BUSINESS: Kyambadde shrugs off ‘Buy Uganda’ critics

Kyambadde insists

Kyambadde insisted the time is now for the government to promote purchase of locally manufactured goods and services.

“At the moment, a number of supermarkets are importing their products including from South Africa, denying our local products market,” Kyambadde said, “We cannot continue watching as jobs are exported to other markets. We need these jobs now.”

She said countries such as South Africa and the U.S. have campaigns to promote local content in their local trade and that Uganda cannot be an exception.

In line with Kyambadde’s push, the Ministry of Finance, Planning and Economic Development, has issued guidelines for a `reservation scheme’ that favours local firms in public procurement works.

The guidelines issued in accordance with the Public Procurement and Disposal of Public Assets (PPDA) law and the Local Governments (PPDA) Regulations demand that procurement of supplies and consultancy services whose cost is Shs1 billion and below will be reserved for local producers. Consultancy services are ring-fenced specifically for Ugandans.

The scheme also provides that procurement of road works of Shs40 billion and below, or other public works whose cost is estimated at Shs10 billion and below will be reserved for locals.

In case foreign firms are awarded a contract worth Shs45 billion and below, they must reserve at least 30% of the value through subcontracting to local providers.

The reservation scheme targets deals in the transport, water and environment, local government, health, and defense ministries.  It also covers Uganda National Roads Authority and Kampala Capital City Authority.

While announcing the guidelines on March 23, the Minister of Finance, Planning and Economic Development, Matia Kasaija, repeated the government position that locally manufactured products need to be supported, together with knowledge transfer, and human capital development. The move is also aimed at facilitating the achievement of targets in the five-year National Development Plan II (2015/16 – 2019/2020).

Buy local campaigns elsewhere

The BUBU promoters cite similar campaigns across the East African region.

Kenya has ‘Buy Kenya, Build Kenya’ while Tanzania and Rwanda have ‘Be Proud, Buy Tanzanian’ and ‘Made in Rwanda’ respectively.

The Kenya plan, unlike Uganda, has a strong focus on incentives for firms in its Export Processing Zones. The firms, which are exempt from paying Value Added Tax, are required to sell 20% of their high quality export products to the local market at affordable prices.

Kenya’s Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed says the move is one way of reducing the amount second-hand products; especially clothes, on the local market.

The Kenya government failed to implement a policy to buy local products although its PPDA law stipulates that 40% of purchases by government agencies comprise of goods made in Kenya. Gaps in the law were exploited to frustrate the government.

Tanzania meanwhile aims to boost consumption of locally produced products through enhanced standards, quality and packaging.

The Tanzanian parliament last year amended the Public Procurement law making it mandatory for local firms and experts to be included in non-emergency procurements involving goods, works, and non-consultancy services.

Foreign firms bidding for any non-emergency assignment are required to include local experts and firms in their teams.

Up to 15% of government purchased goods and services in Tanzania must be locally produced. Rwanda also plans to review its procurement laws to give preference to the local products.

Elsewhere, the USA, Australia, and South African have had ‘buy local’ campaigns that requires the government to prioritise locally made products in its procurement.

However, the policies do not ban procurement of foreign goods but only establishes a preference for local products in contracts above specified thresholds.

Australia has a law requiring government agencies to design requests for quotation or tender to reflect local business capability and to recognise “local content” in bid evaluations.

To achieve this, all requests for tender with an estimated contract price of $750,000 and above must include a “local content” evaluation criterion.

South Africa, which has been carrying out ‘Buy Back SA’ campaigns since early 2000’s requires that at least 50%of the cost of production must be incurred in South Africa and there must be “substantial transformation” of any imported materials.

Ssebagala Kigozi, the immediate past executive Director at the Uganda Manufacturers Association told The Independent that it is time Ugandan products are given preference over imported ones to test their capability in terms of quality and quantity.

“Providing us with ready market for our locally produced products will give us an opportunity to produce more for our local markets and even exports,” he said.

Data from BoU shows that the value of Uganda’s export has doubled over the past decade, rising from US$1.19 billion in 2006 to US$2.94 billion in 2016, with half of the export destined to the East African Community.

However, value of imports has risen at an even greater rate from US$2.63 billion to US$5.1 billion over the same period due to high demand for especially machines and industrial raw materials.

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editor@independent.co.ug