HomeReportsBureau of Economic and Business Affairs2023 Investment Climate Statements…Uganda

# 					2023 Investment Climate Statements: Uganda			

 In this section										/

													EXECUTIVE SUMMARY											

                -  EXECUTIVE SUMMARY 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties 
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  Resources to Report Corruption 
                -  10. Political and Security Environment 
                -  11. Labor Policies and Practices 
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 
                -  13. Foreign Direct Investment Statistics 
                -  14. Contact for More Information 

## EXECUTIVE SUMMARY

Uganda’s investment climate presents both important opportunities and major challenges for U.S. investors. With a market economy, ideal climate, ample arable land, a young and English-speaking population, and ongoing development of fields containing at least 1.4 billion barrels of recoverable oil, Uganda offers numerous opportunities for investors. In 2022, Uganda lifted all restrictions that had been imposed to curb the spread of COVID-19, which briefly inspired confidence in the economy, but prospects for economic recovery fell following rising commodity prices caused by supply chain shocks and the effects of Russia’s war in Ukraine. In 2022, inflation peaked at 10.7%, the highest rate since August 2012, because of surging fuel prices that reached historic highs, contributing to high transport prices, higher production costs, and eventually a tightening of monetary policy by the Bank of Uganda (BOU). In the Fiscal Year (FY) 2021/22, Uganda’s economy grew by 4.7%, a slight improvement from 3.5% in FY 2020/21. According to the BOU, Foreign Direct Investment (FDI) increased by 37% to $1.4 billion in 2022 compared to $911 million in 2021. The growth in FDI was influenced by oil sector project-related spending. The BOU forecasts that pre-oil investment will average $2 billion annually until first oil is achieved in 2025. The ongoing investment in drilling rigs and the oil pipeline also have large import components.

Uganda maintains a liberal trade and foreign exchange regime. Uganda also sustained liberal policies even as commodity prices rose, and policymakers ignored political pressure to implement a subsidy regime to cushion the population from rising prices. In 2022, the IMF approved the third tranche of the Extended Credit Facility (ECF) to the government to help the country deal with the COVID-19 crisis and boost private-sector led growth. Uganda received the first tranche of $258 million in June 2021, the second tranche of $125 million in March 2022, and the IMF approved the third tranche of $240 million in December 2022. The ECF conditions included the GOU’s implementation of reforms on increased social spending, ensuring debt sustainability, and improved governance. As the economy continues to recover to pre-pandemic levels, Uganda’s power, agricultural, construction, infrastructure, technology, and healthcare sectors present attractive opportunities for U.S. business and investment.

President Yoweri Museveni and government officials vocally welcome foreign investment in Uganda. However, the government’s actions do not always align with its rhetoric. The closing of political and democratic space, poor economic management, endemic corruption, growing sovereign debt, weak rule of law, growing calls for protectionism from some senior policymakers, and the government’s failure to invest adequately in the health and education sectors all create risks for investors. U.S. firms often 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, a complicated land tenure system, and increased local content requirements also impede the growth of businesses and serve as disincentives to investment.

An uncertain mid-to-long-range political environment also increases risk to foreign businesses and investors. President Museveni was reelected in January 2021. He has led Uganda for more than 36 years and appears to have no plans to step down. Domestic political tensions and restrictions on democratic institutions continued following the 2021 elections. Parliament recently passed the Anti-Homosexuality Act of 2023, which, if assented by President Museveni will further criminalize LGBTQI+ individuals. Many of Uganda’s youth, a demographic that comprises 77% of the population, openly clamor for change. However, President Museveni has not provided any indication that he or his government are planning reforms to promote more inclusive, transparent, and representative governance.

