HomeReportsBureau of Economic and Business Affairs2019 Investment Climate Statements...Uganda

# 					2019 Investment Climate Statements: Uganda			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Uganda’s investment climate continues to present both important opportunities and major challenges for U.S. investors.  With a market economy, ideal climate, ample arable land, young and largely English-speaking population, and at least 1.4 billion barrels of recoverable oil, Uganda offers numerous opportunities for investors.  Uganda’s Gross Domestic Product (GDP) grew by 6.3 percent in fiscal year (FY) 2017-2018, and the International Monetary Fund expects nearly the same growth rate in 2018-2019. Uganda maintains a liberal trade and foreign exchange regime.  Foreign Direct Investment (FDI) grew by nine percent in FY 2017-2018, powered by increased equity investment, infrastructure spending, and investment in the oil and gas sector. Uganda’s power, agricultural, construction, infrastructure, technology, and healthcare sectors present important opportunities for U.S. business and investment.  President Yoweri Museveni and Ugandan government officials vocally welcome foreign investment in Uganda.

The government’s actions sometimes do not support its rhetoric, however.  Closing political space, poor economic management, endemic corruption, growing sovereign debt, and the government’s failure to invest adequately in the health and education sectors or give a voice to its burgeoning young population all create risks for investors.  U.S. firms may also find themselves competing with third country firms that cut costs and win contracts by disregarding environmental regulations and labor rights, dodging taxes, and bribing officials. Shortages of skilled labor and a complicated land tenure system also impede investment.

An uncertain mid-to-long-range political environment also increases risk to foreign businesses and investors.  In February 2019, the government arrested and deported four top executives of a leading foreign-owned telecommunications company on spurious charges of treason and maintaining connections to a leading opposition politician.  The government also levied a seemingly arbitrary charge for renewal of the company’s operating license. These types of actions could increase in the run- up to 2021 elections as the 34-year incumbent president faces new challengers, with a resultantly chilling effect on foreign investment.

On the legislative front, a new 2019 investment law introduces some new protections and incentives, but also includes vague language about minimum investment thresholds and performance requirements.  Early analysis suggests that two new taxes on social media and mobile money transactions, largely seen by analysts as regressive, are affecting financial inclusion and technological innovation.

*Table 1: Key Metrics and Rankings*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Ugandan authorities vocally welcome FDI, and Uganda’s legal regime generally facilitates FDI.  A new Investment Code Act (new ICA) came into force in February 2019. The new ICA defines investment more broadly, to include both FDI and portfolio investment.  It also includes international development agencies and companies incorporated in Uganda but with foreign ownership or control in the “foreign investor” category. The new ICA abolishes restrictions on technology transfer and on repatriation of funds by foreign investors.  It establishes new incentives for investment, and grandfathers in old incentives.

Uganda’s laws do not discriminate against foreign investors per se.  Some provisions of the new ICA may discourage FDI, however. Investors must obtain a license from the Uganda Investment Authority (UIA) before investing.  The new ICA establishes a minimum threshold value of USD 250,000 for FDI and a yet-to-be-specified minimum threshold value for portfolio investment. The Ugandan authorities can alter these minimums at any time, thereby creating potential uncertainty for investors.  Additionally, investment licenses may carry specific performance conditions, such as requiring investors to permit the UIA to monitor operations, or to employ or train Ugandan citizens or use Ugandan goods and services to the greatest extent possible. Further, the Ugandan government may revoke investment licenses of entities that “tarnish the good repute of Uganda as an attractive base for investment.”  The government has yet to revoke any investor license on this ground.

Sending a possibly chilling signal to would-be foreign investors, in early 2019, the government accused South African telecoms giant MTN of conspiring with foreigners to commit treason, deported several of its top foreign executives, and reportedly pressured it to list on the Ugandan stock exchange and sell at least 20 percent of its equity to Ugandans.  In a seemingly arbitrary manner, the government also raised the fee for renewal of MTN’s license from USD 100 million to USD 118 million.

The UIA facilitates investment by granting licenses to foreign investors, as well as promoting, facilitating, and supervising investments in Uganda.  It provides a “one stop” shop online where investors can apply for a license, pay fees, register businesses, apply for land titles, and apply for tax identification numbers.  In practice, investors may also need to liaise with other authorities to complete legal requirements. The UIA also triages complaints from foreign investors. The UIA’s website (www.ugandainvest.go.ug  ) and the Business in Development Network Guide to Uganda (www.bidnetwork.org  ) provide information on the laws and reporting requirements for foreign investors.

