Investing in Uganda
Uganda has a rapidly growing liberalised economy and a favourable investment climate. The government of Uganda provides the necessary legal policy and physical infrastructure for private investment to flourish. The government is further privatising parastatals and revising regulations to promote foreign investments. The law permits 100 per cent ownership of investments and, with very few exceptions, investors can invest in any economic activity.

Constitutional Provisions and other provisions on protection of private property
The Constitution of the Republic of Uganda 1995 (as amended), the supreme law in Uganda recognises and gives protection to private property.

Under Article 26 (1) it is provided that every person has a right to own property either individually or in association with others.

Article 26(2) thereof provides that no person shall be compulsorily deprived of property or any interest in or right over property of any description except where the following conditions are satisfied:

1. the taking of possession or acquisition is necessary for public use or in the interest of defence, public safety, public order, public morality or public health; and
2. the compulsory taking of possession or acquisition of property is made under a law which makes provision  for
1. Prompt payment of fair and adequate compensation, prior to the taking of possession or acquisition of the property ; and
2. A right of access to a court of law by any person who has an interest or right over the property.
   

Article 28(1) of the Constitution provides that in determination of civil rights and obligations or any criminal charge, a person shall be entitled to a fair, speedy and public hearing before an independent and impartial court or tribunal established by law.

Article 50(1) of the Constitution provides that any person who claims that a fundamental or other right or freedom guaranteed under this constitution has been infringed or threatened, is entitled to apply to a competent court for redress which may include compensation.

The Constitution has established a Supreme Court, a Court of Appeal, and the High Court and provided for the setting up of subordinate courts. The subordinate courts that have been established include Magistrate's Courts (Chief Magistrate, Magistrate Grade I and Magistrate Grade II) and Land Tribunals.

Under the Investment Code, Statute No.1 of 1991, Section 29

(1) The business enterprise of an investor which is licenced under this Code, or an interest or right over any property or undertaking forming part of that enterprise shall not be compulsorily taken possession of or acquired except in accordance with the provisions of the Constitution of Uganda.

(2) Where a licenced business enterprise, of an investor or an interest or right over property forming part of that enterprise is compulsorily taken possession of or acquired, compensation in respect of the fair market value of the enterprise specified in the enterprise or an interest or right over property forming that enterprise shall be paid within a period not exceeding twelve months from the date of taking of possession or acquisition.

(3) Compensation paid out to the investor under subsection (2) shall be freely transferable out of Uganda and shall not be subject to exchange control restrictions under the Exchange Control Act or any law made thereunder.

Under the Investment Code, a dispute between a foreign investor and the UIA or the Government in respect of a licensed business enterprise may be submitted to arbitration in accordance with the rules of procedure of the International Centre for the Settlement of Investment Disputes (ICSID), or within the framework of any bilateral or multilateral agreement on investment protection to which the Government of Uganda and the country of which the investor is a national are parties; or in accordance with any other international machinery for the settlement of investment disputes.  

Uganda has bilateral trade investment promotion and protection agreements with Kenya, Tanzania, South Africa, The United Kingdom & Italy.

Uganda is a signatory to the Multilateral Investments Guarantee Agency (MIGA) treaty.

Uganda is a member of the East African Co-operation Initiative, which brings together three countries - Kenya, Tanzania and Uganda.  This ensures closer economic co-operation, reduced tariffs and regional market access.

Uganda is a member of the Common Market of Eastern and Southern African States, (COMESA) bringing together 19 countries in the region with a market of approximately 300 million people.

Uganda products enjoy preferential (quota free) access when exported to the European Union under the Lome Convention and to the United States of America under the Generalized System of Preferences (GSP).

Assistance
Magezi, Ibale & Co. promotes investments in Uganda by assisting local and foreign investors with advice, counselling and information with the following: -
   1. Reservation of a name at the Registry of  Companies.
   2. Preparation of Memorandum & Articles of Association and relevant documents.
   3. Incorporation and registration of company.
   4. Applying for, following up and securing investment licences from the Uganda Investment Authority (UIA).
   5. Applying for, following up and securing work permits from the Immigration Department of the Ministry of Internal Affairs.
   6. Applying for, following up and securing electricity and water connections from the Uganda Electricity Board and the National Water and Sewerage Corporation.
   7. Application, following up and registration of company for income and corporate taxes and PAYE (Pay as you earn) with the Uganda Revenue Authority.
   8. Application, following up and registration with the Value Added Tax (VAT) Department of the Uganda Revenue Authority (URA). An investor with projected annual gross sales of US$ 30,000 or more or a business which wishes to get a refund of VAT on imports and inputs need to register for VAT.
   9. Applying for, following up and securing telephone connections and postal box numbers.

