The Independent Uganda: You get the Truth we Pay the Price
The government has raised the budget allocation for the extractive sector by 92% to Shs961 billion for this financial year
Kampala, Uganda | THE INDEPENDENT | Small and Medium Enterprises (SMEs) have been encouraged to bolster their operational capabilities to fully leverage opportunities within the oil and gas sector.
This call to action was made by John Walugembe, Executive Director of the Federation of Small and Medium-sized Enterprises Uganda (FSME), during an X Space event organized by the Uganda Chamber of Mines and Petroleum (UCMP) on July 18. The event is part of the ongoing 90 Days of Oil and Gas Media campaign.
“We have encouraged our members to continue enhancing their capacity in terms of standards, supply, financial management, and emerging sector needs such as environmental, social, and governance issues, even as we await the first oil production,” Walugembe said. “This will enable them to not only survive beyond oil but also thrive.”
In line with the X Space’s theme of assessing the benefits of SMEs in the oil and gas sector, Walugembe noted that some members have already benefited from capacity-building programs implemented by the Stanbic Business Incubator and the African Development Bank.
He also highlighted ongoing efforts by entities like the Industry Enhancement Centre, funded by TotalEnergies, which are encouraging further participation in capacity-building activities.
“We have seen small and progressive wins, but there is still a lot of work to do,” he said.
Speaking at the same event, Tom Ayebare Rukundo, the Manager of Economic & Financial Analysis at the Petroleum Authority of Uganda said SME capacity-building efforts must focus on diversity, equity, and inclusivity in their program strategies to attract oil companies offering contracts in the sector.
He highlighted existing opportunities in ring-fenced goods and services, including transportation, security, food and beverages, hotel accommodation and catering, human resource management, office supplies, fuel supply, land surveying, clearing and forwarding, crane hire, locally available construction materials, civil works, and more.
“We are pleased to report that some SMEs in Uganda are already beneficiaries,” Rukundo said, adding that contracts worth a total of US$7.9 billion have been signed in the oil and gas sector, with around US$1.7 billion awarded to Ugandan companies.
More than 13,000 jobs created
Additionally, he said that over 13,000 jobs have been created, with 90% of these positions filled by Ugandans, including close to 5,000 from host communities. He mentioned that SME capacity-building programs have reached 5,000 beneficiaries, with more expected to benefit in the future.
Rukundo urged SMEs to make time and understand the contracts they sign with oil companies so they can meet the terms and conditions stated.
“When some companies are signing contracts, they do and after they do not give feedback…they only run to us when there is a problem after signing…that should stop,” he said.
Rukundo also said that prepared companies have a chance to grow their businesses. “We have some companies that have grown and are now 10 years because of oil and gas business in sectors of infrastructure, fabrication, and assembly,” he said, “some were at the point of bankruptcy but were able to bounce back.”
Humphrey Asiimwe, the Chief Executive Officer of UCMP said opportunities in the sector will always go to those that have consistently demonstrated high standards because the sector demands that.
He said that the Petroleum Authority of Uganda (PAU) has established the National Suppliers Database and the National Talent Register, among other initiatives, which should be utilized to tap into oil sector revenues.
“As UCMP, we continue to engage with PAU, the Ministry of Energy, and other stakeholders to address challenges related to late payments, invoicing, incentives, standards, and high credit costs, and we anticipate positive outcomes as we progress,” Mr. Asiimwe said.
Data from the Uganda Investment Authority indicates that about one million SMEs operate in Uganda, constituting a substantial part of the economy. SMEs represent about 90% of the private sector and employ a significant portion of the workforce. However, a considerable number of these SMEs face challenges leading to their collapse, often due to poor management.
Last month, the Ministry of Finance presented the current budget showing an increase in money allocated to the extractive sector (oil, gas, and mining) by 92% from Shs501bn in FY2023/24 to Shs961bn in FY2024/25) to partly fund the East African Crude Oil Pipeline (EACOP) and the refinery – which are critical projects for the country’s commercial oil production expected in 2025, according to the government plan.
