Overview:
According to the Private Sector Investment Survey (PSIS) 2023 conducted by the Bank of Uganda, Uganda Investment Authority, and Uganda Bureau of Statistics, FDI inflows registered a record high growth – expanding by 79.2 percent, from net inflows of $1,648.2 million registered in 2021 to $2,952.9 million in 2022.
Oil and gas activities as well as gold trade increased Foreign Direct Investment (FDI) in Uganda by 79.2 percent in 2022, the latest report indicates.
According to the Private Sector Investment Survey (PSIS) 2023 conducted by the Bank of Uganda, Uganda Investment Authority, and Uganda Bureau of Statistics, FDI inflows registered a record high growth – expanding by 79.2 percent, from net inflows of $1,648.2 million registered in 2021 to $2,952.9 million in 2022.
The significant boost in FDI inflows during 2022 was largely attributed to the progression in activity in the oil sector, i.e., the transition from the exploration and appraisal phase to the development phase.
This advancement followed the conclusion of the Final Investment Decision (FID) in February 2022, a significant milestone – that launched major construction works towards the development of Tilenga, Kingfisher, and the EACOP projects.
“Consequently, 62.4 percent of FDI inflows received in CY2022 was solely attributed to activity in the oil sector, of which 35.4 percent was channelled directly to the Mining sector, while 26.9 percent was channelled through the Transportation sector (pipeline),” the report reads in part.
Notable FDI inflows were also registered through the ICT (17.6%), and Finance (7.3%) sectors. FDI inflows were largely sourced from the Netherlands, United Kingdom, Mauritius, Kenya, and Switzerland.
The stock of FDI rose by 10.9 percent to US$16.6 billion in CY2022, from US$15.0 billion in CY2021, on account of increased capital inflows reflected through all components, i.e., equity capital, retained earnings, and related debt inflows. FDI stock comprised of equity capital (49%), revaluation (24%), outstanding related debt (15%), and accumulated retained earnings (12%), primarily invested in the Mining, Transportation, Finance, Manufacturing, and ICT sectors.
Foreign direct investment is comprised of three components: equity capital, reinvestment of earnings, and intracompany debt. Reinvestment of earnings is the portion of earnings that the non-resident parent enterprise decides to reinvest in the affiliate rather than receive as a dividend and can be an important source of financing for affiliates. Equity capital is often associated with new investments, such as greenfield or M&As, even though it can also reflect extensions of capital or financial restructuring.