Foreign Direct Investments and remittances to Uganda are projected to fall this year due to a slowdown in economic growth in the UK and North America. These economies account for 60% of the inflows to Ugandan.
This implies that Uganda is likely to experience less investment in various sectors of the economy, which could hit job creation and worsen the balance of payments.
Adam Mugume, the director of research at the Bank of Uganda (BoU), told The Independent that in the best case scenario, the financial regulator is projecting both FDIs and workers’ remittances to reach $1 billion each this year.
Adam Mugume, the director of research at the Bank of Uganda (BoU), said, “The outlook is a little negative. The economic growth in countries that are major sources of FDI and workers’ remittances is projected to weaken in 2016 and symptoms of another financial crisis are visible given the heavy exposure to the oil prices for some major financial institutions,”
Last year, FDI inflows decreased to $1.039 billion, down from $1.146 billion recorded in 2014, reflective of decline in oil sector related investments due to a fall in international oil prices and the election related anxiety.
This is the fourth year in a row that Uganda is registering a fall in FDI since 2011 mainly attributed to lower investments in oil and gas related sectors and a weak domestic and regional market that have traditionally pulled FDIs into the national economy.
Compared with the rest of the countries in the East African region, Uganda has been performing better in FDI inflows, according to the World Investment Report 2015.