Investing in Uganda
Presentation toInvited Guests at the Uganda Embassy,Tokyo, Japan 27th March 2014

By Eng. Dr. Frank B Sebbowa
Executive Director
Uganda Investment Authority
Email: fsebbowa@ugandainvest.go.ug

Key Highlights About Uganda

Geographical & DemographicalPopulation: 35.6 million (2012 est.)

UgandaKey Facts

Area sq km

241,038

CapitalKampalaLanguages

English is the official languagewith Luganda as the regional
language. Swahili is taking
root as an East African
Commercial Language .

Currency

Ugandan shilling (UGX)

Dialing Code256

Labor force
engaged inagriculture

81.2%

Part of EAC Population : 138 Million
Also part of COMESA Population : 490 Million

Location at the Heart of Africa

Economical Highlights
Sector-specific GDP constitution (2010)

4.2%

22.9%

574.1 590.0

600

8.3%
8.9%
22.0%

9.6%

18.7%

700

13.0%

Agriculture, forestry, fishing & hunting
Wholesale and retail trade, hotels and restaurants
Construction
Transport, storage and communication
Other services
Manufacturing
Finance, real estate and business services
Electricity, gas and water
Public administration, education, healthMining and quarrying
Sources: African Economic Outlook 2012 (Uganda), Unctad Stat, IMF

GDP per capita (US$)

7.3%

3.5%

0.3%

GDP and inflation trends in Uganda

800

500

613.3

639.7

675.7

712.8

14%

508.0 504.9 14.6%

12%
10%
6.1%

5.1%

200

5.7%
4.2%

6.5%

7.0%

7.0%

7.0%

8%
6%

6.1%
5.0%

100

18%
16%

400
300

20%

5.0%

5.0%

5.0%

4.0%

4%
2%

00%
2010 2011* 2012* 2013* 2014* 2015* 2016* 2017*
GDP per capita

GDP % change

Inflation % change

Economical Highlights

Source: Uganda Bureau of Statistics, Statistical Abstract 2011

Investment Climate:

Political Stability (28yrs)– Strong & Visionary Executive– Good & Regularly Elected Legislature– Independent Judiciary (Commercial Court)

Infrastructure– Entebbe Airport (plus other aerodromes)– More that 10 private internet service providers– Good Road Network– Railway through to Indian Ocean Mombasa Port

Economic Stability– Fully Liberalized Forex transactions– Inflation about 6% for past 10yrs– More than 20 Private BanksOTHER REASONS FOR INVESTING IN UGANDA:•Strong economic growth averaging 7.7% per annum since 2000
•Macroeconomic stability•Market access through various international trade agreements•Abundant natural resources•Trainable labor force: 15,000 university graduates every year
•Amiable Climate•Central Location for Regional Market (140 million People in EAC)
•Resource Rich (Agriculture, Minerals, Tourism, Flora and Fauna)•Welcoming population (54 Different Ugandan cultures)•Good Governance (Multi-party democracy: election every 5yrs since 1986)

Uganda: Fore Runner in the EAC
for FDI
FDI Inflows USD, 1990-2012

FDI Inflows to the EAC (USA $Million 2006-2012)You will be Among Other Investors
Top Ten FDI Sources FY 2011/2012250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

Netherlands

UnitedKingdom

Sweden

Kenya

India

China

Sri Lanka

South Korea

IranEritrea

Government Initiatives
Uganda Investment Authority (UIA)•Provides first hand information on investment opportunities•Issue Investment Licenses•Assist in securing other licenses and secondary approvals for investors•Help investors to implement their project ideas through assistance in locating
relevant project support services•Provide assistance in the acquisition of industrial land
•Help obtain work permits and special passes for investors and their expatriate staff•Assist investors in seeking joint venture partners and funding
Investment Capital Allowances•50-75% initial allowance on plant and machinery•25% on start up cost spread over 4 years•100% on scientific research, training and mineral exploration expenditures•20% initial allowance on hotel, hospitals and Industrial buildings•Depreciation rates of assets ranging between 20-40%•5% depreciation rate for Hotels, Industrial Buildings and Hospitals

