America have extended payback and return terms. Few nations are prepared to take that chance.

Even if corruption exists in Uganda, Rwakakamba contended, the East African nation has established online channels that allow prospective investors to speak with Ugandan officials directly, removing the need for middlemen to collect bribes.

Uganda’s Anti-Homosexuality Act, which has been called the world’s worst statute against the LGBTQ+ population, has caused political opposition.

Lakuma suggested that Uganda review the legislation.

He declared, “The world is growing increasingly sensitive [to] issues of diversity and inclusivity.” “I believe it required some tact from our legislators. Despite our desire to preserve our cultures and morals, we don’t live in a vacuum. However, you also need to take note of how the global order is evolving.

The World Bank declared in August that the Anti-Homosexuality Act went against its principles. The bank declared that it would not make any more loans to Uganda until it could test policies to avoid prejudice in the projects it funds in Uganda.