Building a Sustainable Investment Climate in Uganda’s Mining Sector
Full remarks:
“Ladies and gentlemen, first of all, what we have been discussing today is one of the biggest challenges facing Uganda’s mining sector - the lack of a transparent and robust legal framework. When it comes to investments in the mining sector, investors seek stability in the law governing the process, which won’t be subject to constant changes. There are obvious gaps in Uganda’s laws, and to close these gaps, the government must actively engage with stakeholders. While Uganda is developing and strengthening regulations, it must ensure that they are properly operationalized. Strengthening Uganda’s regulatory framework will give investors the clarity and stability they need to confidently operate.
Another critical factor for investment is geology. Investors find it costly to invest in a country where the geological landscape is unclear. Therefore, a well-developed understanding of Uganda’s geology is essential for building a system that attracts investment. Once a solid geological foundation and legal framework are in place, the next step is establishing a fiscal regime that supports investors throughout all stages of their operations. The fiscal system should be flexible and progressive, allowing companies to invest during the challenging early phases when costs are high and production is low. Uganda’s current system offers decent incentives, but there are issues with the taxation regime, which needs to be more progressive to accommodate the full investment cycle.
In terms of value addition and exports, there are a few challenges. First, the government’s expectations for investors are not clearly defined—particularly regarding how much of the value chain, from extraction to the export of refined products, the investor is expected to manage. While refining adds significant value, it is also expensive, and if the government wants companies to bear these costs, it must create a more conducive environment with proper incentives.
Uganda must focus on value addition at the final stages of refining, where the most economic gain is realized. Unfortunately, there is currently a lack of coherence between the Ministry of Energy, the Ministry of Finance, and the Ministry of Trade in supporting value addition. While some provisions exist, they are fragmented and do not form a comprehensive strategy.
To address these issues, Uganda must create a coherent regime that supports total value addition, from raw materials to refined products and encourages manufacturing within the country. This will require coordination across ministries and a strategic review of the entire system to ensure that Uganda can maximize the benefits of its resources.”