By John V Sserwaniko
Matia Kasaijja’s Finance Ministry has been accused of politically frustrating efforts by MPs to legislate a law on local content that seeks to economically empower local business entrepreneurs and contractors trying to cash in on big government contracts. However, when we rang him last evening Kasaijja was very defensive. “I’m not the one. It’s not me. I’m not aware of myself sabotaging those MPs.
In fact I’m hearing about those efforts for the first time but the best person for you to call is the PSST [Keith Muhakanizi] because it’s him and not myself concerned with those things of certificate of financial implications,” said Kasaijja who had just returned from the weekly cabinet meeting. Efforts to speak to equally outspoken Muhakanizi didn’t yield as he never answered our phone calls. Kasanda North MP Patrick Nsamba Ochabe, who last week appeared on CBS and accused President Museveni for refusing to retire, is the one who tabled a private member’s bill on this. He says the financed ministry is being lukewarm not because they are against the law but because they are politically being used to undermine him because of the way he voted on the Magyezi bill last December. “It’s unfortunate that even when I’m NRM and selflessly doing this for the good of the country, people at the finance ministry have been used to politicize the whole thing. We started on this almost a year ago but they have refused to issue the certificate of financial implications to cripple me. They consider me a bad person because I voted against the Magyezi Bill and they are fearing that this Bill will increase the popularity of our group the liberal-minded MPs in the NRM caucus,” MP Nsamba told this news website in an interview. “But we aren’t demoralized. There is a lot in our favor because the Clerk to Parliament, who is supposed to be the contact person for them to deliver the certificate, now says we can proceed even without that certificate. The law allows us to proceed after the mandatory period of 90 days following their refusal to issue the certificate. It then becomes incumbent on Parliament to proceed with the bill and that’s is what is going to happen.” The certificate was first applied for in July this year, making it now three months of inaction. Nsamba said he was optimistic that Speaker Kadaga, herself a strong supporter of local content, will this week Thursday allow the bill to come up for first reading. Should things go according to plan, the matter will be referred to Henry Musasizi’s Finance Committee to conduct public hearings to get public views. From the committee it returns for plenary discussion during which members make improvements whereafter it proceeds to 3rd reading and then sent to the President for his assent. Given its popularity, the bill will become law even if the big man doesn’t assent to it, Nsamba says. Nsamba, who initially faced hostility from mostly Minister Micheal Werikhe, is optimistic that his bill will be widely supported in a bi-partisan way because no politician can risk contradicting something that seeks to increase economic opportunities for local Ugandans especially at this time of unprecedented public anger towards government. There are also fears that a group, led by Minister Haruna Kasolo, might resist the bill just to appease the President who is understood to remain unwilling to forgive the 27 MPs who voted against Magyezi bill last December.
HAJJI MBABALI BEHIND IT;
Nsamba is one of them. But he is working with Bukoto South MP Muyanja Mbabali, a Museveni diehard supporter who fanatically supports this bill because it seeks to economically empower Ugandan entrepreneurs. The other is Soroti Municipality MP Herbert Ariho who is a liberal FDC member. Musasizi’s track record of not moving very fast is another thing Nsamba must worry about. The commonly given example is that of the Mobile Money tax law that his committee has been processing in the manner directed by the President to ensure Ugandans are charged 0.5% tax on mobile money transactions as opposed to 1% that customers have continued to painfully pay because of the Finance Committee delaying to report back to the house. Outspoken Nsamba is the first avid Museveni critic that part of the country (Mubende) has produced since 1986. He is fearless, youthful and eloquent; something that unsettles NRM caucus leadership. His outspokenness has inspired many more anti-Museveni voices in the newly created Kasanda district where Bobi Wine’s People Power are prepared to gamble by fielding their own candidate for the woman MP Seat. Indeed Nsamba is among the few NRM MPs who have openly declared support for People Power.
WHAT’S LOCAL CONTENT?