In practice, investors often bypass the UIA after facing delays, poorly enforced regulations, and corruption.  For larger investments, companies have reported that political support from a high-ranking Ugandan official is a prerequisite.

President Museveni hosts an annual investors’ round table to consult a select group of both foreign and local investors on increasing investment in Uganda, occasionally including U.S. investors.  Every Ugandan embassy has a trade and investment desk charged with advertising investment opportunities in the country. In January 2019, the government conducted a workshop to train its diplomats on investment promotion.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

With the exception of land, foreigners have the right to own property, establish businesses, and make investments.  The new ICA eliminates all obligations and restrictions regarding technology transfer, intellectual property, and repatriation of funds.  Ugandan law permits foreign investors to acquire domestic enterprises and to establish green field investments. The Companies Act of 2010 permits the registration of companies incorporated outside of Uganda.

As detailed above, all investors must secure a license from the UIA.  The Ugandan authorities evaluate investment proposals based on a number of criteria, including potential for generation of new earnings; savings of foreign exchange; the utilization of local materials, supplies and services; the creation of employment opportunities in Uganda; the introduction of advanced technology or upgrading of indigenous technology; and the contribution to locally or regionally balanced socioeconomic development.

Foreigners wishing to invest in the oil and gas sector must apply for registration in through the Petroleum Authority of Uganda (PAU) National Supplier Database.  More information is available at the Embassy’s website on this process (select – Registering a U.S. Firm on the National Supplier Database): https://ug.usembassy.gov/business/commercial-opportunities/

Uganda’s petroleum laws already impel foreign oil companies to preference local goods and labor where available, with the Minister of Energy authorized to determine the extent of required local content.

**Other Investment Policy Reviews**

- The United Nations Commission on Trade and Development (UNCTAD) issued its World Investment Report, 2018, available at:  https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2130  
- The International Monetary Fund issued an Article IV Consultation and Review in 2019, and its concluding statement is available at:  www.imf.org/en/News/Articles/2019/02/14/mcs021419-uganda-staff-concluding-statement-of-the-2019-article-iv-mission  

**Business Facilitation**

The UIA one-stop shop website assists in registering businesses and investments.  In practice, investors and business may need to liaise with multiple authorities to set up shop, and the UIA lacks the capacity to play a robust and proactive business facilitation role.  According to the 2018 World Bank Doing Business report, business registration takes an average of 24 days.

Prospective investors can also register online and apply for an investment license at https://www.ebiz.go.ug/  .  The UIA also assists with the establishment of local subsidiaries of foreign firms by assisting in registration with the Uganda Registration Services Bureau (URSB) (http://ursb.go.ug/  ).  New businesses are required to obtain a Tax Identification Number from the Uganda Revenue Authority (URA), which they can do online (https://www.ura.go.ug/myTin.do  ) or through the UIA.  Businesses must also secure a trade license from the municipality or local government in the area in which they intend to operate.  Investors in specialized sectors such as finance, telecoms, and petroleum often need an extra permit from the relevant ministry in coordination with the UIA.

Under the Uganda Free Zones Act of 2014, the government continues to establish free trade zones for foreign investors with an export orientation.  Such investors receive a range of benefits including tax rebates on imported inputs and exported products. An investor seeking a free zone license may lodge an application with the Uganda Free Zones Authority (https://freezones.go.ug/  ).

**Outward Investment**

The GOU does not promote or incentivize outward investment, nor restrict domestic investors from investing abroad.

							2. Bilateral Investment Agreements and Taxation Treaties					

Uganda has bilateral investment protection treaties with the following countries:  BLEU (Belgium-Luxembourg Economic Union), China, Cuba, Denmark, Egypt, Eritrea, France, Germany, Italy, Netherlands, Nigeria, South Africa, Switzerland, United Kingdom, and Zimbabwe.

Although the countries of the East African Community (EAC) agreed on a text for an Economic Partnership Agreement (EPA) with the European Union (EU) in October 2014, the parties have yet to ratify the agreement.

Uganda does not have a bilateral investment protection treaty, nor a free trade agreement, with the United States.

