MP NSAMBA SHARES SHOCKING FIGURES WHY LOCAL CONTENT LAW IS LONG OVER DUE
By John V Sserwaniko
As an update to our previous story (titled NEW BATTLE LINES DRAWN AS MUBENDE MP WHO BASHED M7 PREPARES TO TABLE BILL TO MAKE UGANDANS RICH), local content private member’s bill main sponsor Patrick Ochabe Nsamba has given shocking statistics and figures to reinforce his argument that indeed the legislation of this law is long overdue. We have also separately perused Parliamentary records to highlight some of the well-accepted justifications Nsamba gave last year when Deputy Speaker Jacob Oulanyah first allowed him to move his motion seeking permission to sponsor a private members bill.
In the latest interview, besides sharing shocking statistics, Nsamba challenges fellow MPs to stop lamenting and use their power to make the necessary legislation to supplement on the President’s relentless efforts calling for local content. “We are the people who pass the budget and approve loans. This is the leverage we must use to insist on local firms’ participation in each and every contract and rescue our economy from the impending collapse,” he says. Nsamba’s figures expose the Chinese firms as taking a lion’s share of the projects. He reflects on the transport sector alone showing that in the last five years (2012-2017), the roads sector spent over Shs15,970bn! Of this, Shs12,324bn was from loans and Shs3,646bn was internally generated/raised by the GoU. On the loan money (Shs12,324bn), the Chinese firms took contracts worth Shs11,175bn (or 91%); followed by Israel firms (Shs444bn or 4%), Asian/Japanese/South Korean firms (Shs447bn or 4%) and Portuguese firms (Shs258bn or 2%). Ugandan firms shared zero! On the Shs3,646bn GoU locally generated (not loans, not grants), the Chinese firms still dominated chewing Shs2,193bn (or 60%). Next were Indian firms which took Shs491bn (13%), Israel firms’ Shs477bn (13%), Turkish firms’ Shs360bn (10%) and Serbian firms’ Shs123bn (3%). Nsamba and other MPs are furious that even on projects which are 100% funded by the GoU, our firms are getting zero (0%) and can’t be permitted to participate at all. He notes that the Chinese firms, taking a lion’s share, have in the last 5 years relied 100% on Chinese managers for top management positions. They have also relied 76% on Chinese engineers for all engineering posts and Ugandans only serve as casual laborers and machine operators attracting poorest remuneration. “Tell me why won’t Ugandan firms and their proprietors be collapsing every day?” Nsamba rhetorically wonders. Referring to the above shocking statics, Nsamba told MPs last year: “If this trend is not regulated, I fear for the worst where the linkages will continue to accrue to Chinese firms.” He argues that his bill seeks to provide for “affirmative action” to enable local firms participate in these multi-trillion projects. “This is good for our Balance of Payment [BOP] position whereby we reduce the importation hemorrhage and volatility in our foreign exchange regime which the President has been complaining about,” argues Nsamba who says private sector is where he will return the day he will cease being MP. He reflects on his figures above arguing: “there is no way our shilling won’t keep weakening against the dollar if the Chinese firms are taking out so much money paid to them by our very government.” He commends the 9th Parliament for putting local content provisions in the petroleum laws enacted in 2013 resulting into increased local firms’ participation in oil sector contracts. However, he says, there are gaps and what was done is clearly inadequate. “That [petroleum] law didn’t clarify the definition of local content, didn’t mention penalties for non-compliance and besides, Petroleum is just one sector. We need to legislate imposing local content obligations for all the other sectors of the economy,” he says faulting GoU “for donating dollars by engaging only foreign firms in all procurements.” He says even as recent as last FY 2016/17, Chinese firms continued having a lion’s share: galvanizing 84% of all major contracts leaving Israel, Turkish, Portuguese, Serbian and Indian firms to share the remaining 16%! Ugandan firms still have got zero contracts! “It’s really very disturbing because the situation is the same even in cases where a project is 100% funded by GoU money,” Nsamba noted in an interview with this news website. He says absence of enabling law is the reason even efforts like the “Buy Uganda, Build Uganda” policy haven’t yielded the desired results because we have no mechanism to punish noncompliance. Even where a project is 100% funded by a Chinese loan, Nsamba says a National Local Content Committee should be created under the proposed law to ensure local content obligations are integrated during loan negotiations. “100% funding shouldn’t be a condition used by the Chinese actors to totally eliminate local firms’ participation in constructing these mega development projects because the Ugandan tax payer still has to repay the loan.” The soft spoken MP also proposes that production of the “local content compliance certificate” could be used as basis for an investor or foreign construction firm to qualify for tax and fiscal incentives. He proposes establishment of an authority to regulate and oversee local content-related matters. If all goes well, he says the local content law should be in force before this year ends. He maintains it’s long overdue. Excitement for his bill manifests even outside Parliament if the views expressed by former Senior Minister Daudi Migereko are anything to go by. “That is a step in the right direction because mainstreaming local content is the solution to all our contemporary economic problems. It’s the only sure way we can build capacity for our local investors and they are entitled to that support from Parliament through the legislation Hon Nsamba is proposing. In fact that law is long overdue,” said Migereko who during his cabinet days colleagues had christened “Mr. Local Content.” For feedback, reach us on 0703164755.