In the weekend interview with this news website, Nsamba explained what his local content bill is all about. He says it’s the comprehensive solution to the ever diminishing business opportunities for our local entrepreneurs when it comes to cashing on the big government procurement deals. His bill seeks to provide a legal framework to tame Chinese firms that have been monopolizing many of the juicy deals in especially roads sector and big energy projects where a significant fraction of our budget is spent. Nsamba says it’s for the absence of such a protective law that many of our local tycoons are collapsing under the weight of bank loans which they contract and subsequently fail to qualify for any contracts in government where the big monies reside. The Local Content Bill will compel government MDAs to give a legally defined percentage or fraction of lucrative contracts to local contractors and firms. The idea is that for every contract a big agency like UNRA gives out, steps must be taken to ensure Ugandan firms participate either as sub-contractors or specific raw material suppliers. It will strengthen the PPDA guidelines already in place to ensure a significant fraction is reserved for local contractors. “In the last 5 years, the GoU has spent over Shs15,970bn [Shs15trn] in road infrastructure projects but all this money has been monopolized by foreign firms. Ugandans haven’t supplied goods or services worth even 1% and to me this is the reason all our local firms are collapsing. They have been denied participation. We have exposed them to international competition without any deliberate effort to help them build capacity to face that competition. This local content legislation is in force elsewhere and it’s the only way the local firms can grow and survive competition,” says Nsamba who before becoming MP worked as development consultant in Kampala. He did this for 10 years before 2016. “I know these things first hand because I know how the likes of Zzimwe, Sembule, Wavamunno, Mukalazi and others collapsed. The time is now and this local content bill is the solution to those frequent media stories about tycoons collapsing.” Nsamba is sponsoring a private member’s Bill to have MPs legislate a law that will make it mandatory for MDAs to observe local content provisions on every lucrative job they give out to foreign firms. The Bill also seeks to preserve “small contracts” exclusively for local firms. “We could for instance say any construction job in the works sector below Shs15bn is prohibited for foreign firms. That is how our local firms will also access opportunities to do these jobs and build their capacity. It’s also about job creation. It’s true the President has previously given directives on local content but without enabling law, nothing can be achieved. How do you prevent a Chinese firm from giving all the management jobs to Chinese nationals if you don’t have an enabling law to punish noncompliance? How do you compel them to use locally-produced raw materials and casual laborers if you don’t have a relevant law?” rhetorically argued one of the MPs closely working with Nsamba to get the Local Content Bill through. The process began sometime last year when Deputy Speaker Jacob Oulanyah allowed Nsamba to move a motion seeking MPs’ no objection to proceed with his Bill. In an unprecedented move, MPs unanimously agreed this legislation was long overdue. That day Premier Rugunda was in the House with many Cabinet Ministers and none of them objected to Nsamba’s well-articulated proposal apart from Werikhe. Nobody had guts to raise objections on grounds of financial implications. “That Bill will relieve all of us. The President has always directed us on local content but honestly we become frustrated in absence of enabling laws. During negotiations nobody listens or takes what you are saying,” said a Minister on condition of anonymity. That time last year MPs across the political divide saw this law as necessary and unanimously endorsed Nsamba’s justifications for it. That stage, ideally, is when MPs raise all manner of objections including pointing out duplication in case any of the already existing laws can serve the same purpose. There was none of that day as Nsamba made his submission.
KICKBACK EATERS;
This Parliamentary unanimity doesn’t mean there are no actors hostile to Nsamba’s proposed Bill. There are those who have been earning big on kickbacks from foreign firms taking a lion’s share. These act like commission agents connecting foreign firms to technocrats in Finance Ministry where some of these contracts or agreements are negotiated and supervised from. These could potentially gang up and fund Nsamba’s political downfall in 2021 by funding his opponents. “I know the consequences because when this legislation succeeds, commission agents are going to lose billions in kickbacks and they won’t just sit back without a fight. But that is immaterial. What is critical is to redeem our economy as a country. I can lose my MP Seat but this law will help the whole country and my constituents will be better off in future. If it means paying the price by losing my seat so be it,” says Nsamba. Mbabali’s involvement and that of Ariko (FDC) shows the bi-partisan support the Bill enjoys. Nsamba says he has widely consulted and is confident his bill has massive support within and outside Parliament. He says, because the bill sponsors have in mind the over $20bn to be spent on petroleum pipeline and refinery infrastructure in the next 4 years, the proposed local content bill must be expedited for Ugandan firms to cash in. Nsamba has also benchmarked on countries where similar interventions have previously succeeded. He refers to Kenya whose 2016 local content legislation imposes penalties on MDAs that fail to ensure 40% of the work on every major contract they award is done by local firms. The law requires 40% of every contract to reflect local content by way of procurement, labor requirements, raw material inputs and consultancy services etc. In Ethiopia, the local content legal provisions have ring-fenced some sectors for local firms 100% and it’s prohibited for foreign firms to do even 1% of the work in sectors like roads, power generation and banking services. “Ethiopian engineers design and build all the roads and dam infrastructure and they have produced better work than international contractors would,” Nsamba explained to Parliament last year in his justification statement. He says Nigeria, Angola and Ghana have done equally well. He says that where local firms lack capacity to do a good job, government is to blame because it never pays them on time in rare cases when they are contracted at all. He wonders why foreign firms are always paid on time and not local ones. He asserts that the recapitalization of UDB and Uganda Development Corporation will be strengthened once his bill becomes law. He also indicts his own NRM government for not making use of Kyankwanzi retreats to deepen patriotism amongst Ugandan entrepreneurs so that they are ideologically oriented not to do shoddy work. “Each time there is a retreat, it’s the political class we take there and never the business people,” he argues. Nsamba also refers to the PPDA Act in existence since 2003. Section 50(1) of this Act prioritizes Ugandan construction and consultancy firms in all procurement deals but the practice has been zero. Eng Ziria Tebalwa’s Electricity Regulatory Authority (ERA) has often been given as the most notorious government entity when it comes to locking out local consultancies whenever there are lucrative consulting deals to be awarded. “MDAs and concerned firms are supposed to be penalized for non-compliance but nothing has been done,” Nsamba says in a bid to justify the essentiality of his local content bill. For feedback, reach us on 0703164755.