On the legislative front, Uganda’s parliament passed amendments to seven existing laws to remove Uganda from the Financial Action Task Force (FATF) gray list. The amendments to Trustee Incorporation (Amendment) Act 2022, The Partnerships (Amendment) Act, Anti-Terrorism (Amendment) Act 2022, Insolvency (Amendment) Act 2022, Cooperative Society (Amendment) Act 2022, Anti-Money Laundering (Amendment) Act 2022, and Companies (Amendment) Act 2022 aimed at improving anti-money laundering and combatting the financing of terrorism (AML/CFT). Some of the amendments include improved identification of beneficial owners and greater regulatory oversight including powers to impose levies on entities or persons violating AML/CFT provisions.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### Policies Towards Foreign Direct Investment

The Ugandan government and authorities vocally welcome FDI and celebrate its job creation benefits. Furthermore, the country’s free market economy, liberal financial system, and close to 45-million-person consumer market attract investors. However, rampant corruption, weak rule of law, threats to open and free internet access – including an ongoing, three year-long ban on Facebook – and an increasingly aggressive tax collection regime by the Uganda Revenue Authority (URA) create a challenging business environment. In July 2022, the government imposed an 18% digital services tax imposed on non-resident electronic service providers such as online advertising, music and movie streaming, and software, among others.

The 2019 Investment Code Act (ICA) abolished restrictions on technology transfer and repatriation of funds by foreign investors, and established new incentives (e.g., tax waivers) for investment. However, the ICA also sets a minimum value of $250,000 for FDI and a yet-to-be-specified minimum value for portfolio investment. Additionally, the ICA authorized the Ugandan government to alter these thresholds at any time, thereby creating potential uncertainty for investors. Under the ICA, investment licenses carry specific performance conditions varying by sector, such as requiring investors to allow the Uganda Investment Authority (UIA) to monitor operations, to employ or train Ugandan citizens, or to use Ugandan goods and services to the greatest extent possible. Further, the ICA empowers the Ugandan government to revoke investment licenses of entities that “tarnish the good repute of Uganda as an attractive base for investment.” However, the government has yet to revoke any investor license on this ground.

The 2020 Communications Licensing Framework (CLF) requires telecommunication companies with nationwide licenses to list at least 20% of their shares on Uganda’s stock market on the Uganda Securities Exchange (USE). In December 2021, MTN Uganda – the largest telecom company in Uganda – sold 13% of its shares to the public when it listed on the USE. Airtel, the second largest telecom, is expected to sell its first shares by end of 2023.The Uganda Investment Authority (UIA) facilitates investment by granting licenses to foreign investors and is tasked with promoting, facilitating, and supervising foreign investments. The UIA 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, however, 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 International Trade Administration’s website (https://www.trade.gov/country-commercial-guides/uganda-market-overview) provide information on the laws and reporting requirements for foreign investors. Investors often bypass the UIA, citing bureaucratic delays. For larger investments, companies have reported that political support from and relationship-building with high-ranking Ugandan officials is a prerequisite.

President Museveni hosts an annual investors’ roundtable to consult a select group of foreign and local investors on increasing investment, occasionally including U.S. investors. While in Washington for the U.S. – Africa Leaders’ Summit in December 2022, President Museveni participated in the Ugandan Trade and Investment Summit in Chicago.

Every Ugandan embassy has a trade and investment desk charged with advertising investment opportunities in the country. In December 2022, the Uganda government appointed specific U.S. trade representatives to market investment and trade opportunities in Uganda.

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

Except for land, foreigners have the right to own property, establish businesses, and make investments. Ugandan law permits foreign investors to acquire domestic enterprises and to establish greenfield investments. The Companies Act of 2010 allows for the registration of companies incorporated outside of Uganda.

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

The Petroleum Exploration and Development Act and the Petroleum Refining, Conversion, Transmission, and Midstream Storage Act require companies in the oil sector to prioritize using local goods and labor when possible and give the Minister of Energy and Mineral Development (MEMD) the authority to determine the extent of local content requirements in the sector.

All investors must obtain an investment license from the UIA. The UIA evaluates investment proposals based on several 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.

### Other Investment Policy Reviews

OECD Report on Uganda. Jobs for Rural Youth: The role of Local Food Economies:https://www.oecd.org/countries/uganda/jobs-for-rural-youth-692c0ca1-en.htm

The United Nations Commission on Trade and Development (UNCTAD) issued its World Investment Report, 2022, available at:https://unctad.org/publication/trade-and-development-report-2022

The World Trade Organization (WTO) issued its most recent Trade Policy Review in 2019; the report is available at:https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=254764,251521,117054,95202,80262,80232,82036,106989&CurrentCatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True

Environmental Justice Atlas list of conflicts in Uganda available at:

https://ejatlas.org/country/uganda

### Business Facilitation

The UIA “one-stop shop” website assists in registering businesses and investments. In practice, investors and businesses may need to liaise with multiple authorities, and the UIA lacks the capacity to play a robust business facilitation role.

