Skip to main content

LET US GIVE SMEs A CHANCE



Something is wrong when most of Ugandan business is shut out of the government procurement process.

This is happening in Uganda today.

Micro-, Small & Medium Enterprises (MSMEs) account for 90 percent of the private sector. These account for 65 percent of national output (GDP).

On the other hand 75 percent of our now sh32trillion national budget is earmarked for public procurement but the MSMEs’ share of this action is only 15 percent.

It does not take a rocket scientist to see that such numbers are behind the huge inequalities in our society and why the majority of us do not have hope of a better and brighter future.

Thankfully this is not an insurmountable problem.

If MSMEs had access to more opportunities accruing from the national budget the benefits to themselves and to the nation as a whole would be huge.

These would include increased production which would lead to job creation, raise incomes at household levels, leading to reduced income inequalities. On a macro level this increased involvement would lead to stabilisation in inflation, interest rates and even the shilling as well as raise much needed revenue for government to improve our debt management and balance of payments situation.

Our MSMEs are not fully engaged in the public procurement processes through a combination of internal weaknesses and bureaucratic impediments.

Through our own surveys at The Private Sector Foundation of Uganda (PSFU) we have narrowed the issues to the following; the biding process for public procurements is complicated, time consuming and costly, political interference and corruption at local government level, insufficient capacity among our local contractors in the construction industry, similarly a general inadequacy in skills and entrepreneurship and last but not least, delayed payments for work done by government agencies.

Recognising that MSMEs minimal participation is partly due to their own deficiencies PSFU is working on ways to  organise and train MSMEs in various sectors, create a Special Purpose Vehicle with MSMEs and other players – Banks, ICT companies for example which can be used to partner with foreign companies to bid for work. This can also be done with public entities under a Public Private Partnership arrangement.

And to lay the ground for the above we are exploring opportunities that can be ring fenced for our companies, mapping MSMES in by location and sector and doing a baseline survey of the opportunities available in the public procurement space.

That being said government needs to meet us halfway in promoting local participation.
The existing legal framework supports the promotion of local content.

Already government is pushing the Buy Uganda, Build Uganda (BUBU) initiative, some contracts have been ringfenced for nationals at the local government level, the Public Procurement and Disposal of Assets (PPDA) Act 2013 has already been amended to allow for MSMEs participation, local content law for Oil & Gas has been implemented and active steps to ensure this happens such as the set of a database of MSMEs to supply the industry is in place.

All that being said we at PSFU think more can be done.

For starters we think public procurement guidelines should not be only employed to curb corruption and increase transparency, but to spur the economy through increased participation of MSMEs. In Addition we think the framing of an “SME procurement agenda” to help address policy constraints, work on capacity deficiencies and address business development support issues would be timely.

We also urge greater transparency and simplification of the national procurement system. PSFU would also like to see the set up, “Tender help desk” to guide suppliers in preparing and submitting responsive bids. To cap it all we would like to see a Local Content Law enacted which has specific provisions for sub-contracting, that helps to build local capacity.

These are broad brush strokes of what we are thinking, but the underlying principle, to shift more of the national budget towards our local businessmen cannot be overemphasised.

Efforts in this direction can only provide a win-win situations for us all, especially in these times when the economy is not at its best and regardless of this the needs of the people continue to grow.

(JUNE 2018)

Labels:

Comments

Post a Comment

Popular posts from this blog

SPORTS AS AN ANALOGY FOR BUSINESS

Like everybody else I know, my spirit was lifted by the success of our athletes at the World Athletics Championships last week. The diminutive Halima Nakaayi showed the heart of a lion, sprinting over the last 100m of the women’s 800m event to snatch victory from a more favoured American runner. It was so uplifting to watch. Subsequent stories about the challenges she has had to overcome to get where she is now were testament to the determination of the woman. Joshua Cheptegei’s victory, while no less inspiring, had a different quality to it. Cheptegei was the man to watch going into the event. He won previously at the Commonwealth Games last year and the in the just concluded Golden League. He was a silver medalist in the 10,000m at the last World Championships in London, pipped to the tape by the now retired Mo Farah. Cheptgei still had to battle the Kenyans and the Ethiopians all the way. But as a favourite he lived up to expectations, which sometimes is more diffic...
Post a Comment
Read more

