Guidance

Overseas business risk: Uganda

Updated 2 January 2024

1. Political

Uganda is a democratic republic with a multi-party system. President Yoweri Museveni and the National Resistance Movement (NRM) have been in power since 1986. President Museveni was re-elected in the January 2021 elections. While voting itself was conducted in relative calm, significant concerns raised in Uganda and internationally regarding the treatment of opposition candidates and journalists in the run-up to and since the elections, as well as the shut-off of the internet during the elections.

President Museveni has ambitions for Uganda to become a middle-income country by 2040 and in line with this, his government is prioritising investment in agriculture, infrastructure, and Uganda’s nascent oil industry.

2. Economic

A historical foundation of robust macroeconomic management and a broadly supportive environment for private sector growth have provided the foundation required to enable Uganda to remain resilient in the face of recent economic shocks. While Uganda has a hard-earned reputation for macroeconomic stability, its widening fiscal and current account deficits driven by the pandemic have left it more exposed to external shocks.

In 2020 GDP growth fell to 3%, driven by domestic lockdown measures implemented to control the covid-19 virus, and related external shocks including reduced foreign direct investment (FDI), tourism exports, cross-border trade and remittance flows.

Economic performance was further impacted by the ongoing Russia Ukraine war and its negative effect on supply chains and prices for key commodities including fuel wheat and vegetable oils. As a result, Uganda’s inflation rose from 2.7% in January 2022 to 10% by the end of the year.  Fiscal pressures and revenue challenges are growing. While the fiscal deficit has reduced to 7.3% from 9% last year, it remains much higher than the medium-term target of 3%. Government is also still failing to raise sufficient domestic tax revenue and the revenue to GDP ratio remains stagnant at 13% of GDP. Since 2020 poverty has risen from 27.5% to 32.7% and Youth unemployment is said to have risen to more than 50% since 2020.

Public debt has risen sharply and at 52% of GDP is close to the fiscal charter debt ceiling. Though still considered by the IMF to be at moderate risk of debt distress, debt levels will give cause for serious concern unless reversed in the next couple of years.

However modest economic recovery is underway and has been helped by strong liquidity support from the Central Bank and multilateral partners. In 2021, Uganda was approved for a $1bn IMF loan to fund the COVID-19 recovery and mitigate constraints on their external position and public finances.  Uganda is projected to grow by 5.3% in FY2022/23, higher than the 4.7% registered for the previous year. In the medium term is growth is expected to average 7% driven by the investments in the oil sector.

Key challenges faced by businesses in Uganda include high interest rates partly driven by government borrowing, high energy costs compared to other regions of Africa, and deficits in road, water and power in many parts of the country. Furthermore, the WEF ranked Uganda’s relatively weakest areas of competitiveness as being poor ICT adoption and poor skills development, both issues likely to be exacerbated by Uganda closing schools for two years during the pandemic – more than any other country in the world.

The Government of Uganda has taken measures to improve the business environment such as a ‘One Stop Centre’ for starting a business. Ugandan Revenue Authority has adopted modern customs processes and e-services to speed up processes for clearing goods and payment of trade taxes. The development of the East African Community (EAC) Customs Union and increased EAC cooperation is helping strengthen regional trade.

Uganda has signed and ratified a number of trade and investment agreements providing access to a large regional and international market including the East African Community Customs Union, Common Market for East and Southern Africa and the new Continental Africa Free Trade Area. Regional integration is a key part of Uganda’s development strategy with the President championing closer integration across the African continent. With duty free access for most commodities to the regional market, numerous business opportunities exit. Uganda delivered a strong COVID-19 trade response ensuring that trade continued. Challenges do however remain with timely clearance at borders impacting previous gains.

The Foreign, Commonwealth & Development Office (FCDO) funded Trademark East Africa programme is supporting Uganda to achieve reductions in the cost and time of trade through improved trade competitiveness and promotion of trade-led growth and poverty reduction. Key interventions include trade logistics facilities, one stop border posts and measures to reduce non-tariff barriers and increased cross border trade. Transport times for containers moving from Mombasa port to Kampala have declined providing clear evidence of the impact of improvements on trade.

Uganda introduced the Public Private Partnership Act in 2015 and has shown an appetite for foreign direct investment, especially in infrastructure. However, there remains an urgent need to improve access to power, transport infrastructure, reduce red tape and non-tariff barriers. Public investment management including the selection, prioritisation and procurement for projects needs to be strengthened to ensure that Projects are delivered on time and at cost.

Uganda’s economy has undergone significant structural change since 1990. The contribution of agriculture to GDP fell from over 50% in 1992 to 24.1% in 2021/22 (even though agribusiness contributes a large amount to the manufacturing sector), with industry contributing 26.8% and services 41.5%. Progress has been made to diversify the export base, with primary commodities (including agricultural produce) comprising 28% of Uganda’s goods exports in 2020. Uganda’s largest goods exports in 2020 were gold (56%), coffee and tea (16%), and fish (4%).

