The State Minister for Privatization and Investment, Evelyn Anite has issued a strong warning to the leadership at Uganda Investment Authority (UIA) against attracting what she termed as “quack foreign investors” in the country.
She urged the officials at UIA, the government agency responsible for facilitating foreign and domestic investment, to do due diligence on foreign investors to endure they pass the quality mark.
Anite made the warning Wednesday while officially inaugurating the new Board of Directors for UIA. The board which will serve three-year tenure is chaired by Emely Kugonza. Other members are; Morison Rwakakamba, Getrude Lutaya, Godfrey Byamukama and Naima Obombasa.
The new Board comes into force following amendments made in the law that governs UIA which reduced the number of board members from 13 to 7.
“The President intends to transform Uganda into not just a middle income country but a first world economy. How are we going to achieve that? You have to attract high quality foreign direct investment,” the Minister said.
“We must change quality so as to create decent employment for the youths. With youth unemployment at 78 percent, this is a ticking time bomb. You are the Board government is looking at to rescue us from this bomb”.
She pointed out technological capabilities as well as reasonable pay that is not exploitative to workers, as prerequisites for any foreign investors seeking to do business in Uganda.
Anite said that there hasn’t been adequate vetting of foreign investors’ financial capabilities in the recent past, citing the case of Uganda Telecom Ltd (UTL) where government hurriedly sourced for an investor who later turned out to be undercapitalized.
“What happened with UTL, we got quack investors and now we are back on the drawing board. There were over 17 companies that had applied, we did due diligence and there was one Mauritius company that had the financial and technical capabilities. But they lost interest because too many things came into play, so we chose a company (Teleology) that didn’t have money,” she told reporters.
Anite had however expressed reservations towards Teleology, a Nigerian firm, which she claimed lacked the technical expertise to run a telecom business. She had instead backed Mauritius Telecom which had been ranked second.
“I raised the red flag. I said Teleology does not have the money. They (those opposed to Anite’s choice) went ahead and gave them the deal but with strict timelines”.
Anite told reporters that as a condition, government instructed Teleology to avail 10 percent of the total USD 70m it was supposed to invest in UTL within a period of one month. The balance would be availed within three months.
“I can tell you, it is now six months and they (Teleology) have not given a coin. So, they actually did not have the financial capabilities. Now, we are back in the open market. We are even looking locally, in case there are domestic firms who can make UTL a better company for us”
“We don’t want white elephant projects. We don’t want investors who come to sell bananas and chapatis. It’s disheartening”.
The Minister also criticized officials at UIA for mortgaging land to foreign investors. She revealed that this has happened in cases involving 12 investors and directed that these be cancelled.
She reminded the newly inaugurated Board of the ambitious task at hand, to create 1 million jobs annually and expanding the number of industrial parks from the current 11 to 25 across Uganda.