Foreign Investment In Mining And Natural Resources In Uganda: The Law, Regulations And Tax Considerations

INTRODUCTION:

Uganda continues to emerge as one of East Africa's most promising destinations for foreign direct investment. With a steadily growing economy, youthful population, and pro-business regulatory climate, the country offers a compelling landscape for foreign investors. This report provides a detailed guide for foreign companies intending to operate in the mining sector in Uganda. It outlines the necessary step-by-step incorporation procedures with the Uganda Registration Services Bureau (URSB), identifies the key regulatory agencies governing the mining sector, details the procedures for obtaining relevant mining licenses, and provides an overview of the estimated timelines and associated costs, and compliance with regulatory requirements.

OVERVIEW OF UGANDA'S ENVIRONMENT.

Uganda's natural environment is characterized by its remarkable biodiversity and extensive natural resource base, which includes fertile agricultural land, vast forests, freshwater lakes, and significant mineral deposits. The Albertine Rift region in western Uganda is internationally recognized for its unique ecosystems and conservation significance, hosting several endangered species and protected areas. For investors, this ecological richness implies opportunities in sectors such as mining, oil exploration, forestry, and eco-tourism. However, Uganda's environment also demands adherence to strict environmental conservation policies, overseen by the National Environment Management Authority (NEMA), which mandates Environmental and Social Impact Assessments (ESIAs) to mitigate risks related to habitat destruction and pollution.¹

Uganda's environment provides accessible natural resources that form the foundation of many small to medium enterprises, particularly in agriculture, forestry, and artisanal mining. Investors are drawn by Uganda's underexploited mineral wealth and emerging oil reserves, but must navigate challenges related to infrastructure deficits and environmental compliance to operate responsibly and efficiently. Uganda's strategic location within East Africa offers access to regional markets but demands investment in transport corridors to ensure resource exports remain competitive.²

Local and International stakeholders must recognize the environmental sensitivities that influence project feasibility and public acceptance. The growing global emphasis on sustainability means investors will be scrutinized for environmental stewardship and community impact mitigation. Compliance with Uganda's environmental policies, combined with the adoption of international best practices, will not only safeguard ecosystems but also enhance project credibility and social license to operate. This balance between exploitation and conservation is critical for maintaining Uganda's environmental wealth as a resource base for future generations.

SECTOR-SPECIFIC REGULATORY LANDSCAPES.

Uganda's natural resources sector is governed by a robust regulatory framework that balances investor interests with national development goals and environmental sustainability. The Mining and Minerals Act (2022) introduced reforms to streamline licensing procedures via digital platforms, increasing transparency and efficiency for both local and foreign investors. The Act mandates inclusive community engagement and benefit-sharing agreements to ensure mining activities contribute to local socio-economic development.³ The government also maintains a stake through the Uganda National Mining Company, which influences strategic decisions in resource extraction, signalling the importance of partnership and compliance for all investors.

In the oil and gas sector, Uganda's regulatory landscape is anchored by the Petroleum Authority of Uganda (PAU), which regulates licensing, production, and environmental protection. The Uganda National Oil Company (UNOC) operates as a commercial entity, ensuring the state's equity interests. Both local and international investors must comply with Uganda's local content regulations that require substantial involvement of Ugandan labour and services, promoting technology transfer and capacity building within the country.⁴ Infrastructure projects such as the East African Crude Oil Pipeline (EACOP) are subjected to rigorous environmental and social governance (ESG) standards, which are increasingly demanded by global financiers and investors to mitigate risks and enhance sustainable development outcomes.⁵

For investors, understanding the regulatory environment is crucial to navigating licensing, environmental compliance, and community relations effectively, thereby reducing operational risks. International investors should anticipate stringent due diligence processes and integrate ESG considerations into their project planning and financing models to align with Uganda's policy objectives and international investment standards. Both local and foreign investors benefit from clear legal frameworks that protect investments while emphasizing social and environmental accountability, fostering a more predictable and stable investment climate in Uganda's resource sectors.

Specific Regulatory Laws and Body:

The Uganda Investment Authority (UIA):

Investment in Uganda is driven and spearheaded by the Uganda Investment Authority (UIA) which has opened a "dedicated one-stop center" that aims to help investors: apply and receive the investment license online, chose an investment area of interest, maintain a register of all investment licenses, establish and maintain investment incentives inventory, propose and advocate policies and measures that will enhance investment in Uganda, acquire develop and manage serviced land for investment, pay all the assessed fees, Supply details of business registration to Uganda Registration Services Bureau (URSB), Apply for tax identification number (TIN), and apply for land titles online. A review of the functions of Uganda Investment Authority leads to the inevitable inference that its functions are to promote, create and facilitate a favorable environment for foreign investment. This includes the attraction of foreign direct investment, the creation of employment and value addition to local production of goods and services.

