Parliamentary overreach risks raising Uganda’s investment costs

NEWS ANALYSIS | TINAH AKETCH | Uganda’s push to attract investment is confronting a challenge beyond financing and infrastructure: uncertainty over whether government contracts will survive parliamentary scrutiny without disruption, costly disputes or demands for cancellation.

Across enquiries into expressway operations, vehicle inspections and digital number plates, Parliament has raised important questions about procurement, pricing and accountability.

But its interventions have also prompted concern about the consequences when oversight moves towards directing the termination of commercial agreements.

At stake is more than the future of individual contractors.

The handling of these disputes sends a signal to businesses assessing whether Uganda offers a predictable environment for long-term investment.

Business analyst Dismus Arinda has argued online that Parliament’s conduct risks undermining the investment climate the government is working to promote.

His concern goes to the heart of contractual certainty: investors commit money on the strength of agreements with the state but may subsequently face demands from another arm of government to suspend or cancel those arrangements.

For a company that has borrowed to purchase equipment, build facilities or recruit staff, prolonged uncertainty can delay expansion and complicate financing. Prospective investors may factor that risk into their prices, seek stronger guarantees or choose another market.

Yet, parliamentary scrutiny also serves an essential purpose. Poorly negotiated contracts, excessive charges and weak supervision can impose substantial costs on taxpayers and consumers.

“Oversight is good in the protection of taxpayers’ money,” says economist Gloria Akello.

She cautions, however, that overreach can have a counterproductive effect, particularly for companies concerned about protecting their reputations.

The challenge is to investigate suspected wrongdoing thoroughly while ensuring that proposed remedies are supported by evidence and account for the state’s contractual obligations.

The Kampala–Entebbe Expressway inquiry illustrates that tension.

Parliament’s Physical Infrastructure Committee recommended terminating operating arrangements and transferring responsibilities to government, citing performance and financial concerns.

The dispute involved EGIS Road Operation’s operating contract and a contested arrangement involving Pinnacle Security.

The Attorney General’s office warned that abrupt termination could expose Uganda to costly international arbitration.

The legal advice highlighted a distinction that can disappear in heated debate: a contractor’s shortcomings do not necessarily give government an immediate right to cancel an agreement.

According to the response presented to Parliament, government needed to establish the relevant breaches and follow the contractual procedures, including opportunities to remedy failures.

The Attorney General’s office also supported a forensic audit of revenue collection systems.

That approach offers a way to pursue accountability while reducing the risk that taxpayers will later finance compensation or arbitration costs.

It also matters to investors watching from outside Uganda. Businesses need to know how performance will be assessed, how alleged breaches will be handled and whether agreed dispute-resolution procedures will be respected.

Titus Nkurunziza, a policy and governance expert, says investors’ treatment during parliamentary proceedings can influence those judgments.

“Dragging investors through grueling parliamentary hearings is not a smart idea. Investors will think twice if this is what they would encounter during the course of their business,” he says.

Public hearings can compel disclosure and expose misconduct. But accusations aired during proceedings can also damage a company’s reputation before an inquiry reaches its conclusions.

Fair questioning, a meaningful opportunity to respond and a clear distinction between allegations and established findings are therefore central to credible oversight.

The digital number plate project presents another test

Parliament is investigating the award and implementation of the US$257 million Intelligent Transport Monitoring System project involving Joint Stock Global Security Ltd.

On October 14, the Physical Infrastructure Committee raised the prospect of cancelling the contract. Yet the parliamentary review has also produced evidence of the system’s operational capabilities.

During an October 2 inspection of the Police Command Centre at Naguru, MPs verified that the technology could track cars and motorcycles, while Police reported recovering 264 out of 289 stolen motor vehicles in 2026 — a recovery rate of 91 percent.

On October 20, Auditor General Edward Akol presented preliminary findings to the Committee during a closed-door session, adding a further layer of scrutiny to the project’s functionality and contractual arrangements.

Where wrongdoing or contractual failure is established, government should pursue the appropriate remedies.

However, calls for suspension or cancellation must also account for legal obligations and the consequences for service delivery, consumers and taxpayers.

SGS contract

Uganda’s experience with Swiss inspection firm Société Générale de Surveillance offers a costly illustration.

Following parliamentary intervention in 2017, the government terminated the mandatory vehicle inspection agreement in 2020. It subsequently agreed to a Shs109.9 billion settlement to acquire the company’s investments.

The case demonstrates why the costs of intervention must be examined alongside the failings that prompt it.

Tororo factory

President Yoweri Museveni has raised similar concerns about institutional decisions disrupting productive investment.

In 2019, he criticised judicial delays affecting major projects, citing the Chinese-backed Osukuru fertiliser factory in Tororo.

Museveni complained that court intervention arising from a dispute between business partners had stopped operations, with consequences for economic activity and employment.

The Tororo dispute illustrates the difficulty of resolving commercial disagreements while preserving business operations. Protecting shareholders’ rights through an independent judicial process is itself essential to investor confidence.

Businesses need both operational stability and institutions capable of enforcing their rights.

For Parliament, credible oversight means demanding records, testing explanations and establishing whether contractual breaches have actually occurred.

Where violations are proven, remedies should follow the law and agreed contractual procedures, with full consideration of the financial, legal and operational consequences.

Uganda cannot afford a situation where protecting public funds today results in costly arbitration, compensation claims or disrupted services tomorrow.

The credibility of its investment climate depends not on shielding investors from scrutiny, but on ensuring that government contracts are examined fairly.

****

Tinah Aketch is a Ugandan-based policy specialist