New law recognises East African citizens as domestic investors

Construction works. Mr Abdul-Rahman Baguma Ahmed the Raxio vice president- technical and operations (L), Mr Jaco Mare (M), the Roko construction project manager and Mr James Byaruhanga, the Raxio general manager, look through the site plan at the launch of the construction works in Namanve, Mukono District. COURTESY PHOTO  

In Summary

• Concerns raised during the consultations centered on access and cost of electricity, land, sewerage disposal system in Namanve Industrial Park, road infrastructure, cost of doing business in Uganda as well as incentives for domestic investors.

By Christine Kasemiire

Kampala. The recently enacted Investment Code Act defines all citizens of East African countries as domestic investors.

The Code, which was assented to by President Museveni in February means that citizens with East Africa will enjoy the same privileges when it comes to investing in Uganda.
“Domestic investor means a natural person who is a citizen of an East African partner state, a company incorporated under the laws of an East African partner state,” the Code reads in part.

This essentially means that Ugandans will have to compete with investors from Kenya, Tanzania Rwanda, Burundi and South Sudan.
However, there are concerns of bigger economies such as Kenya, which could out competitive Ugandan businesses.

Mr Lawrence Byensi, the Uganda Investment Authority (UIA) acting executive director, told Daily Monitor in an interview concerns of out competing Ugandans should not cause alarm, arguing that the reforms were incorporated as a requirement of the integration of the East African Community, which seeks to recognise all countries in the region as a single bloc.

“We only need to prepare our private sector to act on certain things to be ready to take advantage of that,” he said, arguing that Kenyans will not always be ahead.
While the new law might have short term implications, Mr Byensi said, Ugandans will in the long run catch up or even out compete bigger economies in the region.

Ms Faith Lumonya, a programmes officer at Southern and Eastern African Trade Information and Negotiations Institute (Seatini), said there was need to harmonise laws for the orderly implementation of the EAC Common Market Protocol.

“We need to implement the Common Market Protocol in a harmonised manner. So EAC partner states must change all their laws to consider every partner state as a domestic investor,” she said, adding that apart from Uganda, other countries in the region were yet to change theirs.
The Investment Code Act 2019 repeals the 1991 investment code, which was designed to cater for mostly foreign investors.

Before amending the law, various consultative meetings were held with different stakeholders including local and foreign investors in industrial parks, UIA, private sector players and the Finance committee in Parliament.
Concerns raised during the consultations centered on access and cost of electricity, land, sewerage disposal system in Namanve Industrial Park, road infrastructure, cost of doing business in Uganda as well as incentives for domestic investors.

Incentives

According to the new Investment Code, to qualify for incentives, an investor is required to meet the minimum investment capital export of 80 per cent of the goods produced and introduce advanced technology, among others.
However, the law does not stipulate the thresholds for the minimum investment capital, which Mr Byensi said would need to be specified in the regulations, expected to enable implementation of the law.

The Investment Code Act 2019 mainly consists of leadership reforms which cuts the UIA board members from 13 to 7 as well as changes the title of UIA executive director to director general.

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