Uganda pushes to simplify carbon market rules to safeguard local investors, farmers

Uganda is positioning itself to attract major investment into its emerging carbon market, but growing concerns over complex regulations and the risk of exploitation could hamper efforts to ensure the sector benefits local communities.

Speaking at the East African Carbon Markets Forum 2026 in Kampala yesterday, Gen Kahinda Otafiire, the Minister for Environment, warned that global carbon market rules are overly complicated and risk disadvantaging African nations trying to leverage their natural carbon sinks.

“The rules, regulations, and the path to achieving tangible results from the carbon markets are complicated,” Gen Otafiire said. He urged African nations to reconsider these frameworks to favor continental investors, ensuring financial returns remain within Africa rather than flowing outward to historical polluters. “Why don’t you help continental investors to invest and do this thing? And then the resources remain here.”

Gen Otafiire noted that after reviewing forum documents, the presented outlook appeared “too good to be true.” While clarifying that his personal views do not represent official government policy, he stressed that national limitations should not leave the country vulnerable. “My ideas are not the ideas of the Uganda government, but our inability to do these things on our own should not expose us to unfair exploitation,” he added.

Despite these warnings, investor interest in Uganda remains strong. Mr. Bob Natifu, the acting commissioner of the Climate Change and Carbon Trade Department at the Ministry of Water and Environment, revealed that the government has received about 84 proposed carbon projects and issued letters of no objection to roughly 70 percent of them.
“If we’ve received about 84 projects and we’ve issued letters of no objection to about 70 percent of them, that means Uganda is doing very well compared to what other countries are doing,” Mr. Natifu said.

To streamline the market, Uganda introduced the National Climate Change (Climate Change Mechanisms) Regulations, 2025. The framework addresses project approval, verification, and benefit-sharing, ending an era where external developers traded local carbon credits abroad with minimal local returns beyond basic corporate social responsibility activities.
However, Mr. Natifu cautioned smallholder farmers against prematurely rushing into tree-planting projects, noting that ministry calculations show an agroforestry project requires over 600 hectares and a minimum investment of $73,000 (about Shs270 million) to be economically viable. He recommended that smallholders group into aggregated programs to achieve the required scale.

The call for regulatory simplicity was reinforced by Mr. Kenneth Muhangi, Chairman of the Carbon Markets Association of Uganda and co-convener of the forum, who urged the private sector and government to eliminate licensing and financing bottlenecks.

“A carbon market is an environment through which people, governments, and companies can trade in carbon credits. A credit is a unit of measure for every one tonne of carbon dioxide removed or avoided, worth anywhere between $7 and $77,” Mr. Muhangi explained, adding that the forum aimed to connect local developers with financiers and verifiers. “How do you break down those regulations for the ordinary Ugandan to understand how they can participate using their own farm?”

Echoing these sentiments, Ms. Shafiga Wanyenya, Vice Chairperson of Parliament’s Climate Change Committee, emphasized that market success must be judged by how much value reaches everyday citizens conserving local landscapes.
“There needs to be transparency and accountability in carbon markets, credible measurement and verification systems, fair benefit-sharing arrangements, and safeguards against greenwashing and exploitation,” Ms. Wanyenya said.