Uganda Citizenship and Immigration Control Act:

This Act is the principal legislation which regulates and controls foreigners in Uganda. This includes foreign investors. In its preamble, the Act shows that it, among other things, is an Act to provide for the regulation and control of aliens in Uganda. The provisions of Section 2 (a) of the Ugandan Citizenship and Immigration Control Act define "alien" as any person who is not a citizen of Uganda, while Section 3 of the Act creates a board. The functions of the board are provided for under Section 7 of the Act. The functions of the board include inter alia the granting and canceling of immigration permits; registering and issuing identity cards to aliens; determining any questions which may arise in the implementation of the Act or any questions which may be referred to it by the Minister and to perform such other functions as may be assigned to it by or under the Act or other enactment.⁶

CULTURAL OR POLITICAL NUANCES.

Uganda's political environment has been relatively stable over the past decades, fostering a conducive atmosphere for investment. However, political nuances, including governance challenges and localized tensions, require careful navigation by investors. Land tenure systems, which are largely customary, can pose significant risks if local rights are overlooked. Most land is owned communally or by traditional authorities, creating complexities in securing land rights for projects. Both local and international investors must engage deeply with local communities to secure social licenses, avoid conflicts, and ensure equitable benefit-sharing arrangements that respect indigenous rights.⁷

Social activism and environmental advocacy have intensified, particularly around high-profile projects such as the EACOP pipeline, where concerns about displacement, environmental degradation, and long-term livelihoods have led to protests and international scrutiny. Investors must therefore adopt proactive stakeholder engagement strategies and transparent communication to address these concerns early. For local investors, maintaining good relations with communities and government agencies can be a competitive advantage. Failure to adequately address socio-political sensitivities can result in reputation damage, legal challenges, and project delays.⁸

Political risk insurance, thorough social impact assessments, and collaborative community development initiatives are critical tools for managing cultural and political nuisances. Both local and international investors must prioritize Corporate Social Responsibility (CSR) as a core operational principle, integrating social, cultural, and environmental considerations into project planning and execution. Successful navigation of Uganda's socio-political landscape enhances investor legitimacy, facilitates smoother operations, and contributes to sustainable development outcomes aligned with national and community aspirations.

Uganda's laws and policies are generally favorable towards foreign investors. The authorities consider foreign investment as a key to broadening the financial basis of the Ugandan economy, which has remained heavily dependent on official transfers, and to ease the constraints imposed by low domestic savings. Investment inflows are also expected to contribute to industrial and technical adjustment, facilitate structural diversification, and improve the market and export performance of emerging new industrial and services activities.

LAND AND ACQUISITIONS FOR INVESTMENT IN UGANDA

Land in Uganda is under four (4) major land tenure systems which may be available for investment purposes. These are;

1. Leasehold Tenure:

Leasehold tenure is a form of tenure whereby one party grants to another the right to exclusive possession of land for a specified period, usually in exchange for the payment of rent. The longest lease term is 99 years. Foreign investors mostly opt for this.

2. Free Hold Land Tenure:

Only citizens of Uganda are entitled to own land under freehold tenure. Non-citizens may lease it for a period up to 99 years. This tenure derives its legality from the Constitution and the written law. Freehold tenure may involve either a grant of land in perpetuity, or for a lesser specified time period.

3. Mailo Land Tenure:

Mailo tenure is almost identical to freehold tenure. Registered land can be held in perpetuity, and a Mailo owner is entitled to enjoy all the powers of a freehold owner.

4. Customary Tenure:

In some places, the land is held communally, in some it belongs to a particular clan, while in others it is held by individuals. The rules of customary law also vary in different parts of the country.

The current law in Uganda protects investors in case of compulsory acquisition. Section 24 of the Investment Code Act provides for the protection of the rights or interests of a licensed business enterprise over property or undertaking from being compulsorily acquired except in accordance with the Constitution. Where property is compulsorily acquired, prompt payment of fair and adequate compensation shall be made prior to the taking of possession of the property.

LABOUR FRAMEWORK FOR FOREIGN COMPANIES OPERATING IN UGANDA'S MINING AND NATURAL RESOURCES SECTOR.

The foundation of labour relations in Uganda is enshrined in the Constitution and several key statutes that collectively regulate employment terms, workplace safety, social security, and dispute resolution.

