A new law—the Foreign Exchange Regulation Act 2022—allowed more foreign players to invest in the local debt market while also inviting investors from the Southern Africa Development Community to purchase government bonds.

Uganda on the rise

The Ugandan economy grew at 4.6% this year, faster than had been predicted, with the World Bank citing an uptick in business activity after the economy reopened last January after a two-year closure over the covid-19 pandemic. “On the supply side, services, and industry were the main drivers of economic growth. There was also strong recovery in wholesale and retail trade, real estate, and education, with industry rebounding through construction and manufacturing,” the World Bank says. It anticipates the rate of economic growth could rise to over 6% in the medium term.

Meanwhile, this year’s Africa Happiness Index, a survey of 40 African countries, ranks Ugandans as the happiest citizens in East Africa. It uses parameters such as per-capita GDP, social support, healthy life expectancy, freedom to make choices, and generosity.

And the International Monetary Fund (IMF) has praised a move by the Bank of Uganda to control inflation by tightening liquidity conditions, predicting that per capita income will rise from $812 to $1,180 by 2026.

However, the country’s GDP was $40 billion last year, trailing Kenya and Tanzania, which were at $110 billion and $67 billion respectively.

Africa is embracing sustainable finance

According OMFIF chair David Marsh, “Deepening local financial markets is now universally seen as an optimal means of hedging against international economic fluctuations. African countries are embracing sustainable finance, incorporating international investment norms and in some cases adopting pioneering methods.”

But for Uganda to unseat Kenya as the leading financial hub, it will have to do more to grow its fintech and mobile money sector so it can bank its huge unbanked population. To attract even more foreign investors, the country must stop internet throttling and create a conducive environment for startup growth.

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