The Uganda Investment Authority
Uganda Investment Authority (UIA) is the agency set up by government under the Investment Code, Statute No. 1 of 1991 to promote investment in Uganda; to market Uganda's investment opportunities to targeted investors all over the world; to co-ordinate the national investment marketing programme; and to serve as the point of contact for investors interest in Uganda.

As a business oriented agency, UIA is equipped to handle investor's requirements for information or action swiftly.  The Agency is manned by professional staff who can provide advice and assistance to investors in implementing their planned investment programmes with minimal problems.

UIA also advises government on appropriate investment policies.

The Uganda Investment Authority can provide first-hand information on investment opportunities in Uganda.
    * Issue investment licences.
    * Secure other licences and secondary approvals for investors
    * Help investors to implement their project ideas through assistance in locating relevant project support services.
    * Provide assistance in the acquisition of industrial land.
    * Obtain work permits and special passes for foreigners
    * Arrange contacts for investors and organize itineraries for visiting foreign missions within the country
    * Assist investors in seeking joint venture partners and funding
    * Review and make policy recommendations to government about investment.

The Uganda Investment Authority, law firms and business associations work together to promote private investment in Uganda

Incorporation and registration of Companies in Uganda
All businesses have to register the company name or be formed as a legal entity.

As Advocates/solicitors we assist in registration and preparation of the Memorandum and Articles of association and relevant documents.

Investment licence

A local investor with US$ 30,000 or a foreign investor with an investment of $100,000 or more is eligible to an investment licence (with the exception of investors in professional service sectors).

To obtain an investment licence, an investor must provide a Memorandum and Articles of Association, Certificate of incorporation, business plan/detailed investment plan, which includes the capital investment, value and timing of investment and a comprehensive training program. An investment licence entitles the investor to certain privileges.

Obtaining water, electricity, telephone and postal services
The Uganda Electricity Board (UEB) provides electricity. The Uganda Telecom Limited (UTL) and Mobile Telephone Networks (MTN) (Uganda) Limited which are private companies provide fixed and cellular telephone services. Celtel Cellular Limited which is also a private company provides cellular services only. The National Water & Sewerage Corporation (NWSC) provides water in most towns. Postal services are provided by Uganda Post Limited and by numerous courier companies such as DHL, TNT, UPS, Skynet, e.t.c.

Obtaining work permits
An investor is granted a thirty-day tourist pass at the airport. Where necessary, a special pass should be completed to extend the time to ninety days.

After receipt of an investment licence from the Uganda Investment Authority, an investor may apply for an Entry/Work permit through the Uganda Investment Authority. The duration of such permit is up to five years, and fees are paid annually in advance.

Registering for Income/Corporate taxes

Within six months of commencement of the fiscal year, a business must submit estimated taxes and pay any potential tax liability to Uganda Revenue Authority (URA). Four months following the end of the fiscal year, corporation taxes are required to be filed and paid.

On a monthly basis, by the 10th day, a business must pay PAYE (Pay As You Earn) from employee pay roll deductions, at a designated Uganda Commercial Bank (UCB) Branch.

Registering for Value Added Tax (VAT)
Monthly reports are made to Uganda Revenue Authority (URA)/VAT office and monthly payments made to Uganda Commercial Bank (UCB). This enables a business person to get a refund on value added tax on imports and inputs.

Investors may be illegible to obtain VAT refunds on raw materials, plant & machinery, with the commissioner's approval.

Obtaining a trading licence
Everyone, with a few exceptions, operating a business in Uganda is required to obtain a trading licence usually from a local authority wherever the trading is being conducted such as Kampala City Council, Jinja Municipal Council, Fort Portal Municipal Council, etc. The trading licence is granted upon payment of a prescribed fee.

Land
Foreign investors are able to own land in Uganda and can receive long-term leases for a maximum of up to 99 years. Advocates/Solicitors and Estate Agents can assist in locating and leasing suitable and available land.

Import and export information.
Customs Valuation:
Uganda follows the Harmonized System of categorizing goods. All imported goods worth  $ 10,000 and above are subject to a pre-shipment inspection in the country of origin.

