Despite Government’s policy to merge different agencies so as to reduce the cost of administration in Uganda, the Uganda National Association of Building & Civil Engineering Contractors (UNABCEC) has called for the creation of a Local Content Commission so as to support local contractors and service providers.
The proposal was fronted by James Olorya, UNABCEC President who made the remarks while appearing before Parliament’s Finance Committee that is currently scrutunising the National Local Content Bill 2022, where the Association had appeared to present their views on the bill.
Whereas Parliament passed into law the National Content Bill 2019 into law, President Museveni declined to assent to the bill and returned it back to Parliament for consideration, particularly section 3 of the bill that had proposed the creation of a Local Content Department at the Ministry of Finance, on grounds that it goes against Government’s policy to merge agencies.
However, while appearing before the Committee, Olonya argued whereas UNABCEC recognises the relevance of certain aspects of the President considerations on the guidelines and policies associated with development partners and efforts towards the East African Community agreements to facilitate trade and the aspects associated with the proposed department for local content, the overarching importance of the intention of the bill however must not be mortgaged to serve others at the detriment of the country and people of Uganda.
He said, “UNABCEC advocates for an independent agency of the state to effectively regulate the local content development in Uganda. Such an entity should be a regulatory body which will have the independence, power and the integrity of similar agencies and should be an assemblage of the related ministries and private sector stakeholders.”
Although Keefa Kiwanuka, Chairperson Finance Committee tasked officials from UNABCEC to explain what informed their decision to come up with the proposal and if it won’t contradict with government policy of agency rationalization.
In defending the need for a Local Content Commission, Olonya said that the construction sector contributes 13% to Uganda’s Gross Domestic Product (GDP) thus the need for an independent body that is able to enforce and call to account players of the sector so as to ensure successful implementation of local content legislation and subsequent policies.
He explained, “We would want to look at the contribution of nearly 13% of GDP coming from the construction industry second to agriculture, notwithstanding the value chain. While it is true there is quite advocacy by government to collapse a number of agencies, we are dealing with empowerment of our people, I would think this should be a special consideration for our people because infrastructure by default if thrust for economic development.”
UNABCEC also called for the establishment of a Fund to support local contractors who have been blacklisted due to failure to pay loans on time, a decision that has left players in the industry grappling with access to financing.
“We particularly advocate for the need to establish a local content empowerment fund under the proposed legislation, to be dedicated to the development of the Ugandan companies and citizens,” noted Olonya.
The proposal also attracted questions to from lawmakers like Muwanga Kivumbi (Butambala County) who wondered why the contractors can’t seek for cheaper financing from Uganda Development Bank if the conditions imposed on them by commercial banks are too stringent.
“Access to affordable credit is cross-cutting. For you your solution is that we put up a fund, the question is, how many funds should we afford? What if all we have to do is to capitalise our indigenous banks? There is even plan to merge all those banks and have one big local bank that is able to give our people access to cheaper credit. But these many funds won’t be a smart idea,” said Kivumbi.
The Association expressed no reservation for having all public owned banks merged into one single bank, saying the move if adopted would go a long way towards emulating Ethiopia that has no foreign banks and solely rely on the local banks to lend to the contractors.