Prospective investors can 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 (http://ursb.go.ug/). New businesses are required to obtain a Tax Identification Number (TIN) from the URA, by clicking the “My TIN” link at https://www.ura.go.ug/ or through the UIA. Additionally, businesses must 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 additional 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 seeking to produce goods for export and domestic use. Such investors receive a range of benefits including tax rebates on imported inputs and exported products. An investor seeking a free zone license may apply to the Uganda Free Zones Authority (https://freezones.go.ug/).

### Outward Investment

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

							2. Bilateral Investment and Taxation Treaties					

Uganda has 17 bilateral investment protection treaties with several countries. The full list of bilateral investment protection treaties can be found on the UNCTAD Investment Policy Hub. 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, or 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 are 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). Trading under the AfCFTA should have started in January 2021 but as of December 2022, the 43 countries that ratified the agreement are still negotiating the terms of trade.

Uganda does not have a tax treaty with the United States, but it has bilateral taxation treaties with the following countries: Denmark, India, Italy, Mauritius, the Netherlands, Norway, South Africa, and the United Kingdom. Increasingly, there is pressure on the Ugandan government to review these double taxation agreements to curb legal tax avoidance. Uganda imposes a 15% 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% value-added tax (VAT) on business transactions conducted with a foreign firm. URA does not allow companies to offset this VAT on non-resident services against their withholding tax, effectively charging a 33% tax on all foreign services. This tax disproportionately affects U.S. businesses offering software and cloud services and U.S. franchises that access services from the United States.

							3. Legal Regime					

### Transparency of the Regulatory System

On paper, Uganda’s legal and regulatory systems are generally transparent and non-discriminatory, and they comply with international norms. In practice, bureaucratic hurdles and corruption significantly impact 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, or similar legislation, often 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 supranational regulatory requirements in Uganda. For example, 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 only affect an investor’s decision at the local level. 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 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 are responsible for ensuring the government adheres to its administrative processes; however, anecdotal reports suggest that corruption significantly undermines the judiciary’s oversight role. In July 2020, the URA started the implementation of the amended Income Tax Act, which imposes presumptive taxes on rental income based on location using a blockchain compliance system meant to improve transparency and reduce corruption. Generally, there is legal redress to review regulatory mechanisms through the courts, and the process is made public.

Uganda’s legislative process includes public consultations and as needed, subject matter expert presentations before Parliament; however, not all comments received by regulators are made publicly available and Parliament’s decisions tend to be primarily politically driven. Formal scientific or economic analyses of the potential impact of a pending regulation are seldom conducted.

Public finances are generally transparent and budget documents are available online. The government annually publishes the Annual Debt Statistical Bulletin, which contains the country’s debt obligations including status of public debt, cost of debt servicing, and liabilities. However, the government’s significant use of supplementary and classified budget accounts – which accounted for 6.4% of the FY2021/22 budget – undermines parliamentary and public oversight of public finances.

The government does not require companies to disclose environmental, social, and governance (ESG) profiles.

### International Regulatory Considerations

Per treaty, Uganda’s regulatory systems must conform to the below supranational regulatory systems (though 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, through the Uganda National Bureau of Standards (UNBS), is a member of the International Organization for Standardization (ISO), Codex Alimentarius, and International Organization of Legal Metrology (OIML). Uganda applies European Union directives and standards, but with modifications.

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 for Arbitration and Dispute Resolution (CADER). Uganda does not have a singular commercial law, multiple statutes touch on commercial and contractual law. A specialized commercial court decides commercial disputes. Approximately 80% 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 the court system is independent, in practice there are credible reports that the executive has attempted to influence the courts in certain 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 ICA regulate FDI. The UIA provides an online “one-stop shop” for investors (https://www.ugandainvest.go.ug/).

