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Determinants of Private Investment Behaviour in Ugandan Manufacturing Firms

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  • Niringiye, Aggrey

Abstract

This study investigated the determinants of private investment behaviour using panel data. Evidence shows a combination of relatively low investment rates, high profit rates, but small profit effects on investment in Sub-Saharan Africa. Little was previously known about the determinants of investment in Ugandan manufacturing firms. This study adopted the flexible accelerator model with some modifications. The probit and tobit regression models were used in the analysis. The tobit regression results showed that debt capital ratio, financing of new investments with credit, and access to credit problems were consistently associated with the propensity to invest. Other factors found to be associated with the propensity to invest include ethnicity, firm size, corruption, skill problems and competition from imports. Sector effects also influence the decision to invest or not. It is clear from the results that low access to credit and inadequate skills are hindrances to manufacturing firms' investments in Uganda.

Suggested Citation

  • Niringiye, Aggrey, 2014. "Determinants of Private Investment Behaviour in Ugandan Manufacturing Firms," Working Papers 1949157d-930e-4592-be1c-c, African Economic Research Consortium.
    • Handle: RePEc:aer:wpaper:1949157d-930e-4592-be1c-c04595909c37
    Note: African Economic Research Consortium
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