The United States has Trade and Investment Framework Agreements (TIFAs) with the EAC and the Common Market for Eastern and Southern Africa (COMESA), both organizations to which Uganda belongs.  In 2015, the United States and the EAC also signed a Cooperation Agreement to increase trade-related capacity in the region and deepen economic ties. Within the EAC, the slow pace of regulatory reform, lack of harmonization, non-tariff barriers, and bureaucratic inefficiencies still hamper the free movement of goods, capital, and people among member states.

In March 2018, Uganda signed the Treaty Establishing the African Continental Free Trade Area (AfCFTA).

Uganda does not have a tax treaty with the U.S., but has bilateral taxation treaties with the following countries:  Denmark, India, Mauritius, Netherlands, Norway, South Africa, United Kingdom, and Italy.

In 2018, the government introduced new taxes on social media and mobile money transactions, largely seen as regressive by analysts and widely criticized by the telecom industry.  Early analysis suggests that the taxes are having a deleterious effect on both financial inclusion and technological innovation.

Uganda imposes a 15 percent withholding tax on “every person or company who derives any dividend, interest, royalty, rent, natural resource payment, or management charge from sources in Uganda.”  The URA also charges an 18 percent value-added tax (VAT) on business transactions conducted with a foreign firm.  URA does not allow companies to offset this foreign service tax against their withholding tax, effectively charging a 33 percent tax on all foreign services.  This tax disproportionately impacts U.S. businesses offering software and cloud services.

							3. Legal Regime					

**Transparency of the Regulatory System**

On paper, Uganda’s legal and regulatory systems are generally transparent and non-discriminatory, and in accordance with international norms.  In practice, bureaucratic hurdles and corruption significantly affect all investors, but with disproportionate effect on foreigners learning to navigate a parallel informal system.  While Ugandan law requires open and transparent competition on government project tenders, U.S. investors have alleged that endemic corruption means that competitors not subject to the Foreign Corrupt Practices Act can pay bribes to win awards.

Ugandan law allows the banking, insurance, and media sectors to establish self-regulatory processes through private associations.  The government continues to regulate these sectors, however, and the self-regulatory practices generally do not discriminate against foreign investors.

Potential investors must be aware of local, national, and supra-national regulatory requirements in Uganda.  For example, international EAC rules on free movement of goods and services would affect an investor planning to export to the regional market.  Similarly, regulations issued by local governments regarding operational hours or the location of factories would affect an investor’s decision at a local level only.  Foreign investors should liaise with relevant ministries to understand regulations in the proposed sector for investment.

Uganda’s accounting procedures are broadly transparent and consistent with international norms, though full implementation remains a challenge.  Publicly listed companies must comply with accounting procedures consistent with the International Auditing and Assurance Standards Board.

Governmental agencies making regulations typically engage in only limited public consultation.  Draft bills similarly are subject to limited public consultation and review. Local media typically cover public comment only on more controversial bills.  Although the government publishes laws and regulations in full in the Uganda Gazette, the gazette is not available online and can only be accessed through purchase of hard copies at the Uganda Printing and Publishing Corporation offices.   The Uganda Legal Information Institute also publishes all enacted laws on its website (https://ulii.org/  ).

Uganda’s court system and Inspector General of Government ensure governmental adherence to the administrative process, although anecdotal reports suggest that corruption significantly undermines the judiciary’s oversight role.

Public finances are generally transparent and budget documents are available online.  However, the government’s significant use of supplementary and classified budget accounts undermines parliamentary and public oversight of public finances.  Some analysts believe that Uganda’s growing public debt burden is higher than official government reports indicate.

**International Regulatory Considerations**

Per treaty, Uganda’s regulatory systems must conform to the below supranational regulatory systems.  In practice, domestication of supranational legislation remains imperfect:

- African, Caribbean, and Pacific Group of States (ACP)
- African Union (AU)
- Common Market for Eastern and Southern Africa (COMESA)
- Commonwealth of Nations
- East African Community (EAC)

Uganda is a member of the WTO and notifies the WTO Committee on Technical Barriers to Trade (TBT) of all draft technical regulations through the Ugandan Ministry of Trade’s National TBT Coordination Committee.

**Legal System and Judicial Independence**

Uganda’s legal system is based on English Common Law.  The courts are responsible for enforcing contracts. Litigants must first submit commercial disputes for mediation either within the court system or to the government-run Center of Arbitration for Dispute Resolution (CADER).  Uganda does not have a singular commercial law; multiple statutes touch on commercial and contractual law. A specialized commercial court adjudicates commercial disputes. Approximately 80 percent of commercial disputes are resolved through mediation.  Litigants may appeal commercial court decisions and regulatory and enforcement actions through the regular national court system.

