Guide to Investing in Uganda
Guide to Investing in Uganda
Uganda enjoys a unique location at the heart of Sub-Saharan Africa within the East African region and lies astride the equator. The country is bordered by Sudan in the north, Kenya in the east, the United Republic of Tanzania in the south, Rwanda in the southwest and the Democratic Republic of Congo in the west. This land linked position, gives the country a strategic commanding base to be a regional hub for the numerous trade and investment opportunities.
|Population: 35.4 Million (2013 est.)|
|World Population Rank: 35|
|Population Growth Rate: 3.2%|
|Literacy rate: 73% (2009/10)|
|Total Labour Force: 13.4 million (2009/10)|
GDP at current market prices (US$ billion – 2012/13) 21
Per capita GDP at current prices in US$ (2012/13) 596
GDP Growth at constant (2002) market prices (2012/13) 5.1%
Agriculture as a % to GDP at current prices 23%
Balance of Payments surplus (US$ million – 2012/13) 787
Inflation rate (2012/13) 5.6%
Why Invest in Uganda?
1. Predictable Environment:
Uganda has been able to achieve macro-economic stability when clouds of uncertainty rocked many regions of the world.
· Stable economic growth averaging 5.1% in 2012/13
· Maintained a competitive real exchange rate that supports export growth
2. Fully Liberalized Economy:
· All sectors liberalized for investment
· Free inflow and outflow of capital
· 100% foreign ownership of investment permitted
· Ranked the 8th freest economy out of the 46 Sub-Saharan Africa countries by the 2013 Index of Economic Freedom.
3. Market Access:
Uganda is a member of the Common Market for Eastern and Southern African states (COMESA), a region with a market of about 400 million people in 19 countries.
Uganda is a member of the East African Community (EAC) comprising Burundi, Kenya, Rwanda, Uganda, and Tanzania with a population of over 140 million people.
Duty and quota free access into China (quota free access for over 650 products), the USA (AGOA), Generalized System of Preferences (GSP) scheme and EU (EBA) markets.
4. Strong natural Resource Base
· Rich endowment of rainfall, soils, and favorable temperature range. A number of crops are grown organically
· Unexploited mineral deposits and tourism opportunities. Confirmed deposits include Phosphate, Gold, Zinc, Wolfram, Petroleum, Diamond, Vermiculite, Silica etc
5. Government Commitment to Private Sector
· Government and private sector dialogue in policy formulation through business and investment associations e.g. Private Sector Foundation Uganda, Uganda Manufacturers Association, Uganda National Chamber of Commerce and Industry, among others
· Continuous improvement in provision of infrastructure and other social services
6. Trainable Labor
· Uganda presently produces over 15,000 University graduates per year
· Quality of labor is one of the biggest attractions
· The National Development Plan focuses on skilling the labour force to match the needs and opportunities for investment in the country
7. Security of Investment
· Guaranteed under the Constitution and the Investment Code 1991
· Uganda is a signatory to major international investment related institutions such as:
– Multi lateral Investment Guarantee Agency (MIGA)
– Overseas Private Investment Corporation (OPIC) of USA
– Convention on the Recognition and Enforcement of Foreign Arbitral Award (CREFAA)
– Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC)
– International Centre for settlement of Investment Disputes (ICSID), Agreement on Trade Related Investment Measures (TRIMS), General Agreement of Trade in Services (GATS), and Agreement on Trade related Aspects of Intellectual Property Rights (TRIPS)
How Does Government Support Private Investment?
1. Investment Incentives
|Import Based Incentives||The following sectors have exemptions from import duty: Agriculture, Tourism, Health, Education, Renewable Energy; Mining, Oil and Gas.
