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Local content legislation to boost local entrepreneurs

Isimba Hydropower Dam on R. Nile in Kayunga District constructed by Chinese contractor. The government now wants big public infrastructure projects of similar nature to allocate 40% of sub-contractors work to local companies. COURTESY PHOTO

 The law seeks to allocate at least 40% of sub-contracts in public procurement to local companies

Kampala, Uganda | ISAAC KHISA | For quite a while, Uganda’s entrepreneurs have been lagging behind owing to the stiff competition from big foreign firms.

But this could soon come to an end following parliament’s step to pass the Local Content Bill, 2019, on May.22, seeking to allocate at least 40% of sub-contracts in public procurement to local companies.

The Bill, which now waits President Yoweri Museveni’s nod to become law, also requires contracted companies to hire 60% of the locals for the skilled labour and 100% locals for unskilled labour in a bid to create jobs to the local population.

It also limits companies from employing foreigner save for skills that locally, and that that in the event that a firm hires an expatriate for a top job, then, he or she should be deputised with a Ugandan.

The law also proposes that local firms given priority to supply goods and services to government or otherwise provide prove that a local entity did not have the quality, quantity and timely delivery.

“In order to procure another entity other than a Ugandan one to supply goods, the procuring entity must write to the department responsible for local content and seek permission to be exempt,” the Bill reads in part, adding that an entity or individual that fails to adhere to the local content provisions will face a jail term of up to three years, face a fine of Shs 6million, blacklisted or suspended for failing to comply with directives of the local content department.

Parliament Speaker, Rebecca Alitwala Kadaga, said she was happy that Parliament passed the Bill that prioritises local companies and Ugandan citizens during procurement.

“The COVID-19 pandemic has shown that we have the capacity to grow import substitution by local innovations and adaptations. I urge our entrepreneurs to up their game and ensure we produce goods and services of the highest quality,” he said, in reference to recently certified more than 17 companies to produce sanitisers to curb coronavirus pandemic.

This development comes in response to the private sector’s concerns that the local companies were missing out on big public projects, and that they were also likely to miss out in the country’s planned oil and gas developments, limiting their growth.

Uganda and its partners Total E&P Uganda and China National Offshore Oil Corporation (CNOOC) – plan to make their Final Investment Decision reached soon, unlocking more than $20bn investment in the oil and gas industry.

Uganda discovered oil deposits estimated to be 1bn recoverable barrels in 2006 but have repeatedly stumbled over disagreements between the government and oil companies.

Gideon Badagawa, executive director at the Private Sector Foundation Uganda told The Independent in an interview that they are pleased with the passing the Local Content Bill, 2019, in parliament.

“We are happy to the Speaker (Kadaga) and MPs for passing this Bill,” he said, “We have been advocating for this kind of law for some time owed to the fact that Buy Uganda Build Uganda Policy alone has not been very effective.”

The Local Content Bill, 2019, was tabled by Kassanda North MP, Patrick Nsamba and seconded by his Bukoto South counterpart Muyanja Mbabaali.

However, in February last year, it hit a snag after the Committee on Legal and Parliamentary Affairs that was scrutinizing it declined to continue processing it following concerns that certain sections of the Bill contravened the East African Community protocols.

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One comment

  1. Big up to the govt

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