Import Certificates:
Import Certificates, which are non-good-specific, are required and have a validity of 6 months. The Certificates take the place of import licences. The Ministry of Trade & Industry issues the certificates upon payment of a nominal fee

Supplementary Documentation:
The Uganda Revenue Authority at the entry point may require the following supplementary documents whenever the following goods are imported:

• Human and animal drug medications: verified proforma invoices from the National Drug Authority.
• Firearms: firearms certificate from the Ministry of Internal Affairs.
• Live animals (domestic & wild): health certificate.
• Second hand clothing: fumigation certificate.
• Explosives: approval authority.
• Seeds/plants: phytosanitary certificate.
  

Labeling and marking requirements
Imports and exports must be clearly marked with the following information: importer/exporter name, consignee, flight/vehicle details, place of discharge, number of packages, container identity, description of goods, airway bill number/bill of lading & country of origin/destination.

Investing in Uganda

Uganda's economy is almost fully liberalized. It has in the recent past averaged 7.5% growth per annum. The government has continued with its policy of privatization leading to many opportunities for potential foreign and local investors. To set up a business in Uganda is at the best of times complicated and time consuming. To save time and money it is prudent to seek advise from a lawyer either to do the work or to check whether the proper procedure is being followed.

Basic Requirements
Registration of Business name and Incorporation.
Acquisition of Land
Connection of Telecommunication services.
Acquisition of Electric connection
Connection Water and Sewerage Services.
Registration with Uganda Revenue Authority

Property Purchase
Property purchase in Uganda has caused considerable misery to number of buyers. Some have found that the property purchased does not lie on the area depicted on the land title that they hold though the land title itself it may be genuine. Others have found that the land they have purchased has a squatter who cannot be evicted because he is protected by the land act. The land purchased may have been caveated at the land office with the caveat not necessarily reflected or endorsed on the certificate of Title held by the vendor.

The land may have been mortgaged to a financial institution and is therefore not for dale until the institution has been paid off. Other complications may arise by virtue of the complex land tenure system in Uganda. There are four different types of tenures in existence.

• Mailo land
• Freehold
• Customary
• Public land

By law non-citizens and foreign owned companies cannot acquire an interest greater than leasehold. The leases are normally 49 years.. It is not strange to find for example that three different people legally enjoy different interest on the same Piece of land. Take for example this scenario, a Mailo landowner has 1square mile piece of land. He grants a 10-year lease on the land to the farmer. The farmer will obtain a land title in respect to the lease. To the common man there will be no difference between the Mailo owner's title and the leasehold title. Both these parties are free to sale their interest on the land and there will be nothing illegal about their transaction but they will have different implications on the purchaser. If a purchaser were to buy the mailo interest, it would mean that he becomes the owner of the land. He also becomes the landlord of the lessee. Most important of all, unless he is in the know, he will not take possession of the land until the expiry of the ten-(10) year lease granted on the land. Few people would ever purchase property to be occupied ten years from the date of purchase.

On the other hand, a Kibanja holder or customary tenant may occupy the land. Lessee of ten years may not have been aware of the prescence of this Kibanja holder. Since his lease if for ten years, his immediate intention would be to occupy the land and commence farming. His immediate reaction is to try and evict the Kibanja holder on the land. The presence of the squatter would therefore hinder his plans. This however is not possible as the Kibanja holder is protected by the law, so he may turn to the mailo owner to try to cause the eviction of the squatter from his land. The mailo owner does not have the powers to evict a squatter on his land. This is one of the few complications to be found in the acquisition of land or purchase of a home/house in Uganda. There are several others not mentioned. The best way to avoid these pitfalls is to seek legal advise.

Other areas of particular interest in purchase of property are what are the costs involved. The actual purchase price is negotiated between vendor and purchaser and this will depend on the negotiating ability between contracting parties. The law does not govern the transaction costs. These usually include brokerage fees, which range between 5%-10% of the sale price and are usually paid by the vendor.

The other costs to keep in mind are the legal fees. The Advocates remuneration and taxation of cost rules determine legal fees. Client and lawyer may opt to negotiate fees on a particular transaction. Generally the costs will range between 7.5% to 10% of the purchase price. Stamp duty is payable on transaction of the rate of 1% of the transaction value or by the value determined by the Chief Government Valuer. Where there is a conflict in the transaction value and that of the Chief Government value shall prevail.