Attracting mutually beneficial investment is a priority for Uganda, as demonstrated by new legislation to make doing business easier, more efficient and more lucrative for all parties involved
2017 was an outstanding year for investment in Uganda – within the first six months, the Uganda Investment Authority licensed 164 investment projects valued at $614 million. Not only are these investments predicted to create more than 30,000 direct jobs, they also exceeded the government’s investment target by 320 per cent.
“Every day we are being contacted by two or three people who want to come to see Uganda for investment purposes,” says Finance Minister Matia Kasaija.
This hasn’t always been the case for Uganda, which suffered the consequences of Idi Amin’s dictatorship long after his rule ended in 1979. For nearly a decade, Amin’s policies devastated the Ugandan economy through nationalisation of business and the expulsion of the Asian population. During that time, it is estimated that the real value of salaries and wages collapsed by 90 per cent.
But now, after more than three decades of political stability, Uganda has addressed the major economic challenges deriving from the 1970s and is focused on making refined policy changes to facilitate greater investment in the private sector.
Besides Uganda’s attractive attributes – a strategic location, abundant natural resources and a talented workforce – new statutes are also partly to thank for today’s surging wave of investment.
Over the last few years, the government has passed legislation for the establishment of free trade zones, operationalised both the physical and online One Stop Center (OSC) that allows investors to get licenses within hours – two days at the most – as well as simplifying a number of regulations and procedures for investment.
A new Investment Bill, set to be approved by the Ugandan parliament, will go even further to tweak regulatory framework and policies, according to Jolly Kamugira Kaguhangire, executive director of the Uganda Investment Authority. Looking further into the future, Uganda and the World Bank have contracted a new $15 million business facilitation centre to improve ease of doing business, expected to be complete by 2019.
As it stands, the minimum capital investment required for a foreign investor to be eligible to invest in virtually any sector is $100,000.
Reducing reliance on imports and giving Ugandan businesses the opportunity to flourish are the goals behind Uganda’s buy local strategy
Before the Buy Uganda, Build Uganda policy came to effect in March 2017, local businesses had long complained that foreign products were given an unfair advantage in the Ugandan market, making it difficult for home-grown industries to get on their feet. It was because of that, along with the country’s sizeable trade deficit, that the government decided to try something new.
Central to the Buy Uganda, Build Uganda policy is a shift in government procurement guidelines. Now, ministries throughout government are obliged to contract 30 per cent of services from local providers, as well as to buy uniforms, voltage cables and select medicines from Ugandan suppliers. Likewise, major infrastructure projects led by foreign companies now must use a minimum threshold of local labour and products.
“Now, police, doctors and school children wear uniforms that are bought from local producers. As a result, the mills have stepped up their production by installing more machinery and cotton production has been boosted,” explains Trade Minister Amelia Kyambadde.
Tariffs have also been levied on a number of products, including second-hand clothing, and supermarkets are required to reserve 40 per cent of shelf space for Ugandan goods.
And now that Ugandan products have been given a chance to compete domestically, Mrs Kyambadde observes that local businesses have improved their marketing and production. “Before you export your goods, you have to make sure they are competitive in the local market,” she says.