Government Initiatives
Investment Guarantees
The Investment Code guarantees :• Non-nationalization, or non-confiscation of his investment• Such acquisition is only allowed by law and in consideration of a just compensation• The compensation so determined is fully transferrable outside Uganda and ot subject to any exchange controls

Favorable Tax Environment
Investment Law covers• VAT refund on building materials for industrial/commercial buildings for investors who register as investment traders• Duty and Tax free import of Plant & Machinery• Duty exemptions on some personal effects

Dispute Settlement
The law stipulates a clear mechanism of dispute settlement between business parties and between the government
and a private investor. In case the dispute is not solved through the national courts, the law also allows settlement via
international arbitration or multilateral agreements or any other international machinery agreed to by the parties.

Government Initiatives
Repatriation of Capital
An investor in Uganda is entitled to repatriate funds for the following purposes:• Repayment of foreign loans or interest on those loans• Payment of dividends of shareholders who are not citizens of Uganda or to citizens of Uganda resident abroad• Payment of royalties or fees in respect of an agreement for the transfer of foreign technology or expertise• Payments of emoluments and other benefits to foreign personnel employed in Uganda in connection with thebusiness enterprise

Presidential Investors Round Table Policy Recommendations to Government
Diaspora Investment Promotion

Diaspora which is now emerging as the leading contributor to the Economic development in AfricanEconomies•2010 Total Value Transferred USD 768m .▪ Cash accounted for 89% of the total• 11% is in kind (clothing & footwear, food items & general eqpt)• Personal transfers account for about 5% of GDP
Industrial Parks
A Tool for Economic Growth4/1/2014 |Uganda Investment Authority

12Taxation
The tax system has undergone several
reforms in the last few years in termsof tax administration and policy. Better
government initiatives and policies
have resulted in broadening of tax
base, with tax revenue contributing
about 14% of the GDP.
The taxes are collected by selfassessment and by with-holding tax on
payments to residents and nonresidents. The government iscommitted towards fair and equitable
tax administration.

Type of tax

Rate

Income Tax Rate30%

The corporate tax varies for mining
companies from 25% and 45%

30%

Capital gains are taxable that arederived from the disposal of assets
held by the company

15%

Tax is exempted in the case, aresident recipient company controls
25% or more of the voting power ofthe resident payer company

0%-30%

Income in excess of UGX 4.92 million
is taxed at 30%. For oil and gas
sector, resident contractors and subcontractors are taxed at 30%

Value-added tax

18%

Supply of goods used in agriculture,
health and education is exemptedfrom value-added tax

Social SecurityContributions

5%

The contribution goes to Nationalsocial security fundRoyalties

15%

The royalties may be reduced under atax treaty

0.5%

Charged for increase in nominal
capital and for incorporation of thecompany

Capital Gains Tax
Rate
Dividends andinterest

Personal tax

Capital duty

Comments

Reasons for investing in Uganda
by Type of ownership

OthersLow cost of doing business
Availability of rawmaterials
Simplified investment…
Attractive investment…

Joint venture

Availablility of infrastructure

Domestic

Geographical location of…

Foreign

Good weather and climate
Affordable labour
Domestic and regional…
Economic and political…
-20.0