### Competition and Antitrust Laws

Uganda does not have any specialized laws or institutions dedicated to competition-related concerns, although commercial courts occasionally handle disputes with competition elements. There was no significant competition-related dispute handled by the courts in 2022.

### 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” such as eminent domain and preceded by compensation to the owner at fair market value. In 2020, the two National Telecom Operators – MTN Uganda and Airtel Uganda – renewed their licenses to operate in Uganda for 12 and 20 years respectively. One requirement of those license renewals is for the telecom companies to list 20% stakes on the Ugandan stock market within two years of being granted the license. MTN Uganda listed on the stock exchange in 2021. Airtel is required to list by the end of 2023.

In 1972, then-President Idi Amin expropriated assets owned by ethnic South Asians. The expropriation was extrajudicial and was ordered by presidential decree. The government did not allow judicial challenge to the expropriations or offer any compensation to the owners. The Ugandan government has since returned most of the properties to the original owners or their descendants or representatives. There have not been any expropriations since, and government projects are often significantly delayed by judicial disputes overcompensation for property the Ugandan government seeks to expropriate under eminent domain.

### 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 2000 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. Uganda has not been involved in any official 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.

Ugandan courts recognize and enforce foreign arbitral awards, including those issued against the government. The country is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Additionally, the Arbitration and Conciliation Act creates a framework for the recognition and enforcement of foreign arbitral awards, including those against the government.

Uganda has not had any recent experience of extrajudicial action against foreign investors. However, in 1972, the government of then-President Idi Amin extrajudicially expropriated property of foreign investors, including high-profile holdings owned by ethnic South Asians.

#### 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 UN Commission on International Trade Law (UNCITRAL) Arbitration rules. However, unrecorded private arbitration is generally the most effective investment dispute resolution mechanism in Uganda.

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 settling disputes. However, corruption or high-level government officials often influence court decisions.

### Bankruptcy Regulations

The Bankruptcy Act of 1931, the Insolvency Act of 2011, and the Insolvency Regulations of 2013 generally align Uganda’s legal framework on insolvency with international standards. Bankruptcy is not criminalized.

							4. Industrial Policies					

### Investment Incentives

The Public Private Partnership Act of 2015 creates a legal framework for the government to partner with private investors, both local and foreign to finance investments in key sectors. The government has undertaken joint ventures with foreign investors in the oil and gas sector and for infrastructure projects.

In June 2020, the government scrapped 18% excise duty on cooking gas to encourage clean energy cooking. This is meant to reduce the use of charcoal that contributes to deforestation. While the scrapping of this excise duty is positive, the usage of cooking gas is still limited to major cities because the cost is still high relative to incomes.

### 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 trade zone status is generally transparent. In 2022, UFZA licensed five private Free Zone Developers, bringing the total number of free zones to 32. Estimates from UFZA indicate that in FY 2021/2022, free zones attracted $645 million worth of capital investment, employed 9,861 people, and contributed $65 million to total exports, a significant decline from $1.25 billion in 2020/2021.

### Performance and Data Localization Requirements

The ICA does not impose any direct requirements regarding local employment or 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 require investors in the oil sector to contribute to the creation of a locally skilled workforce.

While the UIA has significantly improved its processing of work permits and investment licenses for foreigners, bureaucratic hurdles, inconsistent enforcement, and corruption can still make obtaining visas and work permits onerous and expensive. All foreign investors must acquire an investment license from the UIA.

No general localization law exists in Uganda, but sector-specific laws impose localization requirements. The petroleum laws require foreign oil companies to prioritize the use of local goods and labor when available, and the MEMD has the authority to determine the extent of local content requirements in the sector. The Public Procurement and Disposal of Public Assets Act, which regulates government procurements, also imposes thresholds on the contracts for which a foreign company can apply. Per the petroleum laws, MEMD has the responsibility to monitor companies in the oil sector to ensure they are meeting the local content requirements. Additionally, the Office of the Auditor General carries out audits of the oil and gas sector to ensure adherence to local content requirements. These performance reviews can form grounds for granting incentives or enforcement of the restrictions. Since the 2013 oil laws were passed, no company has been punished for breaching local content rules. Investment incentives in Uganda are quite controversial because they are applied on a case-by-case basis, even though the ICA lists seven grounds for granting investment incentives.

