Investors look beyond anti-gay law and stick with Uganda
Fuzzy guidelines on ethical investing and donors’ timid response to Uganda’s new anti-gay law have reassured fund managers and private equity firms about continuing to invest in the newly oil-rich country, despite worldwide criticism.
Business leader Richard Branson was among those to object when the east African country signed legislation this year which strengthened punishments for anyone caught having gay sex, imposing jail terms of up to life for “aggravated homosexuality” - including sex with a minor or while HIV-positive. It also criminalised lesbianism for the first time.
The law - slightly watered down from original plans a few years ago that included the death penalty for those considered worst offenders - drew criticism from western governments too.
The White House said it was reviewing its relationship with Uganda’s government.
Branson, the billionaire founder of the Virgin Group conglomerate, said he had been seriously considering investing in Uganda but would not now do so. (here)
“I find the imposition of the new anti-gay laws in Uganda very sad and damaging to the country’s reputation and prospects,” Branson said on Tuesday in e-mailed comments to Reuters.
“The new laws will put people off and we will not be setting up new business in Uganda while they exist.”
But so far, the new law has resulted in the redirection of just $118 million or so in aid, unlikely to make a big dent in the country’s budget. And guidelines on socially responsible investing do not necessarily cover discrimination by sexuality.
Zain Latif, founder of investment holding company TLG Capital, which invests in frontier market companies, has two ongoing projects in Uganda.
“There has been a lot more talk than action,” Latif said, pointing to a relatively muted reaction to the law in Uganda’s exchange rate.
“With Africa you have a lot of noise - if you focus on why we are investing in Africa, that has not really changed.”
The attractions of Uganda include a likely 7 percent growth path, according to the World Bank, and as with many other frontier markets, a young and growing population, rising middle class and consumer demand and high returns on domestic debt.