Tanzania and Uganda have widened their lead over Kenya in the race for foreign direct investments (FDI) in the East African region, as lengthy licensing procedures and sluggish commercial dispute settlement turn multinationals away from Nairobi.
New data released by the United Nations Conference on Trade and Development (Unctad) shows Uganda topped the region in attracting FDI last year, followed closely by Tanzania, on the back of increased investments in the oil and gas sector.
FDI to each of the two countries was seven times larger than what Kenya received in 2012, a lag analysts blamed on heightened political tensions and delays in removing cumbersome licensing procedures.
In Uganda, most funds went into the oil, gas and mining sectors.
Recent natural resource discoveries contributed to the increase in FDI inflows to East Africa. This includes investments in gas reserves in Tanzania and oil fields in Uganda, said Unctad in the World Investment Report 2013.
Ugandas inflows
Ugandas FDI jumped by 92.51 per cent to $1.721 billion from $894 million in 2011, while Tanzania attracted $1.706 billion in 2012, a 38.81 per cent increase from the previous years $1.229 billion.
Meanwhile, Kenyas FDIs dropped by 27.04 per cent to $259 million from $355 million.
Rwandas rose by 50.94 per cent to $160 million last year from $106 million, while Burundi, which lagged the five East African countries, attracted $1 million, a 66.67 per cent decrease from $3 million in 2011.
Thus, the EAC countries received a combined $3.9 billion in FDIs last year, a 48.71 per cent rise from the $2.6 billion registered in 2011.
Unctad said interest in the EAC economies among foreign investors is expected to gain fresh impetus in the remaining part of the year, helped by rising confidence in the economy.
In Kenya, a peaceful transition after the March 4 elections is expected to trigger more inflows in the second half of the year. But while it lost its grip on FDI inflows, Kenya remained the main investor to other EAC countries, especially in the service sector.
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Among African investors, KCB was the largest in least developed countries. It announced a total of $300 million in investments over 2005 - 2012, with 31 projects in five African countries, said Unctad. Kenyas vibrant private sector, advanced infrastructure and skills base have been its main selling points.
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