While there are no general requirements for foreign information technology (IT) providers to provide the Ugandan government any source code or information related to encryption, the National Information Technology Authority Act allows the Minister for Information, Communication, and Technology (ICT) to order an IT provider to submit any information to the National Information Technology Authority (NITA). However, it is unclear to what extent, if any, the Ugandan government has invoked this law. 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 requirements 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 BOU 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. Supervised financial institutions are currently implementing this policy. A U.S.- owned data center firm inaugurated in May 2021 a Tier III data center targeting the market for localizing data storage and opportunities for cloud services.

							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; however, corruption often influences final judgments. The Mortgage Act and associated regulations make provision for mortgages, sub-mortgages, trusts, and other forms of lien. However, due to widespread corruption and an inefficient bureaucracy, 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% 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 enforcement mechanisms are weak. The country lacks the capacity to prevent piracy and counterfeit distribution. As a result, theft and infringement of IPR is common and widespread. Uganda did not enact any IP-related laws and regulations in the past year. In August 2021, Uganda did adopt the African Regional Intellectual Property Organization (ARIPO)’s draft protocol on regional voluntary registration of Copyright and Related Rights. The Protocol was adopted by ARIPO member countries with the aim of ensuring African creators benefit from their creative works.

Uganda does not track seizures of counterfeit goods or prosecutions of IPR violations. Agriculture experts estimate some 20% of agriculture products under copyright in Uganda are counterfeit.

Uganda is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles https://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 USE, which is now trading the stock of 18 companies. USE liquidity remains low, constraining entry and exit from sizeable positions. Capital markets are open to foreign investors and there are no restrictions for foreign investors to open a bank account in Uganda. However, the government imposes a 15% withholding tax on interest and dividends. Foreign-owned companies may trade on the stock exchange, subject to some share issuance requirements. The government respects IMF Article VIII and refrains from restricting payments and transfers for current international transactions.

Credit is available from commercial banks on market terms, and foreign investors can access credit. However, persistently high yields on Ugandan government-issued securities push up lending rates more broadly, including interest rates on commercial loans, undermining the private sector’s access to affordable credit. For instance, commercial lending rates averaged 19% and government 10-year bonds averaged 12% at the end of December 2022.

### Money and Banking System

Formal banking participation remains low, with only 35.5% of Ugandans having access to bank accounts, many via their membership in formal savings groups. However, there are 20.7 million total bank accounts and more than 34 million mobile money accounts used to conduct basic financial transactions as some Ugandans hold multiple accounts. Uganda’s banking and financial sector is generally healthy, though non-performing loans remain a problem. According to the Bank of Uganda’s Financial Soundness Indicators, Uganda’s non-performing loan rate stood at 5.35% at the end of December 2022, up from 5.25% in December 2021. Uganda has 26 commercial banks, with the top six controlling at least 62% of the banking sector’s total assets, valued at $12 billion. The Bank of Uganda regulates the banking sector, and foreign banks may establish branches in the country. To enable the banking sector to withstand shocks, the BOU increased minimum capital requirements for banks to $40 million from $6.5 million. New banks seeking to operate in Uganda will be required to have this minimum amount, whereas all other banks operating in Uganda must comply by June 30, 2024. The BOU also applies risk-based supervision where banks are required to shore-up their capital based on the risk they take in terms of lending. In June 2021, the BOU started the direct regulation of mobile money service providers under the National Payment Systems Act, 2020. Since February 2020, Uganda has been on the Financial Action Taskforce “Grey List” due to the country’s insufficient implementation of its anti-money laundering and combating the financing of terrorism (AML/CFT) policies. As of the end of February 2023, Uganda was still on this watch list despite the progress made in amending several laws to meet the FATF requirement. As a result, Uganda’s correspondent banking relationships face increased oversight. The last evaluation report by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in November 2022 indicated that Uganda was compliant on at least 15 of the 40 recommendations by FATF when the country was placed on the grey list. Uganda does not restrict foreigners’ 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. In response to COVID-19, the BOU in March 2020 placed restrictions on supervised financial institutions’ repatriation of dividends until after the BOU certified institutions had sufficient capital buffers and liquidity to absorb shocks brought about by defaulting customers. As of February 2023, these limits had not been fully lifted and banks are granted approval on a case-by-case basis.