Plant and Machinery – Duty free at importation (for most directly used in production), VAT deferment (granted to VAT registered persons), Withholding Tax exemption for some sectors like agriculture
First Arrival Privileges
These are in the form of duty exemptions for personal effects and a motor vehicle (previously owned for at least 12 months) to returning Ugandan Investors
For details of the listed incentives please log onto the Uganda Revenue Authority: www.ura.go.ug
|Export Based Incentives||All exports are tax exempt except raw hides and skins
$1· Manufacturing Under Bond taxes)
$1· Duty exemption on plant and machinery and other inputs
$1· Stamp duty exemption
$1· Duty draw back – a refund of all or part of any duty paid on materials, inputs imported to produce for export
$1· Withholding tax exemptions on plant & machinery, scholastic materials, human & animal drugs and raw materials
|Investment Capital Allowances
Deductible Annual Allowances (depreciable assets)
|Initial Allowance on plant and machinery for industries located in Kampala, Entebbe, Namanve, Jinja and Njeru
Initial Allowance on plant and machinery for industries located elsewhere in Uganda
Start up cost on actual expenditure incurred over the first 4 years in 4 equal installments
Initial Allowance on hotel, hospitals and Industrial buildings Depreciation rate for Hotels, Industrial Buildings and Hospitals
Computers and data handling equipment
Automobiles; buses and minibuses seating capacity of less than 30 passengers; goods vehicles with a load capacity of less than 7 tones; construction and earth moving equipment
Buses; goods vehicles specialized trucks; tractors; trailers and trailer-mounted containers; plant and machinery used in farming, manufacturing or mining operations
Comprehensive- list on www.ura.go.ug
Rails locomotives and water transportation equipment and vessels
Comprehensive- list on www.ura.go.ug
|On scientific research capital expenditures
On costs of training /tertiary education of a citizen or permanent resident of Uganda
On Mineral exploration expenses of capital nature incurred
Of income tax payable if 5% of their employees on full time basis are persons with disabilities
Depreciation allowance granted on expenditure incurred on farm works
Deduction for bad debt in
|Type of Tax
|Income Tax Rate||30%||However, corporate tax for mining companies varies from 25% to 45%|
|Capital Gains Tax Rate||30%||Capital gains are taxable that are delivered from the disposal of assets held by a company|
|Dividends and Interest||15%||Tax is exempted in case a resident recipient company controls 25% or more of the voting power of the resident company|
|Personal Tax||0% – 30%||Income in excess of Uganda shillings 4.92 million is taxed at 30%. For oil and gas sector resident contractors and sub-contractors are taxed at 30%|
|Value-added Tax (VAT)||18%||Supply of goods used in Agriculture Health and Education is exempted from value added tax|
|Value-added Tax (VAT)||0%||Good or services are exported from Uganda
Educational materials &printing
Supply of seeds fertilisers; machinery, tools and implements suitable for use only in agriculture.
Supply of leased aircraft, their parts maintenance equipment.
Supply and installation Sanitary useable mini-infrastructures.
Comprehensive- list on www.ura.go.ug
|Social Security Contributions||10%||This contribution goes to National Social Security fund|
|Royalties||15%||The royalties may be reduced under a tax treaty|
|Capital duty||0.5%||Charged for increase in nominal capital and incorporation of the company|
2. Business Registration and Licensing
Uganda Investment Authority (UIA) is the first point of contact for any potential investor for:
First hand information on investment opportunities in Uganda;
Issuance of an Investment License;
Assistance in securing other licenses and secondary approvals for investors;
Accessing help to implement investment project ideas through assistance in locating relevant project support services;
Assistance in the acquisition of Agricultural and Industrial land;
Help to obtain work permits and special passes for investors, their expatriate staff as well as their families ;
Assistance in organizing itineraries for visiting foreign business missions in the country;
Contacts of potential joint venture partners and funding for the expansion of existing projects;
In addition UIA’s role is to:
Review and make policy recommendations to Government about investment;
Facilitate and enhance Small and Medium Enterprises
Registering your Investment in Uganda
Business registration and licensing can be done through the One-Stop-Centre (OSC) at the UIA. The OSC hosts: the Uganda Registration Services Bureau (URSB) which registers companies and issues them with a Certificate of Incorporation; the Uganda Revenue Authority (URA) which registers Tax Identification Numbers (TINs) and offers tax advice; the Directorate of Citizenship and Immigration Control which issues work permits among other immigration documents; the Lands Registry which assists in the verification of land ownership; and the National Environmental Management Authority (NEMA) which ensures that investments are compliant with the laws that govern environment management. Accessing all these services under one roof saves the investor both timeand money to have their projects licensed and implemented expeditiously.