The Constitution of the Republic of Uganda, 1995 (as amended), under Article 40, guarantees every worker the right to fair labour practices. This constitutional guarantee gives room for all subsequent legislation regulating employment relationships. Besides the Constitution, the primary statute governing employment contracts and workplace relations in Uganda is the Employment Act, 2006 (Cap. 219). This Act prescribes the minimum terms and conditions of employment, including contracts, wages, working hours, leave entitlements, termination procedures, and employee protections.

The Labour Unions Act, 2006 (Cap. 218) facilitates the formation and recognition of trade unions, collective bargaining, and regulates industrial action. Given the high-risk nature of mining activities, compliance with the Occupational Safety and Health Act, 2006 (Cap. 205) is mandatory. This legislation imposes duties on employers to ensure safe working environments, including the provision of protective equipment and health monitoring.

Furthermore, employees are entitled to compensation for work-related injuries under the Workmen's Compensation Act, Cap. 225, while mandatory social security contributions are governed by the National Social Security Fund Act, 2013. In addition, the sector-specific Mining and Minerals Act, 2022, imposes local content obligations that impact employment practices in the industry.

For labour-related compliance, employers must register with the Uganda Revenue Authority (URA) to administer Pay-As-You-Earn (PAYE) taxes on employee remuneration. Registration with the National Social Security Fund (NSSF) is compulsory for all employees as required under the NSSF Act, 2013. Moreover, workplaces must be registered with the Ministry of Gender, Labour and Social Development's Occupational Safety and Health Department, pursuant to the Occupational Safety and Health Act, 2006.

Employment Of Ugandan Nationals And Foreign Workers:

The Ugandan government strongly advocates for localisation and skills transfer, especially within extractive sectors. The Mining and Minerals Act, 2022⁹ explicitly requires mining companies to prioritise the employment of Ugandan nationals wherever possible. Therefore, foreign companies must prepare and submit a Human Resource and Training Plan to the Ministry of Energy and Mineral Development, detailing how they intend to develop local skills and progressively reduce dependence on expatriates.

Employment of expatriates is tightly regulated, and justification must be provided, typically based on the unavailability of local expertise. Foreign nationals employed by such companies must obtain valid work permits issued by the Directorate of Citizenship and Immigration Control under the Immigration Act, Cap. 66.

Employment Contracts And Minimum Labour Standards:

Ugandan labour law mandates written contracts of employment for any engagement exceeding four consecutive weeks.¹⁰ The contracts must clearly outline terms including remuneration, working hours (generally eight hours per day and forty-eight hours per week),¹¹ leave entitlements (annual leave, sick leave, maternity and paternity leave,¹² and termination procedures¹³.

Furthermore, employers must ensure contracts do not contain terms less favourable than those prescribed by law. Furthermore, payment of wages must comply with legal standards, typically in Ugandan shillings unless otherwise agreed.¹⁴

Occupational Safety And Health Compliance In The Mining Sector:

Mining is classified among the most hazardous industries, hence, demanding strict regulatory oversight. The Occupational Safety and Health Act, 2006 makes provisions for companies engaging in these activities in Uganda. The Act requires as follows:

Registration of mining workplaces with the Ministry's Occupational Safety and Health Department.¹⁵
Development and implementation of a formal Occupational Safety and Health Policy¹⁶.
Appointment of Safety Officers responsible for ensuring compliance¹⁷.
Provision of adequate personal protective equipment (PPE) and training for employees.
Regular risk assessments and medical surveillance¹⁸.
Immediate reporting and investigation of accidents and occupational diseases¹⁹.

Failure to comply attracts severe penalties, including suspension of operations and prosecution.

Community Engagement And Social Responsibility:

Beyond strict labour law compliance, foreign companies in the mining and natural resources sector are legally and socially obligated to engage the host communities. The Mining and Minerals Act, 2022 (Part XIII) mandates the negotiation of Community Development Agreements (CDAs) to ensure that communities benefit from mining activities, including through employment and skills development of the locals. Failure to engage communities responsibly often results in social unrest, labour disputes, and interruptions in operations.

For foreign companies in Uganda's mining and natural resources sector, adherence to labour laws is both a legal obligation and a strategic imperative. The employment relationship must comply with constitutional protections, statutory minimums, occupational health and safety requirements, and local content obligations.

Comprehensive planning for local skills development, lawful employment of expatriates, strict workplace safety compliance, and effective labour relations management are essential. By aligning business operations with Uganda's legal framework, foreign investors can secure the social licence to operate, mitigate risks, and contribute positively to Uganda's socio-economic development.

