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Uganda among top recipients of foreign capital inflows in 2011
Uganda was among the top recipients of international capital in 2011 inform of remittances receiving $773m (about Shs1.941 trillion) despite the prevailing difficulties in global economic environment that has weakened capital flows to developing countries.
The World Bank estimates that Uganda receives about 4 per cent of remittances to Sub-Saharan Africa.
According to the World Bank report 2011, in the period 2000–10, Uganda experienced a significant growth in remittance from $299m (about Shs750.9b) in 2003 to $773m in 2011.
This increase is mainly attributed to the growing number of Ugandans working abroad, relaxing of the foreign exchange regulatory regime due to liberalisation of capital accounts in many foreign countries, the adoption of new remittance technologies that helped reduce transfer costs and increase competition in the market.
Private remittances play a key role in Uganda’s economy in inform of fighting poverty and improving standards of living among households that receive it.
Overall, the World Bank report shows that foreign capital inflows to entire Sub-Saharan Africa region rose by $8b, which contributed total foreign capital inflows in the region to reach $48.2b in 2011.
The new report says foreign direct investment, which accounts for about 77 per cent of all capital flows to the region, contributed to about 83 per cent of the increase.
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The World Bank explains that recent foreign direct investment to the region has been spurred by increased global competition for natural resources, higher commodity prices, robust economic growth and a fast rising middle class.
Foreign capital inflows are important sources of income that many African governments use to finance public investments and to support the development of manufacturing or export-oriented service sectors.
Due to high economic growth being experienced in the Sub Saharan Africa region, World Bank officials say the region is increasingly being recognised as an investment destination, especially by private equity investors.
“African economies continue to show resilience and some of the fastest-growing economies in the world are now in Africa,” said Ms Obiageli Ezekwesili, the World Bank vice president for Africa.
Despite high economic growth that has been registered in Sub Saharan Africa region over the past two decades, high unemployment has remained the most disturbing issue to governments in the region.
The World Bank predicts that economic growth in Sub-Saharan Africa remains strong and is poised to grow at an average of 5 per cent this year.
However, on the other hand, the report paints a gloomy picture on some sectors of African economies like tourism which has been playing a key role in attracting foreign exchange.
The authors of the report revealed that the weakening global economy in the second half of 2011 affected tourist arrivals in the region.
In 2011, tourist arrivals in Sub-Saharan Africa were up by 6.2 per cent, higher than the global average of 4.4 per cent, but lower than the 9.6 per cent recorded for the region in 2010, when it benefitted from hosting of the World Cup.
By Martin Luther Oketch
The Monitor Newspaper
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