Saturday, February 9, 2013

Coup talk threatens investment opportunities in Uganda – analysts

We are reprinting a paper firstly published in Uganda Saturday Monitor, and written by ISMAIL MUSA LADU ( - Saturday, February 9  2013

The recent talk about the possibility of a coup is likely to affect foreign direct investment in Uganda, economists believe.
The army take-over talk that was recently re-fuelled by the army commander, Mr Aronda Nyakairima, if not stopped, will hamper the country’s long term investment opportunities, damaging the economy. “The danger here is in the speculators taking over,” the Private Sector Foundation (PSFU), executive director, Mr Gideon Badagawa, said on Wednesday. He continued: “Because of speculation, long term investors will end up watching from the sideline as they study the situation.”

And this could have an impact not only on revenue and employment but the much sought after foreign direct investment (FDI) currently estimated above Shs5 trillion. According to the Makerere University Economist, Mr Augustus Nuwagaba, the talks of possible coups only threaten, particularly foreign investors who are normally careful of where they want to put their investment.
“Such talks are bad for long term businesses. There is no doubt that foreign investors will be threatened by such utterances because they like stability,” said Mr Nuwagaba. He continued: “Government must not just create a conducive environment for investment but it must be seen doing so. Therefore, such utterances could threaten investment.”

Senior research fellow at the Economic Policy Research Centre,Mr Lawrence Bategeka, argues that it will be unfortunate if the coup happens although he quickly adds that the country cannot degenerate to that level compromising all the economic achievements it has registered over the years. “That (coup) will be bad for the economy but I think that is far-fetched. I don’t think it can ever happen,” said the senior research fellow.

Earlier Maj. Gen. Kahinda Otafiire, described the talk about a possible army take-over of government as bad for business.
Over the years, the country’s foreign direct investment proceeds have increased to a range of between half a billion dollars and $2 billion (about Shs5.2 trillion)— according to the 2012 United Nations Conference on Trade and Development world investment report.
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