Financial Data
Updated 26 Sep 2017


Uganda

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Business opportunities and risks

Opportunities for you to do business in Uganda

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There are many opportunities that could make investment in Uganda a viable option. The following are potential opportunities and benefits that could come from the improving business environment in the country, luring investors to work in the country:

  • Uganda offers investment incentives for investors in four priority sectors: information and communication technology; tourism; value-added agriculture; and value-added investments in mineral extraction
  • Under Ugandan law, foreign investors can take 100% ownership of a company. Foreign participation is allowed in any sector of the economy, except defence. Investment incentives include ten-year tax holidays, VAT deferments, tax deductions and exemptions, depreciation allowances, capital allowances, and land allocations. Businesses do not have to invest a minimum amount of capital when opening a business. This is to the benefit of investors with limited capital available, and encourage entrepreneurship.
  • Uganda is expected to begin domestic oil production within the next few years. Some analysts are expecting it to happen as soon as 2018. This will reduce the country’s dependence on fuel imports and increase the country’s export values.
  • There are no restrictions on joint ventures with local investors

A big and largely unregulated labour market benefits employers and guarantees that companies have considerable flexibility in determining annual leave, working hours and salaries. A low national minimum wage makes the costs of employment in the country very low and Ugandan policies on hiring foreign workers are relaxed and inexpensive. The fees for an annual work permit vary by sector and worker qualification. Fees are as low as USD250 or as high as USD1 500 for an investors’ permit. Work permits can be issued for up to five years and may be renewed every three years.

Business opportunities
  • Under Ugandan law, foreign investors can take 100% ownership of a company, and foreign participation is allowed in any sector of the economy, except defence.
  • Investment incentives include 10-year tax holidays, VAT deferments, tax deductions and exemptions, depreciation allowances, capital allowances, and land allocations.
  • Businesses do not have to pay a minimum amount of capital when opening a business. This is to the benefit of investors with limited availability to capital and encourages entrepreneurship in the country’s economy.
Operational risks to consider

While there are several opportunities worth tapping into in Uganda, the country is not without its challenges, and smart investors and businesses should carefully consider and plan for these encounters before establishing a presence in the country.

Operational challenges in Uganda include:

  • Uganda’s infrastructure is weak, particularly energy, water and transport, which can add to your costs when establishing a presence in the country
  • There are legal challenges with regard to contract enforceability, property ownership and the enforcement of intellectual property rights. Trade in counterfeit goods is also widespread.
  • Corruption is a serious problem and the political will to fight it remains inadequate. Despite legal interventions to fight corruption, the judicial institutions and enforcement are weak. Corruption drives up costs for business and complicates business operations. This presents a significant challenge for investors.
  • Since 2011, the Uganda Investment Authority (UIA) is reviewing business licensing applications more critically. Capital expenditure is a pre-condition for foreign business licensing, and licensees are required to invest a minimum of USD100 000 over three years in their projects.
  • It takes 32 days to open a business. The process involves 15 procedures, and the registration fee amounts to USD1 030, or 64.4% of per capita income. In a regional context, the cost of starting a business is regarded as high.
  • In Uganda, the issuing of title deeds on land can be problematic. Under the Land Act of 1998, foreign businesses cannot own land. However, there are certain incentives that investors can use to gain leaseholds or outright ownership, such as incorporating local companies into their operations.
  • The labour force is characterised by low educational levels, poor basic skills and low productivity. This remains a challenge for investors. The country’s labour market also reflects high union membership and industrial action is common, which poses a risk in terms of work interruptions and lost productivity.
Business challenges
  • A major risk to investors relates to property rights. In Uganda, gaining title deeds on land is problematic. Under the Land Act of 1998, foreign businesses cannot own land in Uganda. However, there are certain incentives that investors can use to gain leaseholds or outright ownership, such as by incorporating local companies.
  • Security threats due to weak border controls make it easy for terrorist groups and criminals to move in and out of the country without any restrictions. Somalia’s al-Shabaab has named Uganda as a target for further terrorist attacks.
  • The process of registering a business or property and obtaining permits is complicated. There are many delays and high costs for investors.
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