Uganda and Tanzania emerge as favourite destinations for foreign investors in East Africa ahead of traditional rival, Kenya

from Kibuuka Law Chambers..

July 9, 2013

According to the latest World Investment Report 2013, released by the United Nations Conference on Trade and Development (UNCTAD), Uganda and Tanzania have emerged as favourite destinations for foreign investors in the East African region, on the back of increased investments in the Oil, Gas and Mining sectors.

FDI to Tanzania and Uganda was seven times larger than what Kenya received in 2012, a lag analysts blamed on heightened political tensions, delays in removing cumbersome licensing procedures, and sluggish commercial dispute settlement. In Uganda, FDI inflows increased by 92% from USD894 million in 2011 to USD1.721 billion, a rise believed to have been boosted by the recent discoveries of oil in the country. At the same time, FDI in Kenya reportedly dropped by 27% from USD355 million in 2011 to USD259 million.

However, while Uganda and Tanzania led the East African region in attracting Foreign Direct Investment, Kenya led in regional investments. The report shows that even though Kenya lost its position as top destination for FDI in East Africa, it remains the main investor in other East African Community countries especially in the services sector. It says that Kenya’s investments in the rest of East Africa rose by 77% from USD9 million in 2011 to USD16 million in 2012.

Recent natural resource discoveries contributed to the increase in FDI inflows to East Africa. This, according to World Investment Report 2013, includes investments in gas reserves in Tanzania and oil fields in Uganda.

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