The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of State’s Investment Climate Statement/

Executive Summary

Uganda’s investment climate presents both important opportunities and major challenges for U.S. investors. With a market economy, ideal climate, ample arable land, a young and largely English-speaking population, and development underway of fields containing at least 1.4 billion barrels of recoverable oil, Uganda offers numerous opportunities for investors. Despite the negative effects of COVID-19 related countermeasures on the economy, including a 40-day July-August 2021 national lockdown, according to the Bank of Uganda (BOU), the economy grew by 6.5% in 2021, recovering from 1.5% contraction in 2020. On a fiscal year basis, the economy grew by 3.3% in FY 2020/21 (July 1, 2020-June 30, 2021) compared to 3% in FY 2019/20. Foreign direct investment (FDI) is still yet to recover from pre-pandemic levels, with receipts dropping by 35% to $847 million in FY 2020/21 compared to $1.3 billion in FY 2019/20. The International Monetary Fund (IMF) expects FDI to rebound due to oil-related investments projected at $10 billion over the next five years and the IMF also projects Uganda’s economy to return to pre-pandemic growth that averaged 5.3% from 2014 to 2019. Oil-related investments were spurred by the February 1, 2022 announcement by Uganda and its partners – Tanzania, TotalEnergies, China National Offshore Oil Corporation (CNOOC), and the state-owned Uganda National Oil Company (UNOC) – of final investment decision (FID) on upstream oil production, with first oil expected in 2025.

Uganda maintains a liberal trade and foreign exchange regime. In 2021, the IMF approved a $1 billion Extended Credit Facility (ECF) to the government to enable the country to deal with the COVID-19 crisis and spur economic recovery. Uganda received the first tranche of $258 million in June 2021 and the second tranche of $125 million in March 2022. As the economy begins to recover, Uganda’s power, agricultural, construction, infrastructure, technology, and healthcare sectors present attractive potential opportunities for U.S. business and investment.

President Yoweri Museveni and government officials vocally welcome foreign investment in Uganda. However, the government’s actions sometimes do not support its rhetoric. The closing of political and democratic space, poor economic management, endemic corruption, growing sovereign debt, weak rule of law, growing calls for protectionism from some senior policymakers, and the government’s failure to invest adequately in the health and education sectors all create risks for investors. U.S. firms often find themselves competing with third-country firms that cut costs and win contracts by disregarding environmental regulations and labor rights, dodging taxes, and bribing officials. Shortages of skilled labor, a complicated land tenure system, and increased local content requirements, also impede the growth of businesses and serve as disincentives to investment.

An uncertain mid-to-long-range political environment also increases risk to foreign businesses and investors. President Museveni was declared the winner in the widely disputed and discredited January 2021 general elections and started a five-year term in May 2021 after 35 years already in power. Domestic political tensions increased following election-related violence and threats to democratic institutions. Many of Uganda’s youth, a demographic that comprises 77% of the population, openly clamor for change. However, the 77-year-old President has not provided any indication that he or his government are planning reforms to promote more inclusive, transparent, and representative governance.

On the legislative front, Uganda’s parliament passed a Mining and Minerals Bill on February 17, 2022, aimed at reforming the mining sector and attracting larger mining companies to exploit Uganda’s cobalt, copper, nickel, rare earth, and other mineral deposits. However, the private sector has noted that the bill could limit potential international investment since it contains high tax and free carried interest provisions and insufficient legal protections for mining firms.