While in theory independent, in practice there are credible reports that the executive may attempt to influence the courts in high-profile cases.  More importantly for most investors, endemic corruption and significant backlogs hamper the judiciary’s impartiality and efficacy.

**Laws and Regulations on Foreign Direct Investment**

The Constitution and new ICA regulate FDI.  The UIA provides an online “one stop shop” for investors (www.ugandainvest.go.ug  ).

**Competition and Anti-Trust Laws**

Uganda does not have any specialized laws or institutions dedicated to competition-related concerns, although the regular courts occasionally handle disputes with competition elements.

**Expropriation and Compensation**

The constitution guarantees the right to property for all persons, domestic and foreign.  It also prohibits the expropriation of property, except when in the “national interest” as eminent domain, and preceded by compensation to the owner at fair market value.  In March 2019, the government announced plans to table a new land amendment bill to facilitate large infrastructure projects while respecting the constitutionally protected rights of landowners.  Details and the timeline for passage of the controversial bill remain unclear. Some observers considered the government’s pressure in early 2019 on telecoms giant MTN to sell at least 20 per cent of its equity to Ugandans to be a form of expropriation.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Uganda is a party to both the ICSID Convention and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.  The domestic Arbitration and Conciliation Act incorporates the 1958 New York Convention.

*Investor-State Dispute Settlement*

Pursuant to the Arbitration and Conciliation Act, the courts and government in theory accept binding arbitration with foreign investors and between private parties.  In practice, the overall challenges of the judiciary are likely to impede full enforcement. There is no recent history of prominent extrajudicial action against foreign investors.  Uganda has not been involved in any investment disputes with a U.S person in the last ten years; however, U.S. firms do complain about serious corruption in the award of government tenders.

*International Commercial Arbitration and Foreign Courts*

Ugandan law provides for arbitration and mediation of civil disputes.  The legal framework on arbitration includes the Arbitration and Conciliation Act and Commercial Court Division Mediation Rules.  Litigants must first submit all civil disputes to mediation before a court-appointed mediator. CADER is a statutory institution that facilitates the mediation and operates based on the UNCITRAL Arbitration rules.

Most investment disputes in Uganda are resolved through unrecorded private arbitration.  The Foreign Judgments Reciprocal Enforcement Act enables the recognition and enforcement of judgments and awards made by foreign courts.

There is no evidence that Ugandan courts favor state owned enterprises when arbitrating or adjudicating disputes.

**Bankruptcy Regulations**

The Bankruptcy Act of 1931, the Insolvency Act of 2011, as well as the Insolvency Regulations of 2013 generally align Uganda’s legal framework on insolvency with international standards.   Uganda ranked 112 out of 190 countries for resolving insolvency in the 2019 World Bank Doing Business Report. Uganda averages 39.3 cents on the dollar for recoveries, well above the sub-Saharan average of 20 cents per dollar.  Bankruptcy is not criminalized.

							4. Industrial Policies					

**Investment Incentives**

The government is still formulating new investment incentives after the enactment of the new ICA.  The Public Private Partnership Act of 2015 creates a legal framework for the government to partner with private investors, both local and foreign, in financing investment in key sectors.  The government has undertaken joint ventures with foreign investors in key sectors such as oil and gas and infrastructure.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

The Uganda Free Zones Authority (UFZA) (https://freezones.go.ug/  ) regulates free trade zones, which offer a range of tax advantages.  The government’s process in awarding free zone status is not transparent, however.  There have been reports that corrupt individuals in government are allocating free trade zones in return for bribes.  UFZA has issued 20 Free Zone Licenses to 17 developers and three operators. In the first half of 2018-2019, the government estimates the value of exports through Free Zones at USD 93.6 million.

**Performance and Data Localization Requirements**

The new ICA does not impose any direct requirements regarding local employment and does not specify mandatory numbers for local employment in management positions.  The broadness of its provisions, however, arguably leaves the door open for enforcement of local employment requirements. The Petroleum Exploration, Development, and Production Act and the Petroleum Refining, Conversion, Transmission, and Midstream Storage Act may require investors in the oil sector to contribute to the creation of a local skilled Ugandan workforce.  Bureaucratic hurdles and inconsistent enforcement can make obtaining visas and work permits for foreign workers an onerous and expensive process. Foreign investors must have a license to invest in Uganda.

