8 February 2013

Uganda: PSFU Wants Law to Support Business

In a bid to build the capacity of local suppliers, the Private Sector Foundation Uganda (PSFU) has urged the Government to enact a law granting 15% local preference for any public procurement.

For instance, should the Government carry out construction of a new building, 15% of all products used like cement, should be from a local manufacturer.

Gideon Badagawa, the PSFU executive director also asked the Government to implement the trade and industrial policies, enacted in 2008, to promote locally produced commodities. The policies were enacted in the wake of a Buy Ugandan, Build Uganda campaign launched in 2007.

"Kenya and Tanzania have a 15% preference for local suppliers over international suppliers in any (public)

procurement. Why can't Uganda have it?" Badagawa asked. He noted that Ugandans are biased towards locally manufactured products claiming they are of inferior quality, a sentiment he dismissed.

"This is the mind-set we want to change. Why should we import commodities we can manufacture locally? It is by supporting local producers that we will build their capacity, employ more Ugandans and raise government revenues through taxes. Badagawa noted that due to the preference for foreign manufactured products, Uganda is experiencing a balance of trade deficit and which partly justifi es the appreciating dollar value over the Ugandan shilling.

According to Bank of Uganda estimates for the year ending 2012, Uganda spent $4.7b on imports and only realised $2.6b from exports. "We want to assure Ugandans that local products meet their minimum standard expectations," Badagawa says.

The failure to empower local producers, according to Badagawa, was the reason Uganda failed to optimally exploit the vast international markets under the quarter-free Everything But Arms (EBA) and the African Growth Opportunities Act (AGOA) that were precursors for accessing Europe and US markets.

AGOA is a US trade act that enhanced access to the American markets to 40 Sub-Saharan African countries covering an eight year period from 2000 to 2008, but was extended to 2015 while EBA was an initiative of the European Union under which all imports to the EU from developing countries was duty free.

"If you can't sell your product in local supermarkets, how will you sell it abroad? Even if we open up and expand into regional and international markets, the local producers can't take advantage unless their products are locally appreciated," he said

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