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>Uganda has a massive financial sector (for a country as poor as it is) Is that actually a good thing?

• alephnerd 3y ago
  Yes. A strong and professional financial sector is a massive value add for development. Access to capital is often one of the largest blockers to business creation, and Uganda's robust financial system can ease foreigner investors qualms about investing in Uganda directly. There's a reason why foreign companies used to make a HK Shell to enter the Chinese market - it was because business and financial jurispruence was historically stronger in HK over mainland China. By having a robust local financial sector, FDI can just go directly to a business in Uganda instead of having to create a subsidiary of a subsidiary domiciled in Marutius, UAE, London, Singapore, etc which has benefits for Uganda from a tax collection perspective along with from a foreign investors relations standpoint. Add to that the fact that neighboring Kenya has an equally robust financial sector as well and that means there is a lot of capital that can flow all over East Africa.
  • thfuran 3y ago
    Having a financial sector is useful. I'm not convinced that having an especially huge financial sector is good. I think the financial sector often drives a lot of socially undesirable outcomes, and having any company or sector represent a very significant chunk of an economy, whether that's local or national, tends to give it more political influence than it really ought to have. >There's a reason why foreign companies used to make a HK Shell to enter the Chinese market - it was because business and financial jurispruence was historically stronger in HK over mainland China. That and they were legally mandated to open one somewhere in China.