Uganda is a great investment destination. It has the following factors that you can leverage to ensure a high return on investment;
- A highly liberalized economy.
- Availability of a wide range of natural resources.
- Incentives for both local and foreign investors.
- Favorable population demographics.
- favorable political and economic environment enabling security of investments and growth of business.
- Access to markets across the East Africa Community, Common Market for Eastern and Southern Africa and African Caribbean and Pacific Group of States-European Union Partnership
Who can invest in Uganda?
Ugandan law provides for both foreign and domestic investors. A foreign investor could be a natural person not a citizen for the East African Community countries, company not incorporated under the laws of the East African Community states or with majority shares held by noncitizens or controlling interest in a partnership owned by persons not members of the East African Community states.
A domestic investor can be a natural person form the member states of the East African Community states, company incorporated under the laws of the East African Community states or with majority shares held by citizens of the member states or the controlling interest in a partnership owned by persons who are citizens of the East African Community states.
What do you need to invest in Uganda?
The minimum investment capital requirements for domestic investors is USD 50,000 and USD 250,000 for foreign investors. This then will enable them qualify to register as an investor and receive an investment license.
Investors who wish to engage in trade do not require a licence, however, they need proof of operating capital of US$100,000 to enable them get trading licenses and work permits.
Then the person will go ahead and register by making an application(2) An application for an investment certificate shall be in a form prescribed by the Authority and shall include— (a) the full name and address of the applicant; (b) the shareholders and nationality of the business enterprise; (c) the nature of the business, its capital structure, business plan and the amount to be invested; and (d) such other information, documents or particulars as may be specified in the application form. accompanied by the following
- Certificate of registration of the business
- (b) business plan which shall include—
- the name of the investment and detailed information on the type of investment;
- the action plan;
- the date of commencement of operations;
- detailed information on raw materials sourced in the country or in the locality where the investment is to operate;
- detailed information on any financing and assets to be sourced from outside Uganda, including the timeframe in which these finances and assets shall be invested;
- land requirement for the investment;
- the location of the investment;
- utilities required for the investment;
- a market survey;
- details of the projected technology; and
- Knowledge transfer.
- the environmental impact assessment certificate issued in accordance with the relevant laws;
- the projected number of employees; and
- License granted by the business sector in which the investor intends to operate.
Armed with the above information, an investor will get an investment certificate which shall be valid for a period specified in the certificate.
What incentives are available for investors?
It is possible to maximize the returns of an investor through use of incentives. Available to the investors are sector specific incentives as well as those that are general established by the investment code act of 2019. These include
For an investor to acquire status to enable them enjoy incentives, they have to meet various requirements established in the act which include meeting the minimum investment capital requirements, engaging in priority areas, exporting at least 80% of the produce, providing at least a 30 % substitution on the imported goods value, using at least 70% of locally sourced raw materials, having at least 60% employees as citizens and introducing advanced technology or upgrading the available technology.
This will enable the investor to qualify a certificate for incentives.
For purposes of clarity, priority areas are laid out in the second schedule of the Investment Code Act and among many other these include agro processing industry, household appliance industry, building materials industry, textile industry, the real estate and pharmaceutical industries.
Which businesses do not qualify for government incentives?
There are areas where foreign investors shall not be given incentives and these include;
- Wholesale and retail commerce
- Personal Service Sector
- Public Relations business
- Car hire services and operation of taxis
- Bakeries, confectionaries and food processing for the Ugandan market only
- Postal services
- Professional services.
What protection is available for the investor’s property?
The investors in Uganda have a right to own and use property in Uganda in exclusion to everyone else as long as it is attained lawfully. The law also provides that the owner of the property in question shall not compulsorily acquired off of their property without prior and prompt payment. This means that if property is to be taken from someone for the general good, the rights n tat property of ownership and use shall only be transferred when there is fair payment that shall only take place before the transfer.
Firstly, the Constitution of the Republic of Uganda;1995 provides under article 26 that persons have the right to own and handle their property exclusively. It goes ahead to state that no arbitrary action can be taken to acquire such property without prior and prompt payment.
Secondly, the Investment Code Act reechoes this clearly under section 26 stating that no business enterprise, interest or right of a registered investor shall compulsorily taken or acquired from an investor except in accordance with Constitution.
Any restrictions as to what foreign investors business can carry out?
The Investment Code Act states that they shall not carry on the business of crop production, animal production or acquire or be granted or lease land for the purpose of crop production or animal production
However, an exception is provided for provision of materials and any other assistance to Ugandan farmers in crop production and animal production or in cases of leasing land for purposes of manufacturing or carrying out the activities where foreign investors cannot get incentives and priority area for investment.
Which areas are ripe for investment in Uganda?
Among others, you can consider investing in the following areas in Uganda.
- Oil & Gass
- Minerals trade and Mining
- Fish farming
- Health care
- Value addition for Agricultural products
- Affordable housing