Uganda continues to maintain its standing as one of East Africa's relatively successful economies and has experienced rapid economic growth over the last few years. In a drive to increase fiscal independence, the government has been attempting to increase tax revenues by boosting more revenue from small companies and by incorporating more of Uganda's large informal sector. The country enjoys significant inflows of foreign direct investment and the Ugandan government remains committed to structural reforms in order to improve the investment climate and increase productivity.

Overall, Uganda's business climate has improved in recent years and the gains are having positive effects on companies, especially larger ones. The Uganda Investment Authority has been established to help foreign investors set up companies in the country. Nevertheless, critics note that the government's investment strategy needs to be applied more evenly and transparently, while corruption continues to be an important source of concern. For example, business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011, cite corruption as the most problematic factor for doing business in Uganda. Companies also identify the favouritism of government officials in rewarding contracts to well-connected companies and individuals, and the ethical behaviour of companies operating in Uganda as significant competitive disadvantages. Foreign-owned companies are not specifically targeted for bribes and payoffs. However, companies should note that tendering processes, in particular for defence items, are not being carried out in a transparent manner, and there is possible collusion between competing companies and government officials, as reported by the US Department of State 2010. Several sources, including UNAFEI 2007, report that government bureaucracy in providing certain services, like issuance of licences and permits, involving several approval stages provide fertile ground for rent-extraction. Companies must often pay facilitation payments to speed up bureaucratic processes, such as obtaining licences and customs approval, to obtain government services, such as electricity or telephone connections, to reduce taxes, fees, or fines, or to be considered for or to be awarded government contracts. As an example of this, the World Bank & IFC Enterprise Surveys 2006 report that 23.6% of companies identify corruption as a major constraint and 51.7% of companies expect to make an informal payment in order to 'get things done'.

First established in 2003, the Public Procurement and Disposal of Public Assets Authority (PPDA) has been playing an active role in assuring compliance with procurement guidelines, leading to a reduction in corruption losses in procurement. However, companies should be aware that corruption and lack of transparency still prevails in public procurement processes, and according to Enterprise Surveys 2006, more than 45% of the surveyed companies expect to make unofficial payments to secure government contracts. Moreover, according to a 2010 news article by AllAfrica, citing a recent report by the PPDA, corruption in public procurement has resulted in a loss of at least USD 184 million each year. In order to best reduce the risk of extortion and demands for bribes in the procurement process, foreign investors considering bidding on public tenders in Uganda are advised to use a specialised public procurement due diligence tool. Private sector development is also hampered by grand corruption, which leads to significant financial losses through mishandled procurements and outright embezzlement. According to a 2009 news article by AllAfrica, the parliament passed the Anti-Corruption Act 2009, setting a stricter punishment, including imprisonment for up to ten years for corruption in both public and private sectors. Hence, companies are strongly recommended to develop, implement and strengthen integrity systems and to conduct extensive due diligence when planning to do or are already doing business in Uganda.

According to the Heritage Foundation 2011, regulation and bureaucracy in Uganda are not always transparent, consistent and, are subject to corruption. Nevertheless, according to the Bertelsmann Foundation 2010, formerly dense bureaucratic regulations and direct state intervention have been continually and significantly reduced in recent years. The regulatory framework of liberalised sectors of the economy is also being reformed, and although there is not a consistent implementation of declared policies, progress can be seen in, for example, the reforms in the finance and banking sector. According to the World Economic Forum Global Competitiveness Report 2010-2011, companies identify Uganda as having a competitive advantage in relation to the burden of government regulation. According to the World Bank & IFC Doing Business 2011, it takes an average of 25 days and 18 procedures to start a company in Uganda and no minimum capital is required to do it. According to the Bertelsmann Foundation 2010, privatisation of state-owned companies and market liberalisation have characterised economic development, and the private sector has played an increasingly important role becoming the core of the economy. However, the privatisation has been a slow process and parastatal institutions and companies still exist and perform relatively significant roles.

The US Department of State 2010 reports that Uganda generally has an open climate for foreign investment and provides a level playing field for foreign and domestic investors. Nonetheless, the widespread corruption damages the Ugandan business environment, for instance, by restricting the ability of foreign investors to participate in governmental tenders on an equal basis. Moreover, foreign companies have complained that some judges delay rulings on disputes involving politically well-connected parties. The Land Registry, in particular, has been singled out as being characterised by a complex set of laws and for being non-transparent. Although property rights and rules for the acquisition of property are clearly established in principle, their implementation is not consistent. This is especially the case regarding acquisition and ownership of land. Foreign companies are supposed to share the same rights to own property as Ugandan nationals, but the judicial and administrative practices of ensuring existing property rights are often flawed. According to the US Department of State 2010, the revised Investment Code has been presented to Parliament. The revised Code will make the Ugandan Investment Authority a more effective one-stop shop for investors, by providing it with new powers to allocate government resources for investment, and to grant incentives for rural investment.

In contrast to the companies surveyed by the World Economic Forum report introduced above, several sources note that decentralisation and the vast amount of approval stages in the bureaucracy have resulted in higher costs and time-consuming procedures for companies. It is further reported that a consequence of problems resulting from the decentralisation of the political administrative system is continuing pervasive corruption at all levels of government, especially in the local government bodies. Court procedures are complex and administrative corruption is high, but despite a lack of capacity, the commercial courts normally dispose of disputes within seven months. However, it is estimated by the US Department of State 2010 that 80% of commercial disputes are resolved outside the court system in order to save money and time. The Centre for Arbitration and Dispute Resolution was developed in accordance with the Arbitration and Conciliation Act 2000 and can assist in commercial disputes. The Arbitration and Conciliation Act 2000 incorporates the 1958 New York Convention, requires the Ugandan government to accept binding arbitration with foreign investors, and authorises binding arbitration between private parties. Foreign court rulings are accepted and enforced by Ugandan courts where those foreign courts accept and enforce the judgments of Ugandan courts. Companies are recommended to include provisions for alternative dispute resolution in their contracts. Access the Lexadin World Law Guide for a collection of legislation in Uganda.