Uganda courts investors for recycling as plastic tax stalls

KAMPALA — Uganda is inviting private capital into recycling and reusable packaging, even as its own attempt to tax the plastics industry into changing course has stalled in the face of a manufacturers’ revolt and a presidential rebuff.

The pitch to investors came on Monday, when the National Environment Management Authority (NEMA) opened a new project at the Sheraton Kampala Hotel alongside the United Nations Environment Programme (UNEP) and the Embassy of Japan in Uganda. Beyond sharpening data on plastic pollution and tightening regulation, its explicit aim is to “catalyse investment in circular products” — goods and packaging designed to be reused, refilled or recycled rather than dumped after a single use.

The commercial case is not hard to make. NEMA says Uganda generates about 600 tonnes of plastic waste a day, less than 40% of it properly collected, and the country spends roughly Shs10bn a year simply clearing plastic from its drainage channels. Almost none of that waste is recovered for value — a gap that, in principle, is a business opportunity for recyclers and makers of alternative packaging.

But the policy signal investors would read alongside that opportunity has turned murky. Parliament passed the Excise Duty (Amendment) Act 2026, raising the levy on plastics from 2.5% — about $70 (roughly Shs259,000) a tonne — to 25%, or $1,500 (about Shs5.55m) a tonne. That would have handed Uganda the highest such levy in the region, against a mooted $500 (about Shs1.85m) in Kenya and $200 (about Shs740,000) in Tanzania. (Conversions at about Shs3,700 to the dollar; flag for updating.)

Industry pushed back hard. Mukwano Industries chief executive Tony Gadhoke called the rate onerous and a disincentive, warning it would invite cross-border dumping of cheaper plastics. The Uganda Manufacturers Association and a producer grouping whose founders include Coca-Cola, Crown Beverages, Riham, Uganda Breweries and Mukwano argued the tax would cost jobs, lift the price of basic goods and choke the very recycling investment the country says it wants, pressing instead for incentives and enforced Extended Producer Responsibility — obliging manufacturers to collect and recycle their own waste.

They won a reprieve. In mid-July, President Yoweri Museveni returned the Excise Duty (Amendment) Bill to Parliament, rejecting the steep plastics increase as a threat to production costs and investment and recommending the rate stay at 2.5%. Deputy Speaker Thomas Tayebwa relayed the decision to the House on 14 July, leaving the measure in limbo pending reconsideration.

That leaves NEMA courting investment without a settled tax regime to anchor it — and with a second unknown in play. The authority has drafted a separate bill for a total ban on single-use plastics, still awaiting Parliament, which could sharply reshape demand for whoever backs alternatives now.

For NEMA, Monday’s launch is about converting data into capital. Whether investors bite is likely to depend less on the project than on how Uganda finally resolves the tax and the ban.