Uganda fights off pressure over anti-gay law

Uganda’s anti-homosexuality continues to bite as development partners put pressure on Museveni to reverse the law.

This week, the US issued another advisory, the second in four months since the law was passed to its citizens to be careful while in Uganda, traveling to Uganda, or doing business in the country.

Washington on Monday said US companies or citizens face risks while in Uganda, citing corruption and the human rights restrictions, including the recently passed anti-homosexuality law.

The American companies that operate in Uganda include Citibank, Prudential, John Deere, FedEx, Ernst & Young, Deloitte, Price Waterhouse Coopers, and American Tower Corporation.

Ugandan Government spokesman Ofwono Opondo downplayed the advisory, saying it may not have any impact because there are no US companies that have a significant investment to the level of hurting the economy if they shut down operations.

He says Uganda was already looking up to alternative investors.

Dr Fred Muhumuza, a development policy expert in Kampala, and who has worked at Uganda’s Ministry of Finance, says the US warning is not only to their companies but to any firm based anywhere and doing business with Uganda.

He says the warning goes beyond American firms as the US turns economic guns on the country. According to him, any company that deals with Uganda could face restrictions in other countries, including trading with US.

Foreign direct investment (FDI) inflows into Uganda rose from $1.36 billion in April 2022 to $1.5 billion for the year ending April 2023, contributing over four percent of Uganda's GDP, according to the World Bank.

Reviving financing

The timing of the advisory is also suspect, especially at a time when the government is still holding talks with the World Bank with a view of reviving financing, which was very crucial for the economic health of Uganda, according to Dr Muhumuza.

The World Bank froze funding after the new law was passed. The economist says the US is not saying anything new, but various calls about corruption and uncoordinated policies by investors and citizens have not been heeded to by officials and government at large.

Vincent Bagiire, Permanent Secretary in the Ministry of Foreign Affairs, told local media the government is engaging Washington to find out the importance of the advisory, while Ellen Masi, public affairs counsellor at the US embassy in Kampala, said companies will make their decisions and it will be up to them to incorporate the advisory in those decisions.

The advisory warned of potential risks to human rights activists, health workers, and members of minority groups such as LGBTQI+, adding that the anti-homosexuality law increased restrictions on human rights, including freedom of expression, peaceful assembly, and “exacerbates issues regarding the respect for leases and employment contracts.”

After Parliament passed the law in May, US President Joe Biden called for the immediate repeal of the measures, which state, among other things, that engaging in acts of homosexuality would be an offense punishable by life imprisonment.

“The enactment of Uganda’s Anti-Homosexuality Act is a tragic violation of universal human rights. No one should have to live in constant fear for their life or be subjected to violence and discrimination. It is wrong,” Biden said.

He added that he had asked his National Security Council to assess what the law means for aspects of Washington’s engagement with Kampala, including services providing HIV/Aids relief, and other assistance and investments.

Biden also said his administration would consider slapping sanctions on Uganda and restricting the entry into the US of people engaging in human rights abuses or corruption.

The World Bank followed suit announcing suspension of funding to Uganda in August. “Uganda’s Anti-Homosexuality Act fundamentally contradicts the World Bank Group’s values.

Eradicate poverty

We believe our vision to eradicate poverty on a livable planet can only succeed if it includes everyone irrespective of race, gender, or sexuality. This law undermines those efforts. Inclusion and non-discrimination sit at the heart of our work around the world.

Upon the enactment of the law, the World Bank deployed a team to Uganda to review its portfolio in the context of the new legislation.

“Our goal is to protect sexual and gender minorities from discrimination and exclusion in the projects we finance. No new public financing to Uganda will be presented to our Board of Executive Directors until the efficacy of the additional measures has been tested,” the Bank said in a statement in August.

President Museveni’s government has said it will not be intimidated by the US. Addressing his country’s 61st independence anniversary a couple of weeks back, the President indicated that he was facing pressure from the West over the anti-gay law, adding that he had told them not to interfere in the internal affairs of the country.

“Uganda will only happily work with all the countries that respect its sovereignty,” he said.

Uganda has different loan facilities with the World Bank worth billions of dollars, including $217 million for Generating Growth Opportunities and Productivity for Women Enterprises Project, the Greater Kampala Metropolitan Area Urban Development Programme worth $566 million, and the Electricity Access Scale-up Project worth $568 million.

When President Museveni signed the initial version of the anti-gay law in 2014, the World Bank postponed a $90 million loan intended for health sector support. In 2016, then World Bank president Jim Yong Kim said the law Uganda had passed in 2014 was “quite a bit more draconian than a lot of the laws that exist”, adding that it could lead to “not only to discrimination but endangerment”.

According to the 2023/24 budget estimates, Uganda plans to borrow about USh6.16 trillion ($1.58m) to fund its USh52 trillion ($13.78 million) budget. About 50 percent of the country’s health budget is funded by her two main donors; the EU and the US. The US contributes about 32 percent of total health spending and 76 percent of all foreign contributions to Uganda’s health sector.

The bank recently said that it will only resume funding once it is satisfied that the Ugandan government has made efforts to ensure that LGBTQI+ people are not mistreated or marginalized in the programs it funds and according to Dr Muhumuza, the US advisory could be calculated to warn the World Bank that it was not happy with what is happening in Uganda.

While the US hails the country’s good investment environment created by the country’s free market economy and liberal financial system, it blames corruption, weak rule of law, threats to open and free internet access (citing closure of Facebook for three years now), and an aggressive tax collection regime by the Uganda Revenue Authority (URA).

The US also warned that the anti-gay law “creates additional opportunities for interference with business” because the law requires that suspected LGBTQI+ individuals be reported to the authorities, creating “additional avenues for corrupt actors to extract bribes, delay permits, and hinder competition.”