### Sovereign Wealth Funds

In 2015, the government established the Uganda Petroleum Fund (PF) 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. As of June 2022, the PF had a balance of $29 million mostly from taxes and signature bonuses from non-oil production related activities in the oil sector. Uganda does not have a sovereign wealth fund but established a fund called the Petroleum Revenue Investment Reserve (PRIR) to ensure responsible and long-term management of revenue from Uganda’s oil resources when oil production begins. In the 2021 – 2026 Charter of Fiscal Responsibility, the government has committed to spending oil revenue worth 0.8% of non-oil GDP from the previous fiscal year as part of the national budget. The balance would be sent to the PRIR for Investment. Uganda projects oil revenues to start flowing in 2025 when the first drop of crude oil is produced.

							7. State-Owned Enterprises					

Uganda has thirty State Owned Enterprises (SOEs). However, the Ugandan government does not publish a list of its SOEs, and the public is unable to access detailed information on SOE ownership, total assets, total net income, or number of people employed. The government has not established any new SOEs in 2022 but has ramped up expenditure for car manufacturer Kiira Motors Corporation. While there is insufficient information to assess the SOEs’ adherence to the OECD Guidelines of Corporate Governance, the Ugandan government’s 2022 Office of Auditor General report noted corporate governance issues in seven SOEs. In February 2021, the Ugandan government embarked on a plan to merge some of the SOEs to reduce duplication of roles and costs of administration. This process is still ongoing. 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 a privatization program. However, Uganda took over the running of the expired electricity generating concession for Eskom in March 2023 and will take-over the expiring electricity distribution concession for Umeme in March 2025.

							8. Responsible Business Conduct					

Awareness of responsible business conduct varies greatly among corporate actors in Uganda. No organizations formally monitor compliance with Corporate Social Responsibility (CSR) standards. 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 often enables companies to engage in harmful or illegal practices with impunity. Regulations on human and labor rights, and consumer and environmental protection, are seldom and inconsistently enforced.

Uganda’s capacity and political will to regulate the mineral trade across its borders remain weak. On March 17, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Belgian national Alain Goetz, his company the African Gold Refinery in Uganda, and a network of companies involved in the illicit movement of gold valued at hundreds of millions of dollars per year from the Democratic Republic of Congo (DRC). Uganda’s gold refining sector, which includes at least two other refineries in addition to African Gold Refinery (AGR), relies on conflict minerals illicitly imported from neighboring countries, especially from eastern DRC. Despite having no significant gold reserves, gold was the leading annual export commodity in 2018, 2019, 2020, and 2021. This slowed down significantly to $200 million in 2022 from $1 billion due to a tax dispute that gold exporters protested.

Due to Uganda’s rampant corruption, the Ugandan government does not adequately enforce domestic laws related to human rights, labor rights, consumer protection, environmental protections, or other laws intended to protect individuals from adverse business impacts. According to the UN Panel of Experts reports, AGR, Uganda’s largest gold refinery, does not adhere to OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas, and there is no indication the Ugandan government is urging it to do so. Uganda joined the Extractive Industry Transparency Initiative in August 2020. As part of the process, Uganda formed a multi-stakeholder group (MSG) composed of government, industry, and civil society. As Uganda looks to develop its oil and gas sector, the MSG will monitor transparency and accountability in the sector, including environmental impact and land rights issues. Uganda has not formally adopted the Voluntary Principles on Security and Human Rights.

