US warns against investing in Uganda

by Trevor Lutalo
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The United States Government issued Monday a business advisory to its businesses, organisations and individuals alerting them of the potential risks they may face while exercising or planning to conduct business in Uganda.

The US says the recently enacted Anti-Homosexuality Law “further increases restrictions on human rights, to include restrictions on freedoms of expression and peaceful assembly, and exacerbates issues regarding the respect for leases and employment contracts.”

The joint business advisory by the US Departments of State, Labor, Health and Human Services, Commerce, and the US Agency for International Development to health services providers, members of academic institutions, investors and other entities highlights a persistent pattern of violence targeting a range of vulnerable groups in Uganda, including human rights activists, media personnel, healthcare workers, individuals from marginalized communities, LGBTQI+ individuals, and political dissidents.

Within the context of doing business in Uganda, the U.S. business advisory underscores critical risks and considerations, with particular focus on the Anti-Homosexuality Act. The US maintains that the legislation significantly magnifies potential challenges and disruptions for business operations.

The law imposes life imprisonment for same-sex relations, mandates the reporting of individuals suspected of participating in same-sex relationships and establishes the possibility of a 20-year prison sentence for “promoting” homosexuality.

Furthermore, a 2023 Investment Climate Statement on Uganda by the USA cites the country’s economic growth of 4.7% and Foreign Direct Investment is indicated to have grown by 37% in 2022, from USD 991 million to USD 1.4 billion.

The statement also says the Ugandan government expresses “a warm welcome to foreign investment” but their actions frequently contradict these sentiments.

“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 labour rights, dodging taxes, and bribing officials. Shortages of skilled labour, a complicated land tenure system, and increased local content requirements also impede the growth of businesses and serve as disincentives to investment,” the statement reads in part.

Meanwhile, on Tuesday the State Minister for National Guidance, Godfrey Kabbyanga told AFP that the advisory is “laughable because they do not match what is on the ground,”

“This is not the first time our American friends are issuing such negative advisories on Uganda. But Uganda has not collapsed and instead as a country we are moving stronger and stronger.” he added.

Kabbyanga also upheld that the anti-gay law lies in the best interests of the country and the people of Uganda.

Earlier this year in May, The World Bank suspended all new funding to Uganda following the passing of the anti-gay law. Amidst the development, Ugandan officials accused the development finance institution of hypocrisy, saying it was lending to countries in the Middle East and Asia that have the same or harsher laws targeting LGBTQ people.

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