Tuesday, September 30, 2008

Investment in Africa increases - report

Uganda and other African countries’ infrastructure constraints could become something of the past following the increase in trans-national corporation’s (TNC) continued quest for the natural resources.

The World Investment Report (WIR) 2008, an annual publication of the United Nations Conference on Trade and Development (UNCTAD) globally released September 24 said; “In 2007, Foreign Direct Investment (FDI) inflows to LDCs’ in Africa increased to $10 billion up from $9.6 billion in 2006. TNCs responded to a continued rise in global commodity prices.”

The WIR report showcases trends in FDI and technology transfer worldwide, at the regional and country level with emphasis on development implications.

“We are confident that the recently approved National Oil and Gas Policy for Uganda will guide the development of Uganda’s emerging oil and gas sector with a promise to increase FDI flow into Uganda,” said Acting Commissioner Economic Research, Mr Longino Tisarana on behalf Finance Minister Dr Ezra Suruma at a function to release the Uganda version of the report at the Media Centre on September 24.

“Most of the FDI were in infrastructure development, Greenfield expansion prospecting for reserves of base metals and oil and other inflows went into the privatization of schemes in the telecommunication and electricity industries,” the report said.
Uganda in 2006 struck oil in the southwestern region of the country and around the Lake Albert region and exploration is expected to start next year.

If Uganda gets more share of this FDI inflow into the exploitation of the oil and other abundant natural resources in the country, it is something, which is bound to boost the country’s economy and create thousands of jobs for the local people.

The Deputy Executive Director Uganda Investment Authority Mr Tom Buringuriza said: “In 2007, FDI inflows to Uganda amounted to $368 million, a decline from $400 million in 2006 but the FDI stocks registered a 20 percent increment”.

This performance, listed Uganda among the ten (10) major recipients of FDI among the African LDCs in 2007. The major recipient was Sudan, followed by Equatorial Guinea, Madagascar, Zambia, the Democratic Republic of Congo, Chad, Burkinafaso, the United Republic of Tanzania, Mozambique and Uganda.

Commenting about Uganda’s performance Tisarana said; “The 2007 figures are estimates, we are confident that the actual figures will be higher in light of the increased investments in the telecommunication and the oil/gas sectors”.

However, experts say with the prevailing global credit crunch Uganda should get worried for its economic growth and poverty reduction efforts will be adversely affected.

According to the WIR report, Trans-national corporations TNCs from the United States and Europe were the main investors in Africa followed by African investors particularly from South Africa, Egypt and Morocco respectively. The Report also says FDI inflows to Africa grew by 16 percent from $46 billion in 2006 to $53 billion in 2007.