40.0

60.0

80.0

percentage response

100.0Reasons for investing in Uganda

Type of Business Decision by the Firm

Level of Government Intervention in Influencing Firms’ Business Decisions

Wages

2%

Dividends

2%

Merger/Acquisitions

84%

Investment

Never intervenes

58%

30%

12%
10%

77%

19%

4%

0%

80%

16%

13%

3%

Employment

90%

7%

4%

Sales

93%

5%

2%

Pricing

85%

12%

20%

30%

40%

50%

Sometimes intervenes

60%

70%

80%

Always intervenes

90%

100%

Top 20 Sources by Number of Projects,
2012/13

Top 10 Sources of Planned FDI by Value 2009/10 to 2011/13
2009/ 2010

Investment

2010/ 2011

Country

2011/ 2012

Investment

2012/ 2013

Investment

Country

Investment

Country
China288,222,949 India

149,394,923

Netherlands

200,886,162

China

359,152,197

2

Kenya

231,219,751 Kenya

76,506,737

104,394,191

Canada143,588,000

3

India

196,702,034 Netherlands 69,808,590

UnitedKingdom
Sweden78,400,539

Kenya

113,007,806

4

U.K

95,060,500

Norway67,931,140

Kenya

36,743,653

India

91,692,309

5

UAE

35,000,000

China

56,293,500

India

25,861,789

75,696,811

6

Russia20,848,000

Iran

22,724,376

China

22,686,821

UnitedKingdomItaly

30,235,063

7

Canada 18,630,500

Turkey14,515,100

Sri Lanka

18,460,000

South Africa

19,567,800

8Nigeria

16,194,895

Mauritius

14,318,000

South Korea

5,731,000

18,122,000

9

Togo

12,351,000

14,254,194

Iran

5,000,000

12,720,000

10VirginIslands

8,589,000

UnitedKingdomSouth
AfricaCaymanIslands
United States

13,238,465

Eritrea

4,210,250

Sudan

11,331,500

1Uganda’s Priority Investment Sectors• Agro-Business (Value-Adding)• Tourism• Information Communication Technology• Mining and Mineral Beneficiation• And Others

AgricultureCropsLarge Farming&Processing(Value-Adding)

Sun Flower

Agriculture Continued Manufacture of Agricultural requirements:
Tractors, Pesticides, Herbicides, Fertilizers, Silos and packaging
materials etc.

Forestry:
Commercial farming, processing of forestry products etc.

Livestock:
Commercial farming, beef processing, milk processing,leather tanning, manufacture of animal feeds.

Fisheries:
Commercial farming (Cage and pond) fish processing,sport fishing, fish feeds, cold storage facilities etc.

Tourism•Accommodation & conferences•Training for tour operators•Water sports and related activities•Specialized transport for tourists•Joint ventures with existing players•Tourists

White-Water Rafting on the Nile River

Information & Communication
Technology•Provision of ICT-Enabled Services e.g. Data Processing, OutsourcedBusiness Processing•Software Development and Software Exports•Setting up Information hubs and Web sites to facilitate e-mails•Setting up Film Production Centers e.g. Graphic Animation•Local Assembly of ICT Equipment•ICT Tele-centers and Internet Café`s•ICT Training Facilities (Institutions)Uganda: CONNECTED BY SATILITE & FIBRE OPTIC MARINE CABLE

Mining (value-adding)
Uganda offers a variety of opportunities:
Dimension stone products (Marble and Granite)
Phosphates
GoldIron ore
Container glass from silica sands vermiculite

Oil and Gas (Exploration, Crude & Refined Pipelines)
Petroleum (Petrochemical related Industry)Others: - Services•Education (Vocational Inst,P/technical, Linkage with tertiary Inst.)•Health (Specialised diagnostic
facilities, Pharmaceuticals,Generic/herbal Tele-medicine, Medical
Equipment)•Financial Services (Specialised
Financial products, Re-insurance)

Open-heart surgery

Other Investment Opportunities : - Energy
Uganda offers a variety of opportunities i.e.
HydroWindSolar

Bio mass

Manufacture of electrical and electronic equipment.

NOTE: Uganda appreciates JICA for support in Power Systems

INVESTMENT INCENTIVESDuty and Tax free import of plant & machinery
Capital Allowances on P & M

50% - 75%

Start up cost spread over 4 years

25% p.a.

Scientific research expenditure100%Training expenditure100%Mineral exploration expenditure100%Initial allowance on industrial buildings

20%

Depreciation rate for industrial buildings5%Depreciation rates of assets range

20% - 40%

(Subject to amendment by Uganda Revenue Authority)

Why Invest in Uganda• Predictable Investment Environment• Fully Liberalized Economy• Central to Large Market Access• Trainable Young Labour Force• Friendly People• Weather (welcoming warmth all year)Uganda Investment Authority
Email: info@ugandainvest.go.ug
Web: www.ugandainvest.go.ug
Plot 22 Lumumba Avenue
Tel: +256 414 301 000
P. O. Box 7418
KAMPALA, Uganda

Thank You
4/1/2014

29