US business advisory upsets Kampala

A surprise US government advisory warning American companies to be careful about doing business in Uganda has been received with regret and disbelief in Kampala.

Released to media yesterday, the advisory suggested American enterprises could be exposed to unspecified “financial and reputational risks” by operating in Uganda where human rights abuse and corruption are widespread. But officials who spoke to the Monitor indicated that while the US government is free to advise its citizens, Uganda will respond appropriately once it has a clearer picture of why the advisory was issued at this time.

Mr Vincent Bagiire, the permanent secretary in Uganda’s Ministry of Foreign Affairs, yesterday said government is seeking an explanation from the Americans over the matter.

“We are engaging the US authorities both in Kampala and Washington DC to understand the import of the advisory. As you will appreciate, advisories are in most cases unilateral and void of consultation,” he said.

“We are internalising the advisory, however, our relationship with the US government remains cordial as we have many areas where we concur and collaborate such as the fight against terrorism”.

The advisory paints a terrible picture of Uganda, and raises fears that bilateral relations already strained by disagreements over Russia’s war in Ukraine, human rights abuse and the culturally sensitive homosexuality question could get even more complicated.

It said US business people and companies thinking about investing here should beware that Uganda’s Judiciary and Parliament have been compromised by the ruling elite, human rights abuse is widespread and that corruption is rife. 

At the Inspectorate of Government, the reaction to this description was blunt, with Ms Beti Kamya, the Inspector General of Government, denouncing it as “unfair and unfounded”.

“First of all, I think they should have been fair to also say that government has also taken strong measures to address corruption. The President has even set up a special unit in State House where investors can go and report corruption issues,” she said.

Ms Kamya said the Inspectorate continues to work hard against graft, carrying out sensitisation here and abroad to ensure corruption cases are reported, investigated and those guilty are punished.

“So, there are so many anti-corruption agencies that have upped their game... I think in fairness, the US government should have recognised these efforts, and should have actually advised investors to report acts of corruption…,” she said.

The US Department of State statement warned that “businesses, organisations, and individuals should be aware of potential financial and reputational risks resulting from endemic corruption, as well as violence against human rights activists, media members, health workers, members of minority groups, LGBTQI+ persons, and political opponents”. 

It adds that “Uganda’s enactment of the Anti-Homosexuality Act (AHA) on May 29, increases restrictions on human rights… and freedoms of expression, peaceful assembly, and exacerbates issues regarding the respect for leases and employment contracts.”

What is at stake?

Yesterday, Mr Ofwono Opondo, the executive director of the Uganda Media Centre, said “it’s regrettable if [the US] has advised its citizens citing those really flimsy excuses”.

“I am not sure if the [US] has any significant number of investors and investments in the most critical sectors of our economy to dent our forward march. In any case, investors from other countries and, indeed Ugandans, are investing in Uganda and in the most critical sectors as you can see our portfolio has been expanding,” he said.

Similarly steadfast, Mr Morrison Rwakakamba, the Uganda Investment Authority board chairman, said with or without the US business advisory, Uganda will always remain an attractive investment destination.

“The big issue for Uganda and investors who come to Uganda is the issue of return on investment to the extent that for every dollar invested in Uganda, across the eastern Africa and across Africa, Uganda delivers the highest return on investment,” he said.

Mr Rwakakamba observed that a recent study published by Oxford Economics Africa, a development economics research centre based at the University of Oxford, UK, showed that Uganda remains one of the lowest investment risk countries on the continent

He said over the last four years, Uganda has witnessed exponential growth in foreign direct investment in manufacturing, agro-processing, value addition, services and ICT.

“So, in spite of the geopolitical complexities, which I think are behind the statement by the US, for us as a country, we are going to continue talking to investors; that Uganda is peaceful. Despite the global geopolitical contradictions… we hope that investors from USA will follow the money and put aside the cultural wars,” he said.

The Office of the United States Trade Representative, Uganda, puts US foreign direct investment at $42 million (Shs155 billion) in 2022. America also gives $1 billion in budget support to Uganda annually for health services, education, and other socio-economic activities.

The US State Department had indicated yesterday that the advisory is only explanatory and is not intended to be, nor should it be interpreted as imposing requirements under US law.

“Its sole intent is to provide information to businesses and individuals that they may consider in assessing their potential exposure to involvement with entities engaged in human rights abuses, as part of a risk-based approach to due diligence,” the statement says.

Ms Ellen Masi, the public affairs counsellor at the US Embassy in Kampala, last evening said “This is an advisory document. Businesses will make their own decisions about whether and how to incorporate this information into their business decisions”.

She said the United States and Uganda have enjoyed long-standing cooperation that has made the region healthier, more prosperous, and more secure.

“Supporting respect for human rights and democratic space helps strengthen opportunities for prosperity and security for the region and both our countries,” she said.