The government regularly moots local content laws.  Uganda’s petroleum laws already impel foreign oil companies to preference local goods and labor where available, with the Minister of Energy authorized to determine the extent of required local content.  The new ICA provides for broad performance requirements, but is vague on enforcement action.

While there are no general requirements for foreign information technology (IT) providers to give the government any source code or information related to encryption, the National Information Technology Authority Act allows the Minister for Information, Communication and Technology to order an IT provider to submit any information to the National Information Technology Authority (NITA).  Similarly, the Computer Misuse Act allows the government to “compel a service provider...to co-operate and assist the competent authorities in the collection or recording of traffic data in real time, associated with specified communication transmitted by means of a computer system.” These regulatory powers apply to all IT providers, both foreign and local. There are no measures to prevent or unduly impede companies from freely transmitting customer or other business-related data outside of Uganda.  In 2017, however, the Bank of Uganda interpreted Uganda’s cyber security legislation as providing it with the mandate to require financial institutions to relocate their data centers to Uganda to provide the government with access to customers’ digital financial information. Citing customer privacy concerns, financial firms remain in negotiations with the Bank of Uganda over this policy.

							5. Protection of Property Rights					

**Real Property**

Land rights are complicated in Uganda, and present a significant barrier to investment.  Uganda enforces property rights through the courts. The Mortgage Act and regulations make provisions for mortgages, sub-mortgages, trusts, and other forms of lien.  However, due to widespread corruption and administrative red tape, investors frequently struggle with the integrity of land transactions and recording systems.

Foreigners cannot own land directly and may only acquire leases.  Such leases cannot exceed 99 years. However, foreign investors can create a Ugandan-based firm to purchase and own real estate.

The Land Act provides for four forms of land tenure:  freehold, customary, “Mailo” (a form of freehold) and leasehold.  Freehold, leasehold, and Mailo tenure owners hold registered titles, while customary or indigenous communal landowners – who account for up to 80 percent of all landowners – do not.  Ugandan law provides for the acquisition of prescriptive rights by individuals who settle onto land (squatters) and whose settlement on such land is unchallenged by the owner for at least twelve years.

**Intellectual Property Rights**

Ugandan law provides for the protection of intellectual property rights (IPR), but the enforcement mechanisms are weak.  The country particularly lacks the capacity to prevent piracy and counterfeit distribution. As a result, theft and infringement of IPR is common and widespread.  Uganda does not track seizures of counterfeit goods or prosecutions of IPR violations. Agriculture experts estimate some 20 percent of agriculture products under copyright in Uganda are counterfeit.

In November 2018, Parliament passed the Genetic Engineering Regulatory Bill of 2018, which currently awaits presidential assent before coming into force.  While the new law provides for the registration of IPR in biotechnology, it makes the proprietor or an individual developer of genetically engineered material strictly liable for any damage, harm, inconvenience or loss caused to the environment, community livelihood, indigenous knowledge systems or technologies.  While the law is a positive development for IPR, the strict liability clauses are likely to discourage innovation.

Uganda is not included in the United States Trade Representative (USTR) Notorious Markets List or Special 301 Report.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles (http://www.wipo.int/directory/en/  ).

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

The government generally welcomes foreign portfolio investment and has put in place a legal and institutional framework to manage such investments.  The Capital Markets Authority (CMA) licenses brokers and dealers and oversees the Uganda Securities Exchange (USE), which is now trading the stock of 18 companies.  Liquidity remains constrained to enter and exit sizeable positions on the USE. Capital markets are open to foreign investors and there are no restrictions for foreign investors to open a bank account in Uganda.  The government imposes a 15 percent withholding tax on interest and dividends. Foreign-owned companies may trade on the stock exchange, subject to some share issuance requirements. The government IMF Article VIII and refrains from restricting payments and transfers for current international transactions.  Credit is allocated on market terms and foreign investors are able to access credit. However, the private sector remains crowded out of domestic debt markets due to extensive domestic government borrowing.

