Friday, July 8th, 2022
In the past two years, you might have noticed several foreign companies have said farewell to our Uganda borders and made decisions to invest in other countries. Companies like Shoprite, Vodaphone, and Pep, packed their bags one day and felt that Uganda was no longer conducive for their investments to thrive.
It is safe to say that this is the sort of break-up that is solely our fault. Their continued losses no longer justified their commitment to Uganda’s economy. This is something that was only escalated by the recent pandemic. It is no use crying over spilt milk, and though it may be an important topic for us to dive into, this article is more about how these foreign companies came to invest in Uganda in the first place. How can invest in Uganda today?
“An investment in knowledge pays the best interest.”Benjamin Franklin
It is clear that with the number of foreign companies in Uganda today, the government of Uganda is interested in foreign investments. A foreign investor could be a natural person not a citizen of the East African Community countries, a company not incorporated under the laws of the East African Community states or with majority shares held by non-citizens or controlling interest in a partnership owned by persons not members of the East African Community states. The minimum investment capital requirement for foreign investors is USD 250,000. This is to enable them to qualify to register as an investor and receive an investment license.
For a person to register for an investment licence, they must do so by making an application: 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
(d) such other information, documents or particulars as may be specified in the application form.
What incentives are available for investors?
To maximize the returns of an investor in Uganda one must rely on various incentives. To acquire status to enjoy these incentives, an investor must meet various requirements established in the act. These include;
a) Meeting the minimum investment capital requirements
b) Engaging in priority areas
c) Exporting at least 80% of the produce
d) Providing at least a 30% substitution on the value of the imported goods
e) Using at least 70% of locally sourced raw materials
f) Having at least 60% of employees as citizens
g) Introducing advanced technology or upgrading the available technology.
This will enable the investor to qualify for a certificate for incentives. Though the law of Uganda adequately awards different incentives to investors, it also provides for specific foreign businesses that would not be privy to these benefits. These include any business that involves wholesale and retail commerce, personal service sector, public relations business, car hire services and operation of taxis, bakeries, confectioneries and food processing for the Ugandan market alone.
There is a beauty that comes with investing in Uganda. Article 26 of the Constitution of Uganda, allows a person to own property. This does not exclude foreign investors. A foreign investor has a right to own and use the property. The Investment Code Act continues to emphasise this right, under section 26 stating that no business enterprise, interest or right of a registered investor shall be compulsorily taken or acquired from an investor except by the Constitution.
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 crop production or animal production. An exception is provided for the 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 a priority area for investment.
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