Written by OLIVE EYOTARU(The Observer)
The business community has welcomed the proposed bill on local content, reports OLIVE EYOTARU.
A proposed law seeking to compel government to buy and use more locally produced goods and services has been hailed as long overdue. The Local Content Bill 2017, a private member’s bill, outlines 19 goods and services which should be procured by government exclusively from Uganda and supplied by Ugandan companies and citizens.
Among the goods and services listed in Section 14 of the proposed bill are personnel transportation, security, food and beverages, hotel accommodation and catering, human resource management, stationery and office supplies, emergency response services, custom clearance, fuel supply, land surveying, clearing and forwarding, crane hire, locally manufactured or available construction materials, inland transport and civil works.
Others, majorly targeting the oil and gas sector, are the supply of locally available drilling and production materials, environment studies and impact assessment, communications and information technology services and waste management,.
If no local company is able to supply the goods and services, a foreign company will be contracted, as long as it partners with a local company. Soroti municipality MP Herbert Ariko, one of the four drafters of the bill, says the objective of the bill is to ensure that in all undertakings where government is party or where public funds are used, local content obligations are implemented in overall project development, management and execution.
Furthermore, whereas government is the largest consumer of goods and services, there is no deliberate policy or legal requirement formulated to give Ugandan companies or individuals first priority during the procurement of such goods and services, especially for large- scale government-funded projects.
“Uganda does not have legislation aimed at protecting Ugandan manufacturers or service providers from unnecessary completion from manufacturers of similar goods and services from outside the country. This has evidently exposed Ugandan manufacturers to unfair competition,” Ariko told The Observer in an interview last week.
BUY UGANDA, BUILD UGANDA
In 2014, government, under the trade ministry, formulated the Buy Uganda, Build Uganda (BUBU) policy, to encourage consumption of locally produced goods and services, both within and outside government.
The policy hinges its objectives on supporting the growth of local content, even in the face of weaknesses of quality standards. Trade Minister Amelia Kyambadde says one of the policy’s targets is that 20 percent of government procurement by value should be of local products and services while 50 per cent of shelf space in supermarkets should be populated by local products.
During his 2016 state of the nation address, President Museveni directed that all government ministries, departments and agencies start procuring locally made products and services. This, he said, was in a bid to support local manufacturers but also reduce on Uganda’s heavy reliance on imports especially from China.
In one of his directives, the president ordered that uniforms for the armed and police forces be made in Uganda. Everest Kayondo, chairman of the Kampala City Traders Association (Kacita), says the law would be a blessing to Ugandans, who have for long been locked out of government projects in favour of foreign companies.
Kayondo explains that Uganda’s fervent appeal for foreign investors has disadvantaged Ugandan manufacturers, given that little efforts have been put in empowering local service providers.
For many experts, this amounts to neglect of patriotic duty by the government – because local small and medium firms are often the mainstay of the local economy. Speaking in Kampala last year, former World Bank vice president Ngozi Okonjo-Iweala urged government to pay particular attention to local SMEs because they employ more Ugandans and are unlikely to repatriate their profits.
In December, the Ugandan head of the World Bank in Ghana, Liberia and Sierra Leone, Dr Henry Kerali, also urged government to find ways of supporting local SMEs. The proposed law, if passed and implemented, would be a step in that direction.
With an enabling legal regime, Kayondo is confident that more Ugandans will be tapping into the economy’s fortunes. He also proposes that Ugandans should own at least 30 per cent of shares in foreign-owned companies to avoid repatriation of all profits abroad.
“The biggest contributors of our Gross Domestic Product are foreign-owned companies including banks, telecom companies and construction companies handling big infrastructural projects like dams and road construction. Government, being the biggest buyer, must consider Ugandans first,” Kayondo says.
Also proposed in the bill in Section 16 is for Ugandans to be given first consideration for employment or training in any project, activity or operation executed in Uganda. Ariko says employment of a non-citizen shall be done only if suitably qualified Ugandans are not available or are incapable of performing the particular type of work.
“Uganda’s laws and policies are generally favourable towards foreign investors to establish businesses in Uganda but there is no requirement for the investors to employ Ugandan labour and [firms] have instead employed foreign staff yet we have expertise locally,” the MP says.
With unemployment hovering above 60 per cent among youths, according to statistics from ActionAid Uganda, Kayondo proposes that for any investor to set up shop in Uganda, there must be a percentage of shares ring-fenced for Ugandans.
“Let us have at least 30 per cent of the company owned by Ugandans. The current practice is that most of the investors set up shop without any local ownership, then make huge profits and repatriate it back to their countries,” Kayondo bemoans.
Usher Wilson Owere, the chairman general of the National Organisation of Trade Unions (Notu), says the law is long overdue. Owere views the growing influx of Ugandans going abroad to seek greener pastures among the reasons for lack of jobs at home.
“Citizens must be given first priority at all levels. Many sectors like the hospitality sector are being run by foreigners yet Ugandans have the skills and capacity. Uganda only needs to invest in building capacity to address mismatch in qualifications and reduce on theory-based education,” he adds.
The proposed bill also outlines penalties, where any Ugandan who connives with a foreign citizen or company to comply with the local content requirements risks a five-year jail term or pays a Shs 3 million fine.
A national local content committee will be set up to, among other issues, assist local contractors and Ugandan companies to develop their capabilities and capacities, and provide guidelines and measurement of national content to be utilized in Uganda.
It will comprise representatives from Office of the Prime Minister, ministry of trade, ministry of gender, ministry of energy, Uganda Manufacturers Association, Uganda National Chamber of Commerce and Industry, Uganda Investment Authority and Private Sector Foundation Uganda.
Parliament on February 22 granted Ariko, mover Patrick Nsamba (Kassanda), Muyanja Mbabaali (Bukoto South) and Stephen Mukitale (Buliisa) leave of Parliament to draft the bill.
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