Business events that defined 2024

So much has happened in the last 12 months. The economy continues to endure different shocks, with growing debt, increased cyber theft, and rising cost of doing business dominating the debate. Not forgetting the aggressive nature with which Uganda Revenue Authority has enforced tax compliance.

Middle-income

For over five years, the Middle-Income debate has been a constant and it returned in 2024 with government insisting that Uganda had joined the lower middle-income league.

According to President Museveni, by June 2024, Uganda had reached a per capita gross domestic product of $1,146 (Shs4.19m), which is expected to be boosted further as Uganda embarks on an ambitious growth agenda that seeks to expand the economy ten-fold in the next 15 years from $ 50b to $500b.

Public debt stock

Debt remains a headache not only for government, but for Uganda as a whole. As of June 2024, the stock of public debt stood at Shs97 trillion ($25.6b), of which Shs55 trillion ($14.6b) was external while Shs40.3 trillion domestic. 

Bank of Uganda data projects further with public debt growing to more than Shs100 trillion by the end of the 2024/25 financial year. Experts have asked government, which insists that debt remains sustainable with few vulnerabilities, to tame its borrowing appetite.

Taking charge of fuel imports

2024 will go down as the year Uganda National Oil Company (UNOC) assumed full responsibility for the importation of petroleum products. 

The transition, which eliminated middlemen that President Museveni claimed were parasites exaggerating pump prices, was enforced through the Petroleum Supply (Amendment) Act, of 2023, which gave UNOC the exclusive right of importing petroleum products.

EFRIS

No tax enforcement, apart from the introduction of value-added tax in the 90s, has challenged URA like the Electronic Receipting and Invoicing System (EFRIS).

What started as a win-win digitisation measure for traders and government, quickly degenerated into open resistance before traders in Kampala and some major urban centres across Uganda closed their shops demanding that the implementation of EFRIS is delayed or totally withdrawal. 

There were several negotiations but only yielded a cancellation of penalties for non-compliance, with government refusing to withdraw, revise, or delay the implementation. 

Karuma dam commissioning

The 600-megawatt Karuma Hydro-power Plant was finally commissioned in September. The plant, which cost $1.7b, financed by China’s Exim Bank and government, endured delays throughout the construction phase. It was simultaneously commissioned with a 400 kV transmission line and the launch put Uganda on track to achieve 80 percent electricity access by 2040.

AGOA suspension

For years, events around the African Growth and Opportunity Act (AGOA) had remained silent. However, the Anti-Homosexuality Law brought AGOA back into the public after the Biden administration announced that Uganda would be suspended from AGOA. Efforts by government for the US to consider reversing the decision have not yielded results with the US indicating the deal, which expires next September, will not be renewed.

In 2016, the US under Trump, who will return to the White House next January, had threatened to remove Uganda from AGOA due to tensions over the East African Community's proposed ban on second-hand clothes. Thus, unless otherwise, the decision to permanently remove Uganda might be a done deal and while it might have a minimal impact on businesses, it will be a big blow to Uganda’s international trade. 

EU coffee policy

The EU Regulation on Deforestation-Free Products which seeks to ensure that no commodities produced through deforestation are exported to the EU, entered into force in June 2023. The regulation applies to all products placed on the market from December 2024, and June 2025 for small businesses and will be implemented through a stringent traceability mechanism under EU Customs procedures.

The regulation applies to commodities such as coffee and will impact more than 1.8 million households.

Reports have indicated that government is struggling to ensure that Uganda is not caught offside and some analysts such as Africa Kiiza, a PhD Fellow at the University of Hamburg, Germany, say: “The [regulation] was unilaterally enacted and presented on a take-it or leave-it basis that Uganda had to capitulate as the EU is the leading buyer of the country’s coffee.”

Umeme concession 

Government indicated it would not renew Umeme’s concession, which will expire in March 2025 - just three months away – last year. Umeme will hand over its operations to Uganda National Electricity Company Limited, a multi-purpose company that government says has been created to handle all electricity-related issues in Uganda. However, manufacturers, who consume more than 60 percent of electricity have asked to address the country on how the transition will work, and if it will not present any challenges to consumers. The exit will cost government about $300m, which is pending Auditor General's approval.  

Chaotic rationalisation

The Uganda Export Promotion Board was a victim of a rationalisation programme that will phase out at least more than 50 agencies. However, exporters were caught in a fracas resulting from a chaotic merger of the Uganda Export Promotions Board and Uganda Free Zones Authority to create Uganda Free Zones and Export Promotions Authority. 

For months - to date - exporters have continued to struggle with acquisition export certificates that are an endorsement of their product for export and remain uncertain of when normalcy will return.

Bank downgrades, closures, and BoU theft

Earlier in the year, Bank of Uganda (BoU) downgraded three financial institutions including Opportunity, Guaranty, and ABC Capital from tier one to tier two. The three had applied for a voluntary downgrade after failing to grow their capital to Shs150b by June 2024. However, away from the downgrades, the Central Bank also closed Mercantile Credit Bank on June 18 and EFC in January 2024 due to capital-related issues. 

The industry also saw Standard Chartered Bank announce a plan to sell its retail and wealth businesses to concentrate on its affluent clients. 

However, the highlight of the year in the banking sector was the discovery of Shs500m fake notes in a PostBank vault and an incident that saw the Central Bank commit two transactions of millions of dollars meant for debt repayment to two fraudulent accounts in Japan and UK.

After a long silence, Bank of Uganda conceded that two transactions, which were initiated outside the Central Bank, led to payment of $14.7m to two wrong accounts, of which $6.134m was wired to an account in UK and $8.569m to an account in Japan.

The Central Bank indicated that while the $6.134m had been recovered, the money wired to an account in Japan is yet to be recovered. 

Interest charged by money lenders capped

The passing the Tier 4 Microfinance Institutions and Money Lenders Bill 2024, capped interest on loans from the micro finance institutions and money lenders at 2.8 percent per month and 33.6 percent annually.

Although some have spoken against the move, many Ugandans welcomed it and government has since gazetted the legislation in a bid to reduce exploitation, especially by money lenders. 

Shaping businesses 

Kiteezi was largely an environmental and disaster matter. However, it has shaped a business argument that dominated the last part of 2024. 

The landfill, which had been a disaster waiting, collapsed on August 9, burying homes and people while they slept. 

The collapse, which was believed to have been triggered by heavy rains, has since been decommissioned after claiming more than 20 lives and displacing more than 1,000. 

However, it has shaped a new direction, in which government will seek to manage waste differently and productively.  

Already, there have been various proposals that seek to turn waste into energy. 

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