Uganda has significant mineral resources, including oil, and mineral exports have grown exponentially in recent years and future oil exports are expected to bring in much needed revenue contributing to development.

Exports of services have also grown strongly recently – from 4% of GDP in 1990 to 14% in 2020 – with tourism and ICT driving the growth. The destination of goods exported has also changed, with a large shift to regional exports, with over 50% destined for the Common Market for Eastern and Southern Africa (COMESA) region.

The UK has invested heavily in the agriculture, infrastructure and energy sectors. UK expertise is well-respected and is exemplified by UK companies winning strategically important commercial deals to build an international airport in northern Uganda and construct the largest industrial park in Uganda. Uganda is open to foreign direct investment and significant opportunities are available for UK companies, especially in agriculture, infrastructure and energy which the Government of Uganda see as key for Uganda’s economic transformation. However, it should be noted that their appetite for taking on additional debt is limited to the most urgent needs.

Uganda accesses UK Generalised Scheme of Preferences (GSP) preferences under the Least Developed Country Framework that provides duty free, quota free access on all products except arms/ammunition. Please note that goods exported from Uganda to the EU which are subsequently exported to the UK must meet the non-manipulation rule or else they will be treated as imports from the EU and therefore subject to tariffs.

In 2019 Uganda was ranked 115th (out of 141) in the discontinued World Economic Forum’s Global Competiveness Index (PDF, 8,761KB) and 116 (out of 190) in the discontinued World Bank’s ‘Ease of Doing Business’ Index.

3. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Corruption is endemic in Uganda which was ranked 142nd (out of 180) in the 2022 Transparency International Corruption Perception Index (CPI), (for the last 10 years scores between 25 and 27 out of 100). While publicly acknowledging the problem, the government needs to do more to address it. Anti-Money Laundering legislation was enacted in 2013.

Read the information provided on our Bribery and corruption page.

4. Intellectual property

Intellectual Property (IP) rights are territorial, that is, they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets. There are a number of legal provisions pertaining to the administration and enforcement of copyright and intellectual property rights in Uganda. The Copyright Act 2008 makes provision for copyright of literary, musical and artistic works, cinematography pictures, gramophone records and broadcasts.

Piracy, IP rights infringement and counterfeiting are a problem in Uganda, cutting across all forms of goods and services. Uganda’s counterfeit problem is aggravated by the lack of adequate enforcement of trademark laws and weak punitive measures. The institutions currently responsible for enforcing the Trademark Act are the Uganda National Bureau of Standards, Uganda Revenue Authority, National Drug Authority and the Uganda Police.

According to the Uganda Revenue Authority, the most commonly counterfeited products are electric cables, electronic equipment, cosmetics, toothpaste, medicines (pharmaceutical products), pens, plastics, foods and beverages. Counterfeiting is also prevalent in agricultural produce such as herbicides and maize seeds.

In 2020, the Uganda Revenue Authority introduced digital tax stamps to goods to combat illicit trade, seal revenue leakages and boost collection and increased efficiency in managing taxpayer compliance.

Read the information provided on our Intellectual Property page.

5. Human rights

Some areas of human rights have seen progress in the last decade, including the development of a comprehensive institutional framework for the protection of human rights through the Uganda Human Rights Commission, Human Rights Committee in parliament and establishment of human rights desks in key institutions.

However, there are concerns around restrictions to political and civic space (particularly in relation to democracy, freedom of assembly, association and expression), discrimination against vulnerable and marginalized groups, rule of law (e.g. lengthy pre-trial detention, detention without charge and poor prison conditions), use of torture, and limitations to freedom of expression via the usage of internet shutdowns.

The judiciary is perceived to be mostly independent. However, there are concerns about corruption in the judicial system. Whilst often a strong check on government decisions, the courts are not immune to political pressure. The commercial courts are effective but have capacity constraints. The judiciary has a large backlog of cases, many of which are land related (including disputes over ownership and tenancy). Uganda has ratified a number of international conventions on labour rights and transposed these into domestic legislation but has a mixed record on implementation and reporting.

6. Terrorism threat

Terrorists are very likely to try to carry out attacks in Uganda. Attacks could be indiscriminate or against foreign nationals or places frequented by foreign nationals. Information on the terrorism threat in Uganda can be found in the FCDO travel advice for Uganda.

Read the information provided on our Terrorism threat page.

7. Protective Security Advice

Information on personal security advice can be found in the FCDO travel advice for Uganda.

Information on travel to other parts of the country can be found in the Foreign & Commonwealth Office travel advice for Uganda. You should also read the FCDO Travel & Living Abroad guide to Uganda.

Read the information provided on our Protective security advice page.

8. Organised crime

Read the information provided on our Organised crime page.

9. Contact

For further information on trading with Uganda please contact the Department for Business and Trade (DBT) team based in the country.

10. Useful links

• FCDO travel advice for Uganda
• Uganda Investment Authority
• Uganda Bureau of Statistics
• Central Bank of Uganda