Why Did the U.S. Warn Investors Against Doing Business in Uganda?

The United States on Monday issued a business advisory to its businesses, individuals and other US persons including health services providers, members of academic institutions and investors, warning them of potential risks they may face while conducting or contemplating to conduct businesses under the recently Anti-Homosexuality Act enacted by Ugandan government.

According to the business advisory statement issued by the US Departments of State, Labor, Health and Human Services, Commerce, and the US Agency for International Development, all businesses, organisations, and individuals should be aware of potential financial and reputational risks resulting from endemic corruption and violence against human rights which are likely to be exacerbated by the stricter anti-gay law.

The US government noted that Uganda has continued to portray high cases of “violence against human rights activists, media members, health workers, members of minority groups, LGBTQI+ persons, and political opponents”.

“Uganda’s enactment of the Anti-Homosexuality Act on May 29, 2023, further increases restrictions on human rights, to include restrictions on freedoms of expression and peaceful assembly and exacerbates issues regarding the respect for leases and employment contracts,” the statement adds.

The key risks and considerations for conducting businesses in Uganda as highlighted in the US business advisory include the enactment of the Anti-Homosexuality Act, which the US notes that it expands the risks and creates additional opportunities for interference with business operations as it, among other things, mandates reporting of individuals suspected of homosexual behaviour, imposes a life sentence for consensual same sex relations, and allows for a 20-year prison sentence for mere “promotion” of homosexuality, which is defined so broadly as to potentially cover a wide range of activities.

Endemic Corruption 

The US further revealed that Ugandan officials frequently engage in corrupt practices with impunity, and many corruption cases have been pending for years, adding that well-connected individuals enjoy de facto immunity for corrupt acts and are rarely prosecuted in court. 

“This endemic corruption can impede US businesses’ ability to engage in government procurement processes and obtain necessary permits,” the advisory statement read in part. 

Child labour

The advisory noted that “several goods imported from Uganda into the United States have been tied to labour abuses, including those produced by child labour”.

 “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,” it added.

In a related development, the US also warned its business community of the increasing risks for media, broadcasting, advertising and related industries in which security forces subject journalists and media houses to violence and harassment.

“Ugandan government officials have directly and indirectly censored media through intimidation and other means. The Anti-Homosexuality Act potentially increases these censorship risks by criminalising a wide range of commercial activities that are of particular interest to media, broadcasters, the advertising industry, and related industries,” the US said in the advisory statement.

This is not the first time for the US to impose such advisory notices since Uganda's enactment of the anti-gay law, in June, the US issued travel warning for Uganda premised on the adoption of the same law which it said to raise risks of persecution, harassment, imprisonment and violence against persons perceived to LGBTQI+.

On May 29, 2023, President Yoweri Museveni signed the anti-gay bill into law which included punishments of imprisonment and death penalty, depending on the circumstances under which the crime is committed.

The statement comes shortly after the UK issued a travel advisory for their nationals intending to visit Uganda as tourists, after the recent alleged terrorist attack in Queen Elizabeth National Park that left two tourists and their Ugandan guide dead.