WELCOME TO UGANDA AFREXIM BANK

Last week Afrexim Bank opened its regional offices here in Kampala in an event that I think should have had much more play in the media. The Afrexim Bank has as its stated mission the desire to stimulate trade, primarily within the continent but also improve Africa’s trade with the rest of the world. Worthy goals and we should sit up and take notice. The bank’s coming to Uganda is not by chance. A lot of work was done and supported by President Yoweri Museveni to win it away from neighbouring Kenya. The Ugandan businessman is bound to benefit from the proximity to the bank if we get organized. "Of course the bank will be dealing with big deals, but one can hope their expertise in trade financing and the other products they bring to the table, can trickle down through the financial sector and improve our dealings.... But just to give a perspective of what our businessmen suffer because of the gaps in trade facilitation in our economy. Say I want to import...
Post a Comment
Read more

BEWARE OF THE CON MAN

I read with a mixture of horror and sympathy for the victims of the latest Ponzi scheme gone bad in town. Last week a company, Global Cryptocurrencies Ltd, collapsed and along with it went billions of shillings, by police estimates, of their clients’ money. The company working out of an obscure office on Namirembe road, managed to rope in all manner of clients with the promise of magical returns – 40% a week! I have been in business for most of my life, if I could be guaranteed 40% week I would sell everything I own and jump in with both feet. Or maybe not. And this is why. They say if anything is too good to be true, it is. If you can get an annual return of 40% on your investment you will be doing extremely well. So if you put in a million shillings in your business and walk away at the end of the year with sh400,000 after taxes you have found a good thing, and I would like to be your friend. I have seen my share of scam artists and con men. Below are my fast an...
Post a Comment
Read more

CONGRATULATIONS ON YOUR GRADUATION, ITS NOW TIME TO WORK….

Thousands of students will be graduating from their respective universities in coming days and months. Makerere, our country’s oldest university will kick off its ceremonies on January 15th and the other universities will follow. The graduates have already had a taste of the real life, having finished their studies mid last year and tried to get employed. Many know by now that the world can be harsh and unforgiving. I hope many are tightening their belts in readiness for the struggle ahead. Some may have decided to kick the tin down the road by continuing with school. And others may have given up altogether. My prayer is that there are more of the first and less of the last kind. In talking to young people, I find that what is needed is a reorientation of their minds – a mindset change. Let me share with you certain facts to help manage their expectations of the world and how they can fulfil their potential in our context. First of all, the world owes you ...
Post a Comment
Read more

NOT ONLY THE HARDWARE BUT THE SOFTWARE TOO

In the middle of September the United Nations released its annual Human Development Indicator (HDI). This index serves as an indicator of the quality of life of a country’s people by measuring the health, education, inequality, poverty and security standards. Aside from the statistical measures of development like GDP growth, this is obviously a better measure of how people are actually doing. In this year’s HDI report Uganda was ranked 162 out of 189 countries with a HDI score of 0.516. The index goes from zero to one, the nearer you are to one the better. Our score puts us in the low human development category. But as bad as that sounds we have been worse. In 1990, the earliest year that these figures were compiled our score was 0.311 even the UN recognises that we have improved 66 percent in the last three decades. According to the UN figures life expectancy has risen to 60.2 years   from 45.5 in 1990; expected years of schooling has doubled to 11.6 fr...
Post a Comment
Read more

LOCAL CONTENT IS NOT A DONE DEAL, WE NEED TO DO MORE

This year’s “Oil & Gas Convention & Regional Logistics Expo2017” has just concluded after three days of discussion, exploration and soul searching. First oil in Uganda is expected by 2020 and this Expo among other efforts are targeted at getting our local businessmen ready to take advantage of this historical development. At the risk of sounding like a broken record, the discovery and eventual exploitation of our oil resource is one of those once in a generation events, that can transform this nation, not only on a macro level but also in our individual lives. For starters at least $20b will be spent over the next three years in infrastructure development and other things that will ensure we are ready to pipe and refine our oil. During the exploration phase about $3b was spent by the international oil companies, with on three in every ten dollars being retained here. That was an exploration phase and one hopes that we have learnt enough from that period to ...
Post a Comment
Read more

WELL DONE UGANDA REVENUE AUTHORITY BUT …

Over the weekend President Yoweri Museveni commissioned the new head office of the Uganda Revenue Authority, an imposing structure that is set to dominate the Nakawa skyline for some time to come. Congratulations are in order to URA for the construction of such an aesthetically appealing building, which I hope wills set the pace for other developments not only in the area but in Kampala and even Uganda as a whole. I know the pride that comes with having completed such a massive build for the initiators and implementors. The new 22-story structure has allowed the tax man to fold back all his offices from around the city back to the head office, a move they estimate will save them sh7b annually. Using simple math the sh140b will pay for itself in 20 years. The move is seen as precursor to a government move to build a ministerial compound in Bwebajja, where all ministries will be relocated sometime in the future. I have seen comments that such actions are evidence that...
Post a Comment
Read more