Big importers typically have warehouses to deposit imported items for pickup by wholesalers. Wholesalers then pick up consumer goods in bulk containers and typically deposit them at informal trading centers in Kampala and other parts of the country for pickup by retailers. Most transactions are cash-based, making duty collection difficult and enabling corruption. Ugandans also use mobile phone-based transactions known as mobile money.
Using an Agent or Distributor
While use of an agent is not required, many U.S. businesses looking to access the Ugandan market enter into contractual agreements with local agents and distributors. A skilled agent will bring detailed knowledge of market conditions and solid connections with Ugandan government officials to ensure investors successfully navigate Uganda’s cumbersome bureaucratic processes. Careful vetting of agents is critical, however.
Investors can also reach out to: the Uganda Investment Authority (UIA), the Uganda Export Promotion Board, the Ugandan National Chamber of Commerce and Industry, the American Chamber of Commerce in Uganda, the Private Sector Foundation Uganda (PSFU), and the Uganda Manufacturers Association for market inquiries, as well as to identify potential Ugandan business partners. Furthermore, the Uganda Free Zones Authority provides market information and investment opportunities for interested investors.
Establishing an Office
The steps involved in establishing an office in Uganda are:
- Applying for an investment license from the UIA
- Applying for a certificate of incorporation, and reserving a business name for the entity or its local subsidiary from the Uganda Registration Services Bureau (URSB)
- Applying for a tax identification number from the Uganda Revenue Authority (URA)
- Applying for a trading license from the relevant local authority
- When necessary, applying for registration of land title or verification of existing title from the Ministry of Lands.
To facilitate business registration for foreign investors establishing an office in Uganda, the UIA acts as a one-stop shop to help foreign investors navigate the process above. The licensing process for foreign investors in Uganda may be completed as quickly as one week, depending on the type of industry. While there are no explicit provisions requiring the hiring of nationals, there are broad standards requiring investors to contribute to the creation of local employment. Investment licenses carry specific performance conditions varying by sector, such as requiring investors to allow the Uganda Investment Authority (UIA) to monitor operations, or to employ or train Ugandan citizens, or use Ugandan goods and services to the greatest extent possible.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Franchising
The laws relevant to franchising in Uganda include the Contract Act, the 2012 Companies Act, the 1998 Land Act, the 2019 Investment Code Act, the 2014 Industrial Property Act, the 2013 Geographical Indications Act, the 2010 Trademarks Act, the 2009 Trade Secrets Protection Act, and the 2006 Copyright and Neighboring Rights Act. Franchises tend to be in the fast food, hospitality, heavy equipment, and consumer goods sectors.
Direct Marketing
With more than 29 million cell phone subscriptions, mobile phone marketing is the most common form of direct marketing. Foreign businesses typically market their products through local distributors.
Joint Ventures/Licensing
Ugandan law generally recognizes joint ventures. Under the Land Act, foreign entities may only acquire leases and cannot acquire freehold tenure. Under the Petroleum (Exploration, Development, and Production) Act, joint ventures may be licensed to participate in a range of petroleum-related business undertakings provided there is participation by the Ugandan government or a foreign company that is at least 48% Ugandan-owned.
The 2015 Public Private Partnership Act also creates a legal framework for joint ventures between the government and private entities that must be special-purpose companies incorporated in Uganda (albeit foreign-owned) for a specific public project. The private party must also show proof of financial capacity to execute its obligations under the project.
Express Delivery
Express delivery firms operating in Uganda include DHL, FEDEX, and TNT, which offer air delivery to/from the United States in three to five business days. Package contents must be declared at the point of shipping and customs procedures upon arrival in Uganda include security scans for contraband as well as material liable to taxation.
Due Diligence
Fraud is rampant in Uganda and is becoming increasingly sophisticated. Investors interested in entering the Ugandan market must exercise caution and conduct due diligence prior to finalizing any transactions with a potential Ugandan business partner. While many legitimate Ugandan entities seek to source goods with U.S. firms, the U.S. Embassy commercial section regularly receives reports of fraud or attempted fraud.
U.S. businesses are advised to collect cash upon or before delivery, or use an escrow service, as well as collateralizing all loans. U.S. vendors should never agree to accept third-party checks as payment for goods to be shipped to Uganda. Gold should never be accepted in lieu of payment – it is often fake or sourced from conflict regions. U.S. firms should check document veracity with financial institutions or through a commercial law firm. Similarly, firms should also conduct reference checks of potential Ugandan partners, especially other foreign customers, or suppliers.
The American Chamber of Commerce in Uganda offers a due diligence service: manager@amchamuganda.co.ug
Please see the Embassy’s list of commercial lawyers to contact for due diligence services: https://ug.usembassy.gov/business/getting-started-uganda/