Fluctuating exchange rates, rampant corruption and high interest rates remain the most salient constraints to private investment in Uganda, according to a survey quoted by the state-owned New Vision on Monday.

Lawrence Byensi, the director of investment facilitation division at the Uganda Investment Authority (UIA), revealed that most investors felt exchange rates (56.4 percent) were the biggest hindrance, followed by corruption (55.4 percent) and interest rates (54.8 percent).

Other constrains cited in the 2005 Foreign Private Capital Survey were inflation, VAT, income tax, customs duty, tax policy, power shortage and corporate tax.

The survey was the fifth of its kind in a series of annual surveys conducted by Bank of Uganda (BOU), UIA and Ugandan Bureau of Statistics aimed at monitoring private sector investments in Uganda for the period of 2003, 2004 and 2005.

Michael Atingi-Ego, BOU's executive director for research, said although the exchange rate had been stable over the last two years, the responses were based on the 2001/2002 volatile market conditions when the previous surveys were conducted.

"What the perceptions meant was that the volatility in the exchange rate was a major constraint," he explained.

Atingi-Ego said there was need to undertake structural reforms in order to reduce the high lending interest rates because BOU has little control over high lending rates.

Source: Xinhua