Business 17 May 2026 Daily Monitor (Uganda)
Foreign Investors Bypass Local Sourcing Despite Tax Incentives, Report Finds
A recent government report indicates that foreign investors enjoying tax incentives are largely importing their raw materials and inputs, falling significantly short of the government's target for local sourcing. This trend raises concerns about the impact on Uganda's industrial growth and employment. Source: https://www.monitor.co.ug/uganda/business/markets/foreign-investors-importing-inputs-instead-of-local-sourcing-govt-report--5463438
A new government assessment has highlighted a concerning trend among foreign investors operating in Uganda. Despite being granted considerable tax incentives, many of these businesses are opting to import their necessary inputs and raw materials rather than sourcing them locally.
The report, which reviews companies benefiting from government tax breaks, reveals that the proportion of local sourcing remains substantially below the targeted 70 percent. This reliance on imports means that the potential benefits of these investments, such as job creation and the development of local supply chains, are not being fully realized.
Officials had hoped that tax incentives would stimulate local industries and encourage firms to integrate more deeply into the Ugandan economy. However, the findings suggest that this objective has not been met, prompting questions about the effectiveness of current policies and the need for adjustments to promote genuine local content development.
The continued preference for imported inputs not only limits opportunities for Ugandan manufacturers and suppliers but also impacts the country’s foreign exchange reserves. Experts suggest that a review of the incentive structure and stricter enforcement of local content requirements might be necessary to curb this pattern.