Foreign-owned companies operating in Uganda recorded higher profits in 2024 but also sent unprecedented amounts of money back to their parent companies abroad, even as the country defied the global downturn in foreign direct investment (FDI).
The details are contained in a Private Sector Investment Survey 2025 by Bank of Uganda (BoU), Uganda Bureau of Statistics (Ubos), and Uganda Investment Authority (UIA).
The survey paints a picture of an economy attracting increasing foreign capital, largely on the back of oil and gas developments, while highlighting an emerging trend of multinational companies distributing more of their earnings as dividends rather than retaining them for reinvestment.
The report shows that net profits earned by foreign-owned enterprises rose by 15.2 percent to $1.43b (Shs5.22 trillion) in 2024 from $1.24b (Shs4.53 trillion) in 2023.
However, dividend declarations increased even faster, rising 32.5 percent to $933m (Shs3.41 trillion), while dividends actually paid or remitted abroad jumped 62.1 percent to $973m (Shs3.55 trillion).
Consequently, retained earnings fell by 7.7 percent to $493m (Shs1.80 trillion), suggesting companies chose to reward shareholders instead of ploughing more profits back into their Ugandan operations.
The stronger corporate earnings coincided with another year of growth in foreign direct investment inflows, making the country one of the few economies to register higher investment despite a difficult global environment.
According to the survey, net FDI inflows increased by 4.1 percent, from $2.99b (Shs10.92 trillion) in 2023 to $3.12b (Shs11.39 trillion) in 2024.
The performance stands in sharp contrast to the global investment landscape. Citing the UN Conference on Trade and Development, the report notes that global FDI fell by 11 percent in 2024 as geopolitical tensions, high borrowing costs, policy uncertainty, and weaker global economic growth discouraged international investment.
The survey says Uganda’s resilience demonstrates the country’s ability to continue attracting foreign capital even as multinational investors became more cautious elsewhere.
Oil dominates investment
The survey makes clear that Uganda’s investment story remains overwhelmingly tied to developments in the petroleum sector.
Nearly 78.5 percent of all foreign direct investment inflows recorded during 2024 were linked to oil-related activities.
Of this, 56.5 percent was invested directly in oil development-related mining activities, while another 22 percent flowed into the transport sector, mainly to finance the construction of the East African Crude Oil Pipeline (EACOP). Manufacturing accounted for 8.3 percent of total FDI inflows.
The report attributes the continued growth to the transition from oil exploration to the development phase ahead of commercial production.
Equity capital, the largest component of FDI and generally regarded as fresh investment, also reflected this trend.
Mining and quarrying alone attracted 65.2 percent of all equity capital inflows during the year, followed by transport with 27.7 percent, leaving relatively small shares for manufacturing and finance.
Dutch investors lead foreign capital
Contrary to the widespread perception that Asian investors dominate Uganda’s investment landscape, the survey identifies the Netherlands as by far the country’s largest source of foreign direct investment.
Dutch investors accounted for 58.8 percent of all FDI inflows in 2024, followed by France with 19.6 percent.
Other significant sources included Kenya (5.3 percent), Switzerland (4.7 percent), UK (4.4 percent) and Tanzania (2.9 percent).
According to the survey, most investments from the Netherlands and France were directed towards the oil sector, while Tanzanian capital primarily supported transport and storage infrastructure associated with petroleum development.
Meanwhile, investments from Kenya, Switzerland and UK were largely channelled into manufacturing, finance and insurance, wholesale and retail trade.
Strongest profits
While oil attracted the largest share of foreign investment, the financial sector generated the highest profits.
Finance and insurance companies accounted for 47.5 percent of all profits earned by foreign-owned enterprises, increasing their earnings from $548.9m (Shs2 trillion) in 2023 to $675.4m (Shs2.47 trillion) in 2024.
Manufacturing and ICT followed, with profits of $327.2m (Shs1.19 trillion) and $236.7m (Shs865b), respectively.
Together, the three sectors contributed almost 87 percent of the total profits reported during the year.
The survey attributes the stronger financial performance to improved economic activity across the economy during 2024, although it notes that the electricity sector continued to record significant losses.
Investment stock rises to $20b
The report also shows that Uganda’s cumulative stock of foreign direct investment continued to expand.
The total stock of FDI rose by 11.5 percent, rising from $18.2b (Shs66.43 trillion) in 2023 to $20.3b (Shs74.10 trillion) in 2024.
The increase was driven by higher equity capital, reinvested earnings, and related debt, with investments concentrated mainly in mining, transport, manufacturing, finance, and insurance.
The survey says the continued growth in FDI stock reflects sustained investor confidence in Uganda’s economy despite challenging international conditions.
Outlook remains positive
The survey notes that foreign investment will remain strong as Uganda moves closer to commercial oil production.
The survey points to continued construction of the East African Crude Oil Pipeline, progress on the central processing facility, refinery developments, and government infrastructure projects.
It cites investments in highways, electricity generation projects, and bridges as key factors expected to improve the investment climate as they are likely to stimulate growth beyond the petroleum industry by boosting construction, transport, logistics, and other support services, reinforcing Uganda’s outlook as an increasingly attractive destination for foreign investors.