Uganda: Museveni This Way, Kadaga That Way - the Local Content Tango

Uganda's Parliament and the Executive could be headed for another clash, one of the serious skirmishes they have had in the last decade since the country's 'iron lady', Speaker Rebecca Kadaga, took over the reins of the legislature.

But this time the clash is taking an unconventional format. It is a cold war fought through proxies, and so generally unexciting to the general public that neither of the two parties to the conflict will lose as much sleep as they did over the previous confrontations they have had. But Uganda will bleed from it.

The low-key clash is over the National Local Content Bill 2019, which seeks to promote the use of local expertise, financing and goods and services in projects that involve public funds.

Local content demands have intensified in recent years with the birth of the country's petroleum industry which seeing some $20 billion of investment being made, and local investors fear that all of it will end up in foreign countries with only a few coins staying in Uganda. So they want a stipulated percentage of the action to be executed by local companies, hence the Local Content Bill.

Parliament had approved the Bill in May 2020 and sent it to President Yoweri Museveni for assent for it to become law. However, Museveni bounced the Bill back, asking parliament to reconsider a requirement for projects funded through loans to comply with local content obligations.

Museveni argued that this isn't practical since each development partner has policies and guidance that are negotiated before any project starts. He also faulted the Bill for seeking to take over the role of the Solicitor General by introducing new auditing procedures, and contradicting the East African Community Protocol on the free movement of goods and also the Public Procurement and Disposal of Public Assets Act, which provides for international competitive bidding without discrimination.

The Partners Development Group (PDG) comprising envoys of the big lenders, apparently happy with the President's objections, last week boldly cautioned Kadaga over the Bill. But she stood her ground, and reminded them that those who have to shoulder the burden of repaying the development loans -- the Ugandans -- should be accorded some voice in negotiating the terms of the loans.

She went ahead to tell the envoys -- in case they didn't know -- of the ridiculous execution of some of the loan-funded projects that sees even eggs to be eaten by the project workers' for breakfast have to be flown in from abroad.

Kadaga firmly informed the PDG envoys that many project inputs can be sourced locally. But the donors also diplomatically insisted that any law that seeks to limit the investors would limit them and their participation.

So incensed with the development were some of the MPs that promoter of the Bill Patrick Oshabe Nsamba said that it is the Mafia which is misguiding the President on the Bill for their selfish interests.

The insistence on local content by the locals has been gathering momentum since last month's endorsement of the Final Investment Decision for the exploitation of the oil fields, between the Uganda government and the French petroleum giant, Total. Billions of dollars are set to be released anytime but a top official of the local operators in the sector, top lawyer and former legislator Elly Karuhanga, openly cautioned Ugandans to prepare and receive "hundreds of Phillipinos and Indians" who will come to do simple welding jobs.

Local investors argue that by stipulating a (minor) percentage for local inputs, the capacity to produce and manufacture will grow, which will not only fight unemployment but will also promote import substitution thereby reducing on the amount of foreign exchange.

But do you see President Museveni bowing to Parliament's pressure and assenting to the Bill? Or do you see Kadaga capitulating and find ways of getting the MPs to amend the Bill against what they believe in?

Neither of the two is about to happen. And there isn't much public noise about the Bill as people get intoxicated with campaigns for the general elections due in three to four months' time. So the President and the Speaker might continue fighting, without many cheerleaders in the public. But two things are certain.

One, that Uganda is sitting on vast mineral deposits which can transform the country positively if exploited with the interests of the nation especially the youth in mind. This means value addition and harnessing the labour of the youth. And secondly, that in cases where the government has dared invest in local innovations by young Ugandans, amazing outcomes have been realised. But so far, exploitation and export of the country's mineral resources hasn't shown all that significant growth in local industrial growth.

May we pray that it doesn't leave the country worse off, the way oil did to some African countries that we know!

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