Most recent corruption perceptions index issued by the Transparency International have positioned Canada on 9th being one of the highest ranked countries in the world corresponding to one of the least corrupted, where Uganda was ranked 139th (2015). With clear gap between these country’s ranks, Uganda show greater opaqueness in their governing mechanisms, driving away potential foreign investment opportunities compared to Canada.
Ineffectiveness of legal system has high correlation to corruption levels of the country storming heavy impact on the financial sector. With biggest issues of accessibility to legal system has made a snowball impact in Uganda with less transparent policy …show more content…
One of the main problem is misallocation of resources such as investments and human capital where in Uganda, public funds are frequently embezzled leading to overall depletion of country’s wealth (DFID, 2015). This creates higher expected cost in both domestic and foreign market, restricting trade and investment opportunity. Hence in the long term there is a reduction in GDP growth rate. In social sector, corruption leads to declining standard of living due to deficiencies in education and healthcare caused by growing cost of provision and incompetent quality of service due to nepotism (OECD, 2014). This effect is worsened by corrosion of government’s credibility and legitimacy where the public are continually disappointed by their government’s inability provide lasting anti- corruption solutions in their economy (IMF, 1998).
Political risk in Canada and Uganda. To assess political risk, we need to investigate the country’s political environment and their treatment towards foreign investors. This investigation starts with combined analysis of historical data and current news where evidences are gathered by simple observation method i.e. reading newspaper. Effectiveness of this assessment is further integrated by utilising country risk rating systems of various specialists and academics. …show more content…
However, trends have shown, Uganda faces an immense economic turmoil after political elections where in 2011, the currency value decreased by almost 25% due to increase in political tension. With recent 2016 election, experts forecast a fragile economy with value of Uganda shilling to decline (Ojulu, 2016). Similarly, Canada experienced a recent change in government in 2015 election was won by Prime Minister Trudeau and his Liberal Party. Despite an increase of political tension, Canada experienced slighter volatility than Uganda. This would be due to Canada open-market agreements with other nations which effectively regulate the international trade and investments (IEF, 2016). Also, PM Trudeau continuously heighten political stability by attending various international forums like United Nations (The Canadian Press,