Investment Incentives Regime and Growth of Private Sector Investment in Uganda

  • Robert Mugabe
Keywords: Investment, Incentives, Regime, Growth, Private Sector


Local market was regarded as a very significant factor influencing firms’ decisions to establish their enterprises in the country but within a healthy macroeconomic stability that includes price stability and real exchange rate stability. The objective of the study was to determine the Uganda’s current investment incentives regime on private sector investment. The study findings revealed that availability of local market, price stability, access to finance/investment, tax concessions and access to free land were the most cited incentives, medium and large-scale firms have benefited from the government. The study further found out that medium and large scale enterprises enjoying incentives were found to be foreign owned or jointly owned by the government and foreigners under public-private partnerships denying local investors the same benefits that they don’t meet the requirements to enable them enjoy the same benefits. This creates unfair competition in the local markets. Government has put in place bodies/institutions with the mandate to grant and administer investment incentives to the private sector on behalf of the government with the intention of promoting the growth of private sector since the private sector is regarded as an engine of economic growth. In that regard, Uganda Investment Authority was regarded as the most effective and Uganda Electricity Regulatory Authority was regarded as the worst performer in meeting the objective of its formation since electricity tariff has remained high and were found to be very prohibitive. The study further found out that an increase in credit to private sector in form of concessionary loans and a longer repayment period accompanied by stability in real exchange rate that creates stability in prices of imported intermediate goods that are used in the production process significantly promote the growth of private sector.