25 March 2011 Last updated at 11:05 GMT
Uganda's Yoweri Museveni (l) has called for an end to air strikes against Col Muammar Gaddafi (r)
Uganda will freeze Libyan assets worth $375m (£230m), mainly in the telecommunications, hotel, banking and oil sectors, the government says.
The BBC East Africa correspondent says this is not aimed at putting pressure on Col Muammar Gaddafi but rather to comply with UN sanctions.Uganda's President Yoweri Museveni has previously called for an end to the Western air strikes.
Oil-rich Libya has used money to buy influence across Africa.
South Africa has already announced a freeze of Libyan assets, although its president has also condemned the military action.
Reluctance The BBC's Will Ross says the isolated Libyan leader will still be hoping for diplomatic support within Africa.
The African Union is trying to organise peace talks between allies of Col Gaddafi and the rebels.
There is a degree of reluctance in much of Africa to take action against the Libyan leader, our correspondent says.
Col Gaddafi has used money to gain favour and the Libyan government has invested heavily in at least 25 African nations, so the conflict threatens to have a significant economic impact across the continent, he says.
To avert fears of job losses in Uganda, International Co-operation Minister Henry Okello Oryem said that, despite the freezing of assets, the Libyan-linked businesses would still be able to function.
But he said the money would be channelled into a special account until sanctions were lifted.
Libya Crisis
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