Uganda \'Most Improved\' in Trade, Investment-Friendly Environment

Uganda \'Most Improved\' in Trade, Investment-Friendly Environment

Posted on :Thursday , 15th October 2015

Uganda is the most improved economy in the East African region in terms of creating a conducive environment for trade and investment, according to the latest Global Competitiveness ranking.

 
Uganda, which ranked 115 (from 122 last year) of the 144 economies surveyed globally, was followed by Rwanda, whose economy improved from position 62 last year to 58, while Tanzania moved one position to rank 120 globally.
 
Although Burundi improved to position 136 this year from 139, it still ranked among the bottom five economies in the world.
 
Kenya, which slipped nine places to position 99, was said to have lost due to corruption and the sporadic insecurity that has kept away investors over the past three years.
 
Kampala, meanwhile, benefits from strong demographics as it enjoys a relatively youthful population.
 
The report says East Africa's economic improvement has been driven by an overall better infrastructure, macroeconomic environment, as well as advances in health, primary education, goods market, labour market efficiency and innovation. However, corruption, access to finance and political instability remain the most problematic issues affecting doing business in the region.
 
The report defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. A more competitive economy is one that is likely to sustain growth.
 
The highlights come at a time when an Institute of Chartered Accountants in England and Wales (ICAEW) report indicates that East Africa's inflows of foreign direct investment increased by 11 per cent in the third quarter of the year.
 
According to the ICAEW report, drawing on estimates prepared by the World Bank, the total level of external financial inflows into Africa increased from $40.4 billion in 2000 to $192 billion in 2013. This is largely attributed to FDI from China, with investment mainly going into primary resource sectors and infrastructure.
 
Kigali, for example, is helped by Rwanda's performance in the "Ease of Doing Business" metric, with the World Bank ranking it as a better place to set up a business than Italy.
 
"For Rwanda, the ranking is a result of extensive efforts by the government to continuously improve the business environment. As we move towards becoming a middle-income country, we will work even harder to develop a more sustainable and competitive economy that will benefit all Rwandans," said Francis Gatare, chief executive of the Rwanda Development Board.
 
Despite substantive efforts to ignite recovery, global economic growth remains low and unemployment persistently high. The Global Competitiveness Report 2015-2016 calls for productivity-enhancing reforms to break with this pattern.
 
Seven years after the beginning of the financial crisis in 2008, its consequences are still being felt around the world. The recovery has been less robust, more uncertain and taken longer than many expected, suggesting a "new normal" of subdued economic growth, lower productivity and high unemployment. Recent geopolitical shocks from the crisis in Ukraine to conflicts in the Middle East, terrorism and the migrant crisis -- have added to economic difficulties.
 
The report shows that competitiveness understood as higher productivity is a key driver of growth and resilience. The historic proportions of the economic crisis and the relative performance of economies since its onset in 2008 have shed light on how structural weaknesses can exacerbate the effects of and hinder recovery from shocks.
 
During the crisis, the more competitive economies systematically outperformed the least competitive in terms of economic growth: They either withstood the crisis better or recovered more quickly. For example, Switzerland, ranked 1st in the report, has since 2007 experienced only a mild recession (in 2009) and its unemployment rate has remained around 3 per cent throughout the crisis.
 
Meanwhile, Greece, ranked 81st, has seen its economy shrink by 25 per cent and the jobless rate remains above 20 per cent.
 
The report says that at the heart of an economy's competitiveness is its capacity to leverage talent. High unemployment figures weigh heavily on societies, risking not only prolonged lower demand but also the de-skilling of a significant segment of the labour force and growing discontent.
 
"This holds even truer in the post-crisis years, which coincide with a fundamental shift away from the traditional manufacturing industry while the widespread use of ICT is generating entirely new industries and disrupting others. Talent-driven economies are best equipped to adapt to the changes brought about by this tech revolution and to reap their benefits," notes the report.

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