### Additional Resources

Department of State

- Country Reports on Human Rights Practices: Uganda ( https://www.state.gov/reports/2022-country-reports-on-human-rights-practices/uganda )
- Trafficking in Persons Report: Uganda ( https://www.state.gov/reports/2022-trafficking-in-persons-report/uganda/  )
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/ )
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises  )
- Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/ )

Department of the Treasury

- OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions )

Department of Labor

- Findings on the Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings )
- List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods )
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab )
- Comply Chain ( https://www.dol.gov/ilab/complychain/ )

### Climate Issues

Uganda’s Nationally Determined Contribution (NDC) covers the energy, forestry, and wetland sectors. In 2022, Uganda updated its 2015 NDC with the aim of reducing emissions by 24.7% below the business-as-usual scenario of 148.8 million metric tons of CO2 equivalent a year in 2030. As a part of this goal, it seeks to raise renewable electricity generation capacity to 4,200 megawatts by 2030. As at the end of 2021, Uganda generated at least 1,346.6 megawatts of which 90% was from renewable energy sources. In the NDC, Uganda also commits to reversing deforestation from 12.5% of forest cover in 2020 to 21% by 2030 and to reverse deforestation and increase forest cover from approximately 14% in 2013 to 21% in 2030 through forest protection. It also plans to increase wetland coverage from 8.9% in 2020 to 12% by 2030. The objective of Uganda’s NDC is to pursue a low-carbon development pathway and reduce the vulnerability of the population, environment, and economy to the impacts of climate change by implementing measures and policies that build resilience, with a primary focus on forest and wetland conservation. The government has not introduced any policies to reach net-zero carbon emissions by 2050, and public procurement policies do not include environment and green growth considerations, except for those in the petroleum and mining sectors.

							9. Corruption					

Uganda has adequate laws to combat corruption, and an interlocking web of anti-corruption institutions. The Public Procurement and Disposal of Public Assets Authority Act’s Code of Ethical Standards (Code) requires bidders and contractors to disclose any possible conflict of interest when applying for government contracts. However, endemic corruption remains a serious problem and a major obstacle to investment. Transparency International ranked Uganda 142 out of 180 countries in its 2022 Corruption Perceptions Index, dropping one place from 2021. While anti-corruption laws extend to family members of officials and political parties, in practice many well-connected individuals enjoy de facto immunity for corrupt acts and are rarely prosecuted in court.

The government does not require companies to adopt specific internal procedures to detect and prevent bribery of government officials. Larger private companies implement internal control policies; however, with 80% of the workforce in the informal sector, much of the private sector operates without such systems. 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 and does not protect non–governmental organizations investigating corruption. Some corruption watchdog organizations allege government harassment.

U.S. firms consistently identify corruption as a major hurdle to business and investment. Corruption in government procurement processes remains particularly problematic for foreign companies seeking to bid on Ugandan government contracts.

### Resources to Report Corruption

Contacts at the government agency or agencies that are responsible for combating corruption:Beti KamyaInspector General of GovernmentInspectorate of GovernmentJubilee Insurance Centre, Plot 14, Parliament Avenue, KampalaTelephone: +256-414-344-219Website: www.igg.go.ug

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

Contact at a “watchdog” organization: Anti-Corruption Coalition UgandaCissy KagabaTelephone: +256-414-535-659Email: kagabac@accu.or.ugWebsite: http://accu.or.ug

							10. Political and Security Environment					

There has been an uptick in crime over the past several years – particularly after the start of the COVID-19 pandemic – and Uganda has also experienced periodic political violence associated with elections and other political activities. Security services routinely use excessive force to stop peaceful protests and demonstrations. In 2021, Uganda experienced twin suicide bombings in the capital, Kampala, and another bomb explosion in the city outskirts. In the twin suicide explosions, one targeted the main central police station, and the other took place a few dozen meters away from parliament’s gate. Four victims and the bombers were killed in the twin suicide bombings; ISIS-DRC claimed responsibility for both, as well as the earlier bombing on the outskirts, which killed one. Also in 2021, Minister of Works and Transport Gen. Katumba Wamala was targeted by armed assailants who fired bullets at his car, killing his daughter and driver. He survived with minor injuries. In 2022, there were at least three attacks on police stations around the country where assailants killed or injured police officers and stole guns. Political tensions increased dramatically prior to, during, and after the January 2021 general elections. Security forces in unmarked cars picked up dozens of opposition supporters and held them in detention long past the constitutionally mandated limit. Cases of torture allegedly perpetrated by elements within the security forces persist.