Company registration is the first step to formalizing a business in Uganda. The applicable forms and information on registration fees for the formation of a company charged by the URSB can be downloaded from www.ursb.go.ug
The normal processing time for an investment license is 2 days. However, if all the paperwork is in order and there is no need for regulatory approvals, the license can be issued in 24 hours. Investors can also apply for the investment license on-line if they have all their documents in electronic form.
Detailed requirements are available from www.ugandainvest.go.ug
UIA assists the potential investor in the acquisition of secondary licenses. Investments in Energy generation, Mining, Banking, Air transport, Pharmaceuticals production, Education and Health are regulated by the sector Ministries, Departments of Agencies. Regulatory approvals/permits/or licenses must be acquired before applying for the Investment License.
Applications for your Tax Identification Number (TIN) can be done on-line. A tax official in the OSC is at hand to assist and offer tax advice as well. The guidelines can be accessed via the URA website www.ura.go.ug
UIA assists a licensed investor to obtain suitable (and serviced) industrial and agricultural land, as well as work permits for expatriate staff. Utilities like telephone, electricity and water can easily be secured from the relevant providers.
Foreign investors require a minimum of US$100,000 in planned investment. The license is very crucial to foreign investors as it is the instrument that legalizes their investment in Uganda.
Local investors, require a minimum investment of US$50,000. Local investors may proceed with their investment without licensing with the Uganda Investment Authority; however a holder of the investment license is easily distinguished from a trader for tax purposes.
Uganda is among the leading producers of coffee and bananas. It is also a major producer of tea, cotton (including organic cotton), tobacco, cereals, oilseeds (simsim, soya, sunflower, etc), fresh and preserved fruit,vegetables and nuts, essential oils, orchids, flowers and sericulture (silk). Opportunitiesinclude commercial farming and value addition, as well as the manufacture of inputs (fertilizers,pesticides etc.), supply of agriculturalmachinery and the establishment of cold storage facilities as well as the production of packing materials. PublicPrivate Partnership investment opportunitiesexist in thecommercial production of cereals (maize and rice) and beans.
The sector is the second highest foreign exchange earner for Uganda with export revenues amounting to US$ 136.22 million in the year 2011. Large fresh water expanses are home to a wide variety of fish products. Opportunities are available for fish farming and establishment of more fish processing factories on other lakes other than Lake Victoria. Uganda’s fish is a delicacy in Europe and has recently penetrated the US market. The Government of Uganda is encouraging fish farming (pond and cage) from which fish can be produced for food and the skin processed to leather. The manufacture of fish feeds and fishing gear are other opportunities for investment.
With over 4.9 million hectares of rich forest vegetation, Uganda possesses abundant potential in areas like timber processing for export, manufacture of high quality furniture/wood products and various packaging materials. There are also opportunities in afforestation and reforestation especially of medicinal trees and plants, soft wood plantations for timber, pulp & poles.
The distinctive attraction of Uganda as a tourist destination arises from the variety of its game stock and its unspoiled scenic beauty. It is estimated that 50% of the world’s population of mountain gorillas lives in Uganda. Within a relatively limited space of just over 240,000 square kilometers, Uganda offers an interesting contrast ranging from the wide East African plains and expansive savanna grasslands to the impenetrable, mountain rain forests and snow peaked mountains in the south western parts of the country. Lake Victoria, which is shared with Tanzania and Kenya, is the 2nd largest fresh water lake in the world, while Lake Bunyonyi in south western Uganda is the 3rd deepest in the world! The Nile River (longest in the world), with its beautiful waterfalls and unique water scenery has its source in Uganda.
