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)
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