What you need to know:
- Uganda’s banking sector report of 2020 found that banks from South Africa, the United Kingdom and India remain the highest beneficiaries from Uganda’s financial sector with more than 72 percent of total profit after tax generated by non-native financial institutions accounting for Shs528 billion which has been exposed to capital flight.
The State Minister for Foreign Affairs, Mr Henry Oryem Okello, has told investors who plan to do business in Uganda that they are free to make profits and repatriate them to their home countries.
“In Uganda, if you choose to repatriate all your profit abroad, we have no quarrel with you. It is your money, you have made it, take it. Uganda has no restriction on the percentage of repatriation that we withhold like other countries. But if you are arrested on the other side, do not make noise,” Mr Oryem said during a meeting with German investors at the Kampala Serena Hotel yesterday.
He added: “We are all here to make money. There is nothing wrong with making money. It is the lubricant that makes everything move. Uganda offers the atmosphere that enables you to make money in the right way and the right atmosphere.”
According to Oryem, all the investors have to do is: “Be able to pay taxes, employ local people, meet social responsibilities then the profit is yours to take home and we will not complain.”
But economists have cautioned the minister on such open statements on profit repatriation saying this would hinder capital accumulation in the country.
Susan Kavuma, a senior economist at Makerere University, said the minister’s words are dangerous to an economy which is still grappling with the effects of the Covid-19 pandemic.
“There should be a clause for investors to reinvest some of their profits because it will eventually kill capital accumulation. If the minister is just trying to lure the investor, it is good but there is a need to think about the bigger picture for the country,” Kavuma said in a telephone interview yesterday.
Experts said what the minister is saying is that investor companies come, make money and take it out of the country.
Mr John Musinguzi, the commissioner general of URA, said Uganda has attracted the highest foreign direct investment in East Africa because of the tax incentives and exemptions that the government of Uganda has deliberately put in place to attract both local and international investors.
“The priority goes to information technology, construction, transport, health, logistics, and warehousing. There is no better investment destination than Uganda because of the incentives like exemptions,” Musinguzi said.
At the event, Ambassador Danny Ssozi, the head of mission at the Uganda Embassy in Berlin, Germany, urged Ugandans to be disciplined to benefit from the Uganda-German partnership.
“We have a lot of tangible benefits from the relationship we have with the people of Germany, such as hospital construction, security, science and technology. We need to be well-disciplined otherwise we are going to lose a lot,” he said.