Uganda is home to 11% of the world’s bird’s species (1060 species) which offers a wide range of bird species for viewing in addition to numerous sporting opportunities such as mountain climbing and water sports including white water rafting. The opportunities in tourism range from constructing high quality accommodation facilities, operating tours and travel circuits to the development of specialized eco and community tourism.
Public Private Partnership (PPP) projects include:
1. The construction of up to mid market accommodation within Queen Elizabeth National Park and other conservation areas
2. The development and management of 20-25 bed facilities in the protected areas
3. The construction of a Wildlife Forest lodge comprising 20 spacious cottages to provide additional accommodation for mi-range travelers within the tourist areas of Mabira and Budongo Forests, as well as the Queen Elizabeth and Murchison Falls National Parks.
The establishment of internationally rated tourism and hospitability training centres to cater for the increasing number of tourist visitors is another opportunity.
New geodata provides for opportunity in growth in mining. 80% of the country has beensurveyed and Uganda has large under-exploited mineral deposits of gold, oil, high grade tin, tungsten/wolfram, salt, beryllium, cobalt, kaolin, iron-ore, glass sand,vermiculite , phosphates (fertilizer), Uranium and rare earth elements. There are also significantquantities of clay and gypsum.
Gold occurs in many areas of the country, including Busia in the east, Buhweju and Kigezi in the west, Mubende – Kiboga in the central region and significant occurrences in Karamoja in the north east.
Uganda provides special incentives to the mining sector with some capital expenditures being written off in full.
Oil and Gas
A discovery of petroleum wells in the Lake Albert region has enhanced the sector’s joie de vivre.
According to the Petroleum Exploration and Production Department, 21 oil and/or gas discoveries have been made in the country to date. 87 oil wells have been drilled and there are 21 fields in existence.Currently over 3.5 billion barrels of STOIIP have been discovered with over 1.2 billion barrels of oil equivalent estimated as recoverable. However, appraisal of the discoveries is still ongoing. Less than 40% of the Albertine Graben has been evaluated.
Investment opportunities available in upstream activities include:
- Joint Licensing for petroleum exploration and production
- Ventures and farm-in arrangements in existing licenses
- Heated crude oil pipelines to refinery
- Environmental services, given that most activities are located in ecologically sensitive areas. Waste treatment and disposal for both solids and liquids is critical
- Service provision and contracts in the fields of Engineering, Procurement, Construction, Environmental consultancy, drilling services, down hole services etc.
Other opportunities are detailed in the cylindrical illustration are areas where domestic investment can be the major contributor
Information Communication Technology
Uganda’s Information and Communication Technology (ICT) sector is one of the most vibrant within the region and fastest growing sector in the economy. This vibrancy hinges largely on the good legal and regulatory frameworks. The supportive investment climate therein has exposed numerous opportunities in ICT innovation services leading to maximum utilization of the existing youthful human resource base as quite suitable for the ICT work. The newly developed and highly qualitative ICT infrastructure is also ready to accommodate more future investments. Uganda is now connected to three marine fibre optic cables.
Printing and Publishing
In the printing and publishing sub-sector, opportunities exist for the printing of textbooks for schools. Currently, imports supply over 90% of Uganda’s textbook requirement (estimated at over U$7 million a year). Investment opportunities therefore exist in the various type of printing including flexography, screen printing, off-set printing and digital printing. Other opportunities include electronic printing magnetography, thermo graphic printing, ion deposition printing and direct charge deposition printing
Uganda runs high quality training programmes at a relatively cheaper cost than other education destinations and is dedicated to making investment in the country’s knowledge hub a unique experience and a win-win situation for both investors and students. Investment opportunities therefore exist in Uganda for setting up of independent private universities, branch universities and offshore campuses. In order to create the relevant skills needed in emerging industries and technology, the Government of Uganda has emphasized the need for technical & vocational training in the 2040 national vision. There is a need therefore for such training centres that will skill Uganda’s human resource. Other areas of investment include, technology-based education, distance education and student financing.
