The Cost of Homophobia: The Economic Impact of Uganda’s Anti-Homosexuality Act

A new report by Open For Business (OFB), a global coalition advocating for LGBTQ+ inclusion, reveals the far-reaching economic impacts of Uganda’s Anti-Homosexuality Act (AHA) in addition to its devastating consequences on human rights.

The study provides a data-driven analysis of how the legislation, signed into law in May 2023, could drastically harm the nation’s economy over the next five years. By examining key economic drivers such as foreign investment, tourism, public health, and human capital, the report underscores the steep cost Uganda will pay for its discriminatory policies.

The AHA imposes life imprisonment for engaging in homosexual acts and the death penalty for “aggravated” homosexuality. It also outlaws the “promotion of homosexuality,” putting human rights defenders advocating for LGBTQ+ rights at risk of imprisonment for up to 20 years.

Immediate and Long-Term Financial Losses

Since the AHA’s enactment, Uganda is projected to have already lost between $470 million and $1.6 billion—equivalent to 0.9–3.2% of the country’s GDP. These losses, driven by halted international aid, reduced foreign investment, and declining tourism, highlight the AHA’s detrimental impact on Uganda’s economic trajectory.

Over a five-year period, the total economic loss could be as high as $8.3 billion USD.

“This represents an inflection point for the country’s economy,” states the report. “The potential loss of talent and productivity, coupled with heightened stigma and discrimination, further deepens Uganda’s economic vulnerabilities and undermines efforts to diversify the economy and strengthen public health services.”

One of the most significant findings of the report is the potential reduction in international aid, which could cost Uganda up to $1.024 billion annually. This alone would account for nearly half of the projected economic burden, as global donors reconsider their support in light of the country’s growing human rights violations.

The loss of foreign direct investment (FDI) could further cripple Uganda’s economy, with annual losses estimated between $48–75 million USD. The AHA’s negative impact on the nation’s reputation, particularly in the tourism sector, could result in losses of up to $99 million USD per year.

These figures paint a bleak picture for Uganda, as its reputation as an emerging destination for international investment and tourism continues to deteriorate.

Public Health and Human Capital in Crisis

The report also outlines how the AHA exacerbates Uganda’s public health challenges, particularly in combating HIV/AIDS. LGBTQ+ individuals are further marginalised and stigmatised, making it harder for them to access essential health services. This could cost the public health sector $70–312 million USD annually.

Additionally, the AHA is likely to drive away between 5,000–15,000 skilled workers, resulting in an estimated productivity loss of $3–24 million USD per year. The departure of talented individuals seeking refuge in more inclusive countries will only intensify Uganda’s brain drain, further crippling its long-term development prospects.

On top of these issues, Uganda will face policing and legal costs estimated at $0.3–$0.5 million USD annually due to the enforcement of the AHA. These unnecessary expenditures represent a waste of national resources that could be better directed toward promoting inclusive growth.

Meanwhile, the suspension of Uganda’s trade benefits under the U.S. African Growth and Opportunity Act (AGOA) poses a further threat to Uganda’s exports, with the report estimating future losses of around $0.5 million USD annually in tariff payments.

Open For Business urges Uganda to reconsider the AHA, arguing that embracing diversity and inclusion is not only a matter of human rights but also crucial for the country’s economic prosperity.