On corruption

The advisory noted that while Uganda has adequate anti-graft laws and a web of anti-corruption institutions, endemic corruption remains a serious problem. The Uganda government is also faulted for not enforcing domestic laws on human and labour rights; consumer and environmental protection, or laws against adverse business impacts.  

“US firms consistently identify corruption as a major hurdle to business and investment. Corruption in government procurement processes remains particularly problematic for foreign companies seeking to bid on Ugandan government contracts,” it said.  In 2022, Transparency International ranked Uganda 142 out of 180 countries in its Corruption Perception Index, dropping one place from 2021.

Human rights concerns

At Parliament where there is on an ongoing boycott of plenary sittings by the Opposition over human rights violations against their supporters, efforts to obtain reactions from Mr Chris Obore, the director of communications, and Mr Hamson Denis Obua, the government chief whip, were futile.

However, Mr Mathias Mpuuga, the Leader of the Opposition in Parliament, said the advisory shines the spotlight on the government poor human rights record.

“It’s a duty of all responsible governments all over the world who owe their people because it doesn’t make sense for your citizens to invest money and then lose it overseas…,” he said., adding that,  “the American government is executing its duty of care to its citizens… The jury out there is not on the US government, but on the regime in Kampala to assure everyone that those conditions do not exist; abuse of human rights at a time when families of the missing are looking for their beloved ones,” he said

The advisory speaks about gross human rights abuses and violations, noting that there are risks of interference in and intimidation of the Judiciary, use of influence in the courts to resolve political disputes, and co-opted security forces.

“Inconsistently implemented legislation, rent-seeking from officials, and intrusive government security and surveillance likewise can adversely impact the ability of US businesses and individuals to operate.

“The Anti-Homosexuality Act encourages actions that may lead to further isolation and create additional barriers to education access for children identifying as LGBTQI+, which may increase their risk of dropping out of school and engaging in child labour,” the advisory states.

Ugandan laws, however, stipulate that it is criminal to have sex with all minors.

President Museveni on homosexuality

While the President has not directly responded to the latest foreign comment on the AHA, he remained consistent in his views yesterday while officiating at the 4th Youth Business Forum and Expo at Kololo Ceremonial Grounds in Kampala.

President Mr Museveni told his audience that the Europeans “were asking me to leave the homosexuals, I know how to handle these homosexuals. You people should leave me alone”.

Also, during his Independence Day speech, he criticised Western powers for interfering in the internal affairs of African countries and said Uganda will only “happily work with all the countries in the world that respect our sovereignty.”

“That is how the UN system should operate. No country should interfere in the internal affairs of another country. That is why we separate foreign affairs from internal affairs. Why should anybody catapult his values, through foreign affairs, into the internal affairs of another country?” he questioned.

“It is wrong to try to export systems and values or to export revolution (new ideas) or counter-revolution (old ideas). In other words, influence people by your good examples and not by coercion,” he added.

President Museveni on May 26, signed the AHA into law, criminalising homosexuality and promotion of the vice, imposing a 20-year jail sentence for convicted offenders and death penalty for aggravated homosexuality.

The law, widely supported in and outside Parliament, has since attracted strong reactions from the US and its Western allies, with the World Bank Group announcing it is withholding $1.8 billion (aboutShs6.7 trillion) in development assistance to Uganda.

The US government also sanctioned several Ugandan officials, including Speaker of Parliament Anita Among, withdrawing their travel visas to the States.

What some of the key players say...

Vincent Bagiire, permanent secretary, Ministry of Foreign Affairs.
We are engaging the US authorities both in Kampala and Washington DC to understand the import of the advisory. As you will appreciate, advisories are in most cases unilateral and void of consultation.

Beti Kamya, Inspector General of Government 
... government has also taken strong measures address the issue of corruption. The President has even set up a special unit the statehouse investor protection unit where investors can go and report corruption issues.

Morrison Rwakakamba, Uganda Investment Authority  
The big issue for Uganda and investors ... is the issue of return on investment to the extent that for every dollar invested in Uganda, across the eastern Africa and across Africa, Uganda delivers the investors the highest return on investment. 

President Museveni (in Independence speech). 
No Country should interfere in the internal affairs of another Country. That is why we separate “Foreign” Affairs from “Internal” Affairs. Why should anybody catapult his values, through foreign affairs, into the internal affairs of another country?

Ofwono Opondo, government spokesperson. 
I am not sure if the [US] has any significant number of investors and investments in the most critical sectors of our economy to dent our forward march. In any case, investors from other countries and, indeed Ugandans, are investing in Uganda...

Ellen Masi, public affairs counsellor at the US Embassy in Kampala. 
This is an advisory document. Businesses will make their own decisions about whether and how to incorporate this information into their business decisions.