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Uganda Surpasses Kenya In Foreign Direct Investments Due To Improved Ease Of Business Setup

Uganda has emerged as the top destination for Foreign Direct Investments (FDI) in the East Africa Community.

As detailed in the 2024 World Investment Report by United Nations Trade and Development (UNCTAD), foreign investments in Uganda in 2023 were estimated at Ksh370 billion.

On the other hand, Kenya only attracted investments estimated at Ksh193 billion.

The UN body noted that Uganda was one of the most attractive countries for investors because of the ease of setting up businesses.

In particular, Uganda was reported to be among the few countries that have adopted the digital single window model that makes it easy for businesses to register, get clearances and pay taxes.

Conversely, Kenya has a similar technology, however, its did not cover county governments where investors are also required to apply for licences before setting up shop.

“Although some applications can be completed online, the lack of integration among systems adds significant barriers for investors and entrepreneurs. There is a pressing need for enhanced facilitation to elevate investment levels sufficiently to address interconnected economic, health, security and climate challenges.

“The Kenya Investment Authority (Keninvest) offers one-stop, in-person services such as assistance with foreign taxpayer registration, electrical grid connection and work permits. However, its services do not extend to crucial permits and licences at the county, sectoral or environmental levels,” read the statement in part.

Outflows

On the other hand, in terms of investments that left the country, Kenya was the biggest loser in comparison to Uganda.

For instance, in 2023, it is estimated that Kenya lost foreign investment worth Ksh71 billion (USD 558,000,000). Uganda on the other hand only had investments worth Ksh51 million (USD 400,000) being taken to other countries.

“The Kenya Investment Single Window project, being developed by UNCTAD, aims to tackle these issues. It will introduce an online system to streamline the investment process in the country and enhance the Government’s capacity to attract and monitor investments effectively.

The system will connect with existing government databases such as the eCitizen portal, the Kenya Revenue Authority’s iTax system and county government portals. This integration will enhance the functionality of existing platforms, making it easier for businesses to navigate the regulatory environment,” read the report in part.

-Kenyans

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