Uganda ranks 15 out of 102 countries as an attractive destination to make profitable investment in the world.
Six of the top 20 countries in the Baseline Profitability Index (BPI) that ranks countries by their overall attractiveness as targets for a generic foreign investment are African; a key indicator of the changing fortunes of the continent.
Only four other African countries: Ghana, Rwanda, Tunisia and Botswana (highest ranked in Africa) rank higher than Uganda with Rwanda taking the fifth highest position in the list. Top of the list is Hong Kong in the BPI produced by Foreign Policy magazine, while Uganda is number one in the category of ease of repatriation of capital.
Three factors are noted for the ultimate success of a foreign investment. These include: how much an asset’s value grows; the preservation of that value while the asset is owned and the ease of bringing home the proceeds from selling the asset.
There is no direct explanation by the index, however, as to why global giant conglomerates such as Google, Microsoft or Samsung would chose Kenya, Uganda or South Africa as their hub. For instance, markets that seem unattractive by the ranking, but have some advantages, than the higher ranked states. Thus South Africa lies at 41 while Kenya is at 67.
It also does not show how perceptions on corruption automatically translate into bribe paying, yet this is a factor that weighs on what an investor makes and ultimately repatriates.
Analysts also say an asset’s returns may depend on tax treaties between the investor’s home country and the country where the investment is based, which again may fault the value of the assets from one country to another.
The index looks at continents and redraws the typical economic map of the world. For instance, China’s dominant economic rise is well known, but the index also points to the difficulties of doing business they can cut into a foreign investor’s return. China ranks 21st in the BPI.
By David Mugabe, The New Vision
