Firms want to cut into huge value of contracts which go to foreign firms
Kampala, Uganda | ISAAC KHISA | Ugandan local firms have been losing out to international players in clinching big deals in the local market but this could soon be reversed if a new business model that rides on partnerships and joint ventures succeeds.
Abubaker Technical Service and General Supplies (ATSGSL), Nicontra Ltd, Precise Engineering Services and ContinuumEngineering Ltd, among others, have entered into a partnership with their Ethiopian counterparts – Ethiopian Construction Works Corporation, Rama Construction PLC, Orchid Business Group PLC and Saba Engineering PLC and others – to jointly bid for large infrastructural projects in Uganda as well as eastern DR Congo and South Sudan.
Juma Kalema Kutakulimuuki, the managing director at ATSGSL revealed during a business meeting of engineering firms from the two countries in Kampala on Nov. 11 that the local firms are seeking for partners that will enable them win contracts of more than US$5million. Kalema said his firm can at the moment handle contracts of up to US$ 10 million.
“(But) we also want our government to pay attention to helping local construction firms grow the same way the Ethiopian government did to their local firms; in terms of awarding most of the construction works to the local firms to enable them grow.”
The meeting held under the theme ‘A spectrum of opportunities in fastening infrastructure development,’ was organized by ATSGSL in collaboration with the Ethiopian Embassy in Kampala.
Kalema said ATSGSL has successfully operated in Kampala and other regions in Uganda for the past 15 years, constructing more than 80km of tarmac roads and 300 km of gravel roads. He said the firm has also installed over 800 street lights in Kampala City and in the cities of Mbarara, Hoima and Fort Portal.
ATSGSL has over the years recorded steady growth in the value of contracts executed from merely Shs 210 million in 2005 to Shs44.8bn in 2017. Currently, the value of the company’s ongoing contracts is valued at Shs70bn.
Kalema said just like ATSGSL, other local construction firms have performed very well in executing numerous infrastructural developments over the past decades but have not been able to clinch large deals as a result of various factors including limited capital and skills development.
The announcement of the partnership comes at the time Uganda’s business community is eagerly awaiting the final investment decision (FID) ahead of oil and gas production in the next three-four years. It is estimated that approximately US$ 10 billion- $20 billion will be invested in production facilities, crude oil pipeline, refinery and associated services.
Uganda’s expenditure on infrastructural projects which includes among others roads, airports and electricity has been staggering between 15% and 20% of the national budget over the past five years. This is in addition to funding from development partners such as the World Bank, African Development Bank, Islamic Development Bank and the European Union.