Africa East African Community Economy FDI

East Africa’s FDI rise to US$11.5B

Foreign Direct Investments (FDIs) into East Africa surged in 2019 to hit US$11.5B, up from US$5.7B in 2018. This was mainly due to China’s increased interest in East Africa’s construction, manufacturing, and services sector.

According to EAC’s Trade and Investment Report (2019), all East African Community countries except Tanzania posted increased inflows during the year. Inflows to Tanzania declined by 16% to US$2.6B in 2019 from US$3.1B.

The report shows that China was the largest investor in 2019, accounting for 59.7% of the total FDI inflows into the region, with significant realized investments in construction, manufacturing, and services.

Inflows to Uganda increased by almost 20%, mainly on account of investments in the extractives sector and major infrastructure projects like power dams and roads.

Inflows to Kenya were mainly directed into the information, communication and technology, and healthcare sectors.

According to the report, the number of jobs created due to FDI inflows into EAC increased by 134.9% to 211,084 jobs in 2019 from 89,877 in 2018.

Also read: Germany commits €42.9M to support EAC

FDI to Uganda contributed 62,876 jobs (18.2%) of total jobs created, while FDI into Tanzania created 46,765 jobs accounting for 47.9% of the total jobs created.

FDI inflows into Rwanda created 35,715 jobs accounting for 18.7% of total jobs created, while FDI inflows into Kenya created 16,573 jobs accounting for 10.4% of total jobs created.

In Burundi and South Sudan, inflows accounted for 2.2% and 2.6% of the total jobs created, respectively.

Rwanda’s total investment inflows increased 22.6%, reaching US$2.46B compared to US$2B in 2018, mainly due to domestic investments, which moved to US$992.11M in 2019 from US$991.1M in 2018.

Domestic investments also accounted for 40.3%, while FDIs contributed 59.7% of total investments.

South Sudan registered total investments amounting to US$3.87B in 2019, with foreign investments from the rest of the world amounting to US$2.78B. The bulk of the foreign investments was geared towards the utilities and services sectors.

In Tanzania, total registered foreign investments declined by 15.9% to US$2.62B in 2019 from US$3.12B in 2018, with EAC investment excluding Tanzania accounting for 0.7% of the total investment flows of US$18.7M.

Investment flows from the rest of the world amounted to US$2.6B in 2019 compared to US$767M in 2018.

In Uganda, total investment flows into the country increased by 22.2% to US$1.24B in 2019 from US$1.01B in 2018, of which US$433M were domestic investments.

This increase was attributed to reforms in the licensing system after introducing the e-Biz system of project licensing and increased provision of incentives and facilities for investors, including the Namanve Industrial Park.

Source: Kenya Wall Street

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