Police said the boat was "in poor mechanical shape" and was overloaded with passengers.
A marine unit people has rescued 27 people, with searches ongoing to find more bodies. No information was provided by police on how many people may still be missing.
Ugandan President Yoweri Museveni offered condolences to the victims, adding that "according to preliminary information from the security services" the boat was "private, unregistered, unlicensed and maybe uninsured."
Somalia's President also tweeted about the incident, saying the people of Somalia "stand by Uganda [in] this trying moment of grief."
Ugandan police spokesman Patrick Onyango said there was bad weather at the time of the accident.
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