**Money and Banking System**

Formal banking participation remains low, with twenty percent of Ugandans having access to deposits in bank accounts.  While only some five million Ugandans hold bank accounts, some 22 million use mobile money transfers to accomplish basic financial transactions.  In 2018, the government imposed new taxes on the use of mobile money, resulting in a drop in mobile money transactions. Uganda’s banking and financial sector is generally healthy, though non-performing loans remain a problem.  According to the Bank of Uganda’s latest Financial Stability Report 2018, Uganda’s non-performing loan rate stood at 4.4 percent at the end of June 2018, while total bank assets grew to USD 7.3 billion from USD 6.8 billion year over year.  Competitiveness and innovation are steadily increasing in Uganda’s banking sector, but lending to the private sector is still relatively low, largely because of perceived high risk (limited collateral) among potential borrowers, and the government crowding out the private sector in the bond market.  The Bank of Uganda regulates the banking sector. Foreign banks may establish branches in Uganda. Uganda does not have restrictions on a foreigner’s ability to establish a bank account.

**Foreign Exchange and Remittances**

*Foreign Exchange*

Uganda keeps open capital accounts, and there are no restrictions on capital transfers in and out of Uganda.  If, however, an investor benefited from tax incentives on the original investment, he or she will need to seek a “certificate of approval to “externalize” the funds.  Investors may convert funds associated with any form of investment into any world currency. The Ugandan shilling (UGX) trades on a market-based floating exchange rate.

*Remittance Policies*

There are no restrictions for foreign investors on remittances to and from Uganda.  The Financial Intelligence Authority and Bank of Uganda may delay remittances if investigating money laundering concerns or terrorist finance.

**Sovereign Wealth Funds**

In 2015, the government established the Uganda Petroleum Fund to receive and manage all government revenues from the oil and gas sector.  By law, the government must spend a portion of proceeds from the fund on oil-related infrastructure, with parliament appropriating the remainder of revenues through the normal budget procedure.  In early 2019, the Auditor General found that the government had already made significant withdrawals from the fund without parliamentary approval as required by law.

							7. State-Owned Enterprises					

Uganda has thirty State Owned Enterprises (SOEs).  There is no formally published list of SOEs and detailed information on the ownership of SOEs, their total assets, total net income, or number of people employed is not accessible to the public.  SOEs do not get special financing terms and are subject to hard budget constraints. According to the Ugandan Revenue Authority Act, they have the same tax burden as the private sector. According to the Land Act, private enterprises have the same access to land as SOEs.  One notable exception is the Uganda National Oil company (UNOC), which receives proprietary exploration data on new oil discoveries in Uganda. UNOC can then sell this information to the highest bidder in the private sector to generate income for its operations.

**Privatization Program**

The government privatized many SOEs in the 1990s.  Uganda does not currently have any privatization program.

							8. Responsible Business Conduct					

Awareness of responsible business conduct varies greatly among corporate actors in Uganda.  No organizations formally monitor respect for Corporate Social Responsibility (CSR). CSR is not a requirement for an investor to obtain an investment license and CSR programs are voluntary.  While government officials make statements encouraging CSR, there is no formal government program to monitor, require, or encourage CSR. In practice, endemic corruption means that well-connected companies can enjoy impunity for harmful practices.  Regulations on human and labor rights, and consumer and environmental protection are inconsistently enforced. Several nongovernmental organizations attempt to name-and-shame companies engaged in nefarious practices, with differing degrees of success.

Uganda’s capacity and political will to regulate mineral trade across its borders remains weak.  Credible organizations allege Uganda’s mineral trade relies on conflict minerals from neighboring countries, especially from the eastern Democratic Republic of Congo.  In 2018, gold surpassed coffee as Uganda’s main export, although Uganda has no significant domestic gold deposits. Non-governmental sources allege that a single well-connected gold refinery that sources gold from conflict areas in neighboring countries accounts for the jump in Uganda’s gold exports.

Uganda announced in 2019 that it would join the Extractive Industry Transparency Initiative, but has not yet finalized its membership.  Uganda has also not formally adopted the Voluntary Principles on Security and Human Rights.

							9. Corruption					

Uganda has generally adequate laws to combat corruption, and an interlocking web of anti-corruption institutions.  However, endemic corruption remains a very serious problem and a major obstacle to investment. Transparency International ranked Uganda 149 out of 180 countries in its 2018 Corruption Perception Index.  While anti-corruption laws extend to family members of officials and political parties in most cases, in practice many well-connected individuals enjoy de facto impunity for corrupt acts. The government does not require companies to adopt specific internal procedures to detect and prevent bribery of government officials.  While Uganda has signed and ratified the UN Anticorruption Convention, it is not yet party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Uganda does not provide protection for non–governmental organizations investigating corruption, and some organizations in fact allege government harassment.  U.S. firms consistently identify corruption a major hurdle to business and investment. Corruption in procurement processes remains a particular problem.

