Private capital funds are a source of patient capital, which is important for supporting start-ups in strategic sectors of the economy. Photo / Edgar R Batte
For 18 years, Edward Isingoma Masiko, team lead at Pearl Capital Partners, has operated as a fund manager in Uganda.
His latest fund, the Yield Uganda Investment Fund, is one of the few locally domiciled funds in the country. However, he says, establishing it was far from straightforward.
“We wanted to register Yield Uganda Investment Fund with the Capital Markets Authority (CMA), but met several hurdles. We only towed the line because our investors - European Union, International Fund for Agricultural Development, and NSSF - were supportive through the process,” he says.
Isingoma, who was speaking at a stakeholder engagement hosted by CMA and Uganda Registration Services Bureau (URSB) in partnership with the East African Venture Capital Association, said the regulations are a culmination of years of advocacy and policy work now bearing fruit.
“It has been a 15-year journey,” Stella Akot, the International Fund for Agricultural Development representative, said on the sidelines of the meeting.
Historically, Uganda has lacked a regulatory framework to support private capital funds, with many that operate here domiciled in Mauritius, Luxembourg, Dubai, Kenya, and Rwanda.
However, the new regulations, which allow investors to be registered as limited liability partners, could change the story.
“This is unlike a company limited by shares, where investors could be held fully liable if the company runs into trouble. Many were jittery,” Isingoma explains, emphasising that fund managers previously weren’t held accountable for meeting the fund’s objectives.
Previously, the CMA Act, which did not define private capital fund structures or their durations, was a stumbling block because it made registration with URSB almost impossible.
Fund managers have also for a long time struggled with how to handle the issue of double taxation, whereby companies that they fund pay tax on operations, yet they are taxed again upon winding up.
“Through Enimiro, a previous fund, we invested in companies like Biyinzika Poultry, KK Foods, and Pristine Foods, which paid taxes during operations. Yet when we wrapped up the fund, we had to pay tax again on profits earned. This was counterproductive, ” Isingoma says.
Turning point
However, with the new regulations - Partnership Regulations, 2025 and CMA Licensing and Approval Regulations, 2025 - Uganda has taken a critical leap forward to develop the venture capital space.
“Uganda is catching up with countries like Rwanda and Kenya, where these regulations have existed for a while,” says Christine Maina, the East Africa Private Equity and Venture Capital Association (EAVCA) chief executive officer.
The move, she says, shows government is willing to support private sector growth, “which is very encouraging for investors looking at Uganda” and boost investment in impactful sectors such as agritech and startups.
“In the past two years, Kenya has led Africa in attracting such investments, helping businesses to scale up, create jobs, and increase national revenue. We hope Uganda will begin to see similar ripple effects.”
Private or venture capital funds are largely a source of patient capital that is mostly deployed to support strategic capital-intensive startups.
The reforms are, therefore, a response to challenges identified in a 2023 study, which highlighted regulatory and structural obstacles as the cause of slow growth of Uganda's private capital landscape.
Previously, the CMA Act confined private equity and venture capital fund structures to company status, limiting their flexibility of operation.
The absence of clear provisions for Limited Liability Partnerships, mostly foreign, further discouraged the establishment of private capital locally.
URSB registrar general Mercy Kainobwisho says Partnership Regulations will now provide a clear legal structure for both foreign and local funds, while streamlining Limited Liability Partnership registration.
Uganda is the second-largest recipient of private capital in East Africa after Kenya.
In 2023, Uganda held deals worth $78.6m, which was an improvement from the $70.5m in 2022.
Kenya and South Africa attract the highest volumes of private capital in Africa, according to Stears Private Capital in Africa Report, which shows the two economies jointly commanded 66 per cent of the private investment deals on the continent in 2024.
Industry outlook
Godwin Kakande, a partner at MMAKS Advocates, says the new regulations will address three key concerns, including regularisation of existing fund structures as companies that may now need to convert to partnerships for onward licensing, new entrants, and provide clear guidelines as outlined by CMA.
“Once these requirements are followed, operating a fund in Uganda will become smoother,” he says.
Economic impact
Beyond the funds that come in, enabling the establishment of private capital funds locally comes with a multiplicity of shared values.
For instance, Dickson Ssembatya, the CMA director of research and market development, says there are broader economic benefits, such as employment and entry of patient capital, among others, that come with establishing local private funds.
“When you are locally based, you are better placed to identify potential investments. Plus, there is an entire ecosystem - accountants, lawyers and staff - that earn and pay taxes, ” he says.
Apart from this, the new regulations align Uganda with global best practices, which drive investor confidence.
“We expect more capital reaching entrepreneurs, leading to more jobs, business growth, and community transformation,” Maina says, while Leonard John Businge, who is the EAVCA country coordinator for Uganda, calls the new reforms a milestone.
“By enabling funds to operate as tax-transparent limited liability partnerships, we are creating a more attractive investment destination and boosting innovation, investment, and economic growth,” he says.
Therefore, as CMA prepares to implement the new regulations, Ssembatya says the market is ready to test, learn, and refine the system, highlighting that “the future is bright”.
Obstacles
The reforms respond to regulatory and structural obstacles that had confined private equity funds to companies, thus limiting their flexibility of operation due to the absence of clear provisions for Limited Liability Partnerships.
The new Partnerships Regulations, 2025, provide a comprehensive framework for Limited Liability Partnerships by defining contributions, partnership agreement, partnership interest, and explicitly require foreign Limited Liability Partnerships to have a resident of Uganda as a general partner.
On the other hand, the CMA Licensing and Approval Regulations, 2025, introduce a licensing framework for private equity funds, a crucial step towards providing regulatory clarity and structure.
These regulations detail the application process, eligibility criteria, and post-approval compliance requirements, ensuring a transparent and well-regulated environment for private capital operations.
The reforms are strategically aligned with Uganda’s NDP III and the Capital Markets Masterplan Uganda. They underscore the commitment to mobilising alternative financing sources through strengthening the legal and regulatory frameworks for private capital in Uganda.