Uganda’s manufacturing sector presents various opportunities in virtually all areas ranging from beverages, leather, tobacco based processing, paper, textiles and garments, pharmaceuticals, fabrication, ceramics, glass, fertilizers, plastic / PVC, assembly of electronic goods, hi-tech and medical products.
Although significant efforts have been made to develop and rehabilitate the existing physical and non-physical infrastructure, potential investment opportunities still abound. In particular, transport & logistics and energy sectors still require further investment.
With less than 10% of the mainstream capacity of 2,700 megawatts of power exploited, Uganda has the potential to be a major supplier of hydro electric power to the entire East African region.
About 90% of Uganda’s total cargo freight is transported by road leading to high costs in maintenance, wear and tear as well as non tariff barriers and time. Only 20% of the rail network is functional. Investment opportunities in transport infrastructure include some public private partnership projects in the development of the Kampala – Jinja Toll Road, Bus Rapid Transit, Uganda Railway Projects, Uganda/Tanzania Railway Project, and refurbishment and expansion of Entebbe International Airport and the Upcountry Airports.
The average costs of investment for the Entebbe International Airport are: Domestic Terminal ($8M), New Cargo Centre ($60M), Maintenance Centre ($30M), and Multi-Storey Car Park ($5M). The upcountry airport upgrades are estimated to cost: Gulu ($61M), Kasese ($41M), and Pakuba (Oil Fields – $10M)
The financial services sector is liberalized for business. The recent years have seen an expansion in the branch network countrywide. In 2000 there were 129 branches in the country and at the end of last year (2012) the branches had risen to 495. The existing banks are spreading outside the capital city of Kampala; there are now 270 bank branches outside Kampala. However, opportunities for investment still exist for international multinational banking groups particularly promoting new or innovative financial products (i.e. Mortgage finance, venture capital, merchant banking, leasing finance and agricultural banking, considering Uganda’s agro based economy). Micro finance saving institutions is the most relevant option for operating in rural areas. Insurance, in particular, is still a relatively young sector and offers several opportunities for investment. The liberal economic environment also encourages the growth and development of electronic banking and innovative solutions to transactions like mobile money transfers. There are currently around 9 million registered mobile money customers in the country (about ¼ of the country’s population)
Uganda Investment Authority
Tel: +256 414 301000
Uganda Registration Services Bureau
Tel: +256 414 2235219 / 235915
Uganda Revenue Authority
Tel: +256 417 444602 – 4, 417 444620
Uganda Tourist Board
Tel: +256 414 342196/7
Uganda Wildlife Authority
Tel: +256 414 3555000, 312 355000
Directorate of Citizenship and Immigration Control
Tel: +256 414 595945
Uganda National Bureau of Standards
Tel: +256 414 505995, 222369
Bank of Uganda
Tel: +256 414 259090, 312 392000
Uganda National Bureau of Statistics
Tel: +256 414 706000
Uganda Export Promotion Board
Tel: +256 414 230250, 230233
National Environment Management Authority
Department of Geological Survey and Mines, Uganda
Tel: +245 414 320656, 312 262902
Petroleum Exploration and Production Department
Tel: +256 414 320714
Uganda Manufacturers Association
Tel: +256 414 221034, 287615/2
Private Sector Foundation Uganda
Tel: +256 312 263850, 261850
Uganda National Chamber of Commerce and Industry
Tel: +256 753 503035
Uganda Chamber of Mines and Petroluem
Tel: +256 312 516695