DOING INVESTMENT BUSINESS IN UGANDA

Uganda offers One Stop Centre (OSC) services for business registration, licensing, facilitation and aftercare at Uganda Investment Authority (UIA). The investment-related Government departments and agencies within the OSC currently include:

Uganda Registration Services Bureau (URSB) for company registration.
Uganda Revenue Authority (URA) for tax advice and registration.
The Directorate of Citizenship and Immigration Control for the issuance of work permits and other immigration documents.
The Lands Registry which assists in the verification of land ownership.
The National Environmental Management Authority (NEMA) to facilitate the investor to environmental compliance.
Uganda National Bureau of Standards (UNBS) for standards advice.

Who is a Foreign Investor?

The Investment Code Act 2019 under Section 1(f) provides that a "foreign investor" can be;

A person who is not a citizen of an East African Community Partner state,
A company incorporated under the laws of any country other than that of the East African Community.
A company incorporated under the laws of Uganda in which the majority of the shares are held by a person who is not a citizen of an East African Community partner state.
A partnership in which the controlling interest is owned by a person who is not a citizen of an East Community partner state.²⁰

Furthermore, in the 'Locus Classicus' case of Pearl Impex (U) Ltd & 2 Ors v. Attorney General and KCCA, the Court while invoking Section 9(2) of the repealed Investment Code Act said that a foreign investor shall not be deemed to be any of the following categories namely:

A registered company incorporated in Uganda in which the government holds majority of shares.
A body corporate established under Ugandan law.
An international development agency duly vetted by the Uganda Investment Authority
A cooperative society registered under the Cooperative Societies Act
A trade union registered under the Trade Unions Act.

Navigating Uganda's Business Permit System:

Entry Permit:

All non-citizens in Uganda are required by the Registration of Persons Act, 2015 to have the "Aliens Identification Cards". The first step for acquiring an alien's identification card is submission of the alien's information at the National Identification and Registration Authority. Upon submission, the Authority is required under Section 72 of the Registration of Persons Act to allocate the alien a unique identification number. Upon allocation of a unique identification number to an alien, Section 73(1) requires the Authority to issue out an alien's identification card. This card is prima facie proof of the particulars contained in it. The validity of an Alien Identification Card depends on the period of residence or visit of the alien. However, upon expiry the Card can be renewed by the alien on application to the Authority.²¹

In addition, the Uganda Citizenship and Immigration Control Act under Section 53(1) provides that no person shall enter or remain in Uganda unless that person is in possession of a valid entry permit, certificate of permanent residence, or pass issued under the Act. Section 1 defines "entry permit" as a permit granted under Section 54. For a non-citizen to be issued with an entry permit or certificate of permanent residence, he or she must be in possession of a passport, certificate of identity, convention travel document or any other valid travel document. An entry permit is granted if the National Citizenship and Immigration Board is satisfied that it shall be for the benefit to Uganda or part of Uganda; and it shall not be to the prejudice of the inhabitants generally of Uganda. A "Deportation order" under Section 60 of the Act can be issued against a non-citizen who lacks an entry permit or Certificate of Permanent residence.

However, it should be noted that there is no legal requirement for foreign business entities to have an entry permit. Entry permits are "only issued to natural persons" who are the directors and employees of a foreign business. This position is derived from "the clear wording of the Uganda Citizenship and Immigration Act and the Immigration Act which states that an entry permit is granted to individual and natural persons.²² Consequently, the word foreign investor in terms of the grant of entry permits is not straightforward. The business entity which is registered in Uganda under the Investment Code Act does not require an entry permit. It is the employees and directors who are non- citizens who do.

Footnotes

1. NEMA, 2024

2. World Bank Uganda Infrastructure Assessment, 2023

3. Mining and Minerals Act, 2022

4. Petroleum Authority of Uganda, 2024

5. African Energy Chamber, 2024

6. Section 1-7 of the Uganda Citizenship and Immigration Control Act

7. UNDP Uganda Environmental Report, 2022

8. Human Rights Watch, 2023

9. Sections 88–90, Mining and Minerals Act, 2022

10. Section 25, Employment Act, 2006.

11. Sections 37 and 40, Employment Act 2006.

12. Sections 57–64, Employment Act 2006.

13. Sections 74–80 Employment Act 2006.

14. Section 36, Employment Act 2006.

15. Section 4 Occupational Safety and Health Act, 2006

16. Section 6 Occupational Safety and Health Act, 2006

17. Section 7 Occupational Safety and Health Act, 2006

18. Section 8 Occupational Safety and Health Act, 2006

19. Section 9 Occupational Safety and Health Act, 2006

20. The Investment Code Act 2019

21. Registration of Persons Act, 2015

22. Pearl Impex (U) Ltd & 2 Ors v. Attorney General and KCCA

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Foreign Investment In Mining And Natural Resources In Uganda: The Law, Regulations And Tax Considerations

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Government, Public Sector

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Uganda