							11. Labor Policies and Practices					

Over 70% of Ugandans are engaged in the agriculture sector, and only 20% work in the formal sector. Statistics on the number of foreign/migrant workers are not publicly available; however, given the abundance of cheap domestic labor, there is minimal import of unskilled labor. Conversely, there is an acute shortage of skilled and specialized laborers. Uganda has a large informal sector that is estimated to comprise at least 50% of Uganda’s GDP. The informal sector, however, contributes less direct tax revenue; Uganda’s government is implementing several tax policies to raise revenue. Targeting the informal sector would reduce the pressure to tax foreign businesses. The passing of the Landlord and Tenant Bill in 2022 also sought to formalize the relationship between landlords and, especially, informal tenants. While there are no explicit provisions requiring the hiring of Ugandan 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 require investors to contribute to workforce development by providing skills training for workers.

Ugandan labor laws specify procedures for termination of employment and for termination of 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 10% of an employee’s gross salary to the National Social Security Fund (NSSF). The Uganda Retirement Benefits Regulatory Authority Act of 2011 provides a framework for the establishment and management of retirement benefits schemes for the public and private sectors and 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 member unions. 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. Public sector strikes are not uncommon in Uganda; In 2022, teachers of arts subjects and medical interns went on strike over salary increments and unpaid arrears.

Uganda ratified all eight International Labor Organization fundamental conventions enshrining labor and other economic rights, and partially incorporated 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. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

The DFC is currently funding 10 projects worth $44.2 million in Uganda and maintains an investment incentive agreement with the government of Uganda. DFC planned projects require host government approval of U.S. government investment support. Active projects in Uganda can be found here: https://www3.dfc.gov/ActiveProjectsMap/Default.aspx#

							13. Foreign Direct Investment Statistics					

**** Uganda Bureau of Statistics Annual GDP Report 2021/22. *********

							14. Contact for More Information					

U.S. Economic and Commercial Office UgandaEmbassy of the United States of AmericaPlot 1577 Ggaba Road,P.O. Box 7007, Kampala, UgandaTel. +256 414 306001E-mail : commercialkampala@state.gov

## View report by:

### On This Page

                    -  EXECUTIVE SUMMARY 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment                        -  Policies Towards Foreign Direct Investment 
                      -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                      -  Other Investment Policy Reviews 
                      -  Business Facilitation 
                      -  Outward Investment 
                    -  2. Bilateral Investment and Taxation Treaties 
                    -  3. Legal Regime                        -  Transparency of the Regulatory System 
                      -  International Regulatory Considerations 
                      -  Legal System and Judicial Independence 
                      -  Laws and Regulations on Foreign Direct Investment 
                      -  Competition and Antitrust Laws 
                      -  Expropriation and Compensation 
                      -  Dispute Settlement                          -  ICSID Convention and New York Convention 
                        -  Investor-State Dispute Settlement 
                        -  International Commercial Arbitration and Foreign Courts 
                      -  Bankruptcy Regulations 
                    -  4. Industrial Policies                        -  Investment Incentives 
                      -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                      -  Performance and Data Localization Requirements 
                    -  5. Protection of Property Rights                        -  Real Property 
                      -  Intellectual Property Rights 
                    -  6. Financial Sector                        -  Capital Markets and Portfolio Investment 
                      -  Money and Banking System 
                      -  Foreign Exchange and Remittances                          -  Foreign Exchange 
                        -  Remittance Policies 
                      -  Sovereign Wealth Funds 
                    -  7. State-Owned Enterprises                        -  Privatization Program 
                    -  8. Responsible Business Conduct                        -  Additional Resources 
                      -  Climate Issues 
                    -  9. Corruption                        -  Resources to Report Corruption 
                    -  10. Political and Security Environment 
                    -  11. Labor Policies and Practices 
                    -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 
                    -  13. Foreign Direct Investment Statistics 
                    -  14. Contact for More Information 

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#### The Lessons of 1989: Freedom and Our Future