The US Department of State released a Business Advisory for Uganda on October 23, 2023, informing U.S. businesses, individuals, and other U.S. persons—such as academic institution members, investors, and providers of health services—about potential risks they might encounter when conducting, or considering conducting, business in Uganda (US Department of State, October 23, 2023).
Similarly, on Monday, October 30, 2023, the US President said that, beginning of January 1, 2024, Uganda will no longer be included among the African nations covered under the African Growth and Opportunity Act (AGOA). AGOA came into effect on May 18, 2000, and US President Bill Clinton signed it into law. The AGOA laws have been renewed many times, the most recent being in 2015 when its expiration date was moved forward to September 2025.
The United States Government’s business recommendation and the decision to halt Uganda’s participation in the African Growth and Opportunity Act (AGOA) have not pleased the Private Sector Foundation Uganda (PSFU). Uganda and the United States of America have long been close allies in the fight against terrorism in the “Horn and East/Central Africa” and in peacekeeping efforts in places like South Sudan, the Democratic Republic of the Congo, and the Central African Republic.
According to AGOA data, Uganda bought $166 million worth of goods in 2022 and exported items worth US$174 million. Jobs are created by these statistics for people of the USA and Uganda. Additionally, Uganda is a popular travel destination for Americans, with 50,000 visits on average from 2005 to 2017. In 2022, there will be 13,212 visitors, 7100 in 2020, 7571 in 2021, and 61,775 in 2017. In the field of education, we are also collaborators. For example, according to the US Department of State (2020), “318 U.S. students studied abroad for academic credit in Uganda in the 2019–2020 academic year.”
The United States of America (USA) government’s decision to halt Uganda’s participation in AGOA hurts our economy and private sector players more than it does Ugandan businesses. For example, the United States exported vaccinations, blood, antisera, toxins, and cultures (worth US$62.3 million), airplane components (worth US$18.2 million), and laboratory reagents (of US$9.04 million) in 2021, according to trade statistics from the Organization for Economic Cooperation and Development (OECD).
From 1985 till the present, both nations have had average yearly increase in exports (5.4% for the USA and 10% for Uganda) (OECD, 2021 statistics). However, Uganda exported coffee, vanilla, and mushroom spawn worth US$89.6 million to the United States of America.
PSFU wants to let people know that there are favorable business conditions and possible investment possibilities in Uganda, as well as information for international and local investors and development partners. We want to be clear that the US business advice is inaccurate and misrepresents the reality of Uganda’s business climate.
A 2023 research by Absa Group Limited has named Uganda as the Most Favourable Country for Investment for the second consecutive year, placing it fourth in Africa. The research said that Uganda’s economy was larger than those of its neighbors, including Kenya, Tanzania, and Ethiopia (Uganda Investment Authority, 2023). The liberal market depth, market transparency, tax and regulatory environment, foreign currency availability, ability of local investors, macroeconomic environment/transparency, and the strength and enforcement of the law are the foundations of Uganda’s superior investment performance.
Compared to US$ 911 million in 2021, Uganda’s Foreign Direct Investment (FDI) grew by 37% to US$ 1.4 billion in 2022 (Bank of Uganda, 2023) In particular, Uganda received US$ 104 million in foreign direct investment (FDI) from the US in 2022, a 13% increase from US$ 81 million in 2021 (Bureau of Economic Analysis, 2023). Spending on projects connected to the oil industry has affected the rise of FDI.
In summary, Uganda boasts a consumer market population of over 45 million, political stability spanning over 36 years, a free market economy with a liberal financial system, openness to foreign investment, a robust base of natural resources, highly competitive labor costs, and more, all of which make it an excellent place to invest.
Thus, we urge the US government to reevaluate this stance. We further urge the Ugandan government to use diplomatic channels and work with their US counterparts to undo these detrimental choices made by the corporate sector.
Choosing Uganda as your investment location is a wise decision.