*Resources to Report Corruption*

Contacts at government agency or agencies are responsible for combating corruption:

Justice Irene MulyagonjaInspector General of GovernmentInspectorate of GovernmentJubilee Insurance Centre, Plot 14, Parliament Avenue, KampalaTelephone:  +256-414-344-219Website:  www.igg.go.ug  

Contact at “watchdog” organization:

Anti-Corruption Coalition UgandaCissy KagabaTelephone:  +256-414-535-659Email:  kagabac@accu.or.ugWebsite:  http://accu.or.ug  

Public Procurement and Disposal of Public Assets Authority (PPDA)UEDCL Towers Plot 39 Nakasero RoadP.O. Box 3925, Kampala UgandaTelephone:  +256-414-311100Email:  info@ppda.go.ugWebsite: https://www.ppda.go.ug/  

							10. Political and Security Environment					

Uganda has experienced periodic political violence associated with elections and other political activities.  Security services routinely use force to halt protests and demonstrations. There are no prominent examples in the past ten years of such violence leading to significant damage of projects or installations.  There has been an uptick in crime over the past several years. In addition, political tensions are likely to increase in the run up to 2021 general elections.

							11. Labor Policies and Practices					

Over seventy percent of Ugandans derive their livelihoods from agriculture.  Formal employment remains low, as do skill and education levels. With figures ranging from five to 80 percent, youth unemployment statistics in Uganda can vary significantly depending on the source and definition of employment.  However, there is consensus that Uganda’s young population faces major unemployment, underemployment, and overwhelming informal employment.

Statistics on the number of foreign/migrant workers are not publicly available.  There are acute shortages of skilled and specialized laborers, especially in the trades.

While there are no explicit provisions requiring the hiring of nationals, there are broad standards requiring investors to contribute to the creation of local employment.  The Petroleum Exploration, Development, and Production Act of 2013 and the Petroleum Refining, Conversion, Transmission, and Midstream Storage Act of 2013 both require investors to contribute to the development of a skilled local workforce.  Foreign nationals must obtain a work permit from the Ministry of Internal Affairs.

Ugandan labor laws specify procedures for termination of employment and for termination payments.  Depending on the employee’s duration of employment, employers are required to notify an employee two weeks to three months prior to the termination date.  Employees terminated without notice are entitled to severance wages. Ugandan law only differentiates between termination with notice (or payment in lieu of notice) and summary dismissal (termination without notice).  Summary dismissal applies when the employee fundamentally violates his/her terms of employment. Uganda does not provide unemployment insurance or any other social safety net programs for terminated workers.

Current law requires employers to contribute ten percent of an employee’s gross salary to the National Social Security Fund (NSSF).  The Uganda Retirement Benefits Regulatory Authority Act of 2011, which provides a framework for the establishment and management of retirement benefits schemes for both the public and private sectors, has created an enabling environment for liberalization of the pension sector.

The Employment Act of 2006 does not allow waivers of labor laws for foreign investors.

Ugandan law allows workers, except members of the armed forces, to form and join independent unions, bargain collectively, and conduct legal strikes.  The National Organization of Trade Unions (NOTU) has 20 member unions. Its rival, the Central Organization of Free Trade Unions (COFTU), also has 20 union members.  Union officials estimate that nearly half of employees in the formal sector belong to unions. In 2014, the Government of Uganda created the Industrial Court (IC) to arbitrate labor disputes.

Uganda ratified all eight ILO fundamental conventions enshrining labor and other economic rights and partially adopted these conventions into the 1995 Constitution, which stipulates and protects a wide range of economic rights.

Despite these legal protections, many Ugandans work in unsafe environments due to poor enforcement and the limited scope of the labor laws.  Labor laws do not protect domestic, agricultural, and informal sector workers.

							12. OPIC and Other Investment Insurance Programs					

OPIC is currently working on several projects in Uganda.  The potential for continued OPIC participation in projects in Uganda is very good.  OPIC has a bilateral agreement with the government of Uganda, which was executed in 1965 and remains in effect (https://www.opic.gov/sites/default/files/docs/africa/bL_uganda.PDF  )

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*