Foreign direct investment (FDI) in Uganda has declined by 35 percent over the past year occasioned by the impact of the coronavirus, a latest report shows.
According to the 2021 World Investment report by the United Nations Conference on Trade and Development (UNCTAD), Uganda’s FDI declined from $1.3 billion (Shs4.6 trillion) in 2019 to $823 million (Shs2.9 trillion) in 2020.
“The coronavirus pandemic has amplified the fragilities of the structurally weak economies. Investment in various sectors relevant for achieving the Sustainable Development Goals, especially in food, agriculture, health and education has been falling” said UNCTAD’s director of investment and enterprise, James Zhan.
“SDG-related investment needs to be scaled up in the post-pandemic period,” he cautioned.
The report also attributes the decline to the contraction of tourism in the sector in the country. The Ministry of Tourism economic growth forum budget for 2019/2020 financial year indicates that tourism is the leading foreign exchange earner for Uganda, generating $1.5b in revenue. But this has declined over the last two years due to the Covid-19 induced lockdown.
The report adds that government interventions to counter the negative effects of the pandemic are limited by resource constraints.
Bank of Uganda governor Emmanuel Tumusiime Mutebile, while releasing the Monetary policy statement for May, cautioned that there may be little in fiscal support by government if the economy suffers more due to Covid-19 as debt to Gross Domestic Product ratio will be at 52 per cent by the end of FY2021/22.
Without a push by the international community, the report says these countries will remain on the margins of the structural changes of the global economy and global FDI.
Overall inflows to least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing states (SIDS) combined accounted for only 3.5% of the world total in 2020