The inaugural East African Small and Medium Enterprises oil and gas conference last week in Kampala ended with local enterprises upbeat about opportunities in Uganda’s emerging $20b petroleum economy.

Organised by the Stanbic Business Incubator Limited, under the theme; Exploring Opportunities for SMEs in the Oil and Gas Sector, the conference brought together small and medium enterprises (SMEs) from across the region and deliberated on how local enterprises can circumvent barriers to effectively provide local content in Uganda’s oil and gas emerging economy.

The Petroleum Authority of Uganda (PAU), Uganda National Oil Company, Uganda Investment Authority (UIA) and China National Offshore Oil Corporation (CNOOC) supported the conference. They urged SMEs to play their part if they were to drive the local content agenda in the oil and gas economy.

Speaking during the conference, Eng. Irene Pauline Batebe, the permanent secretary in the energy ministry, said the Government has done everything to ensure that local enterprises get a fair share of the oil and gas economy.

“We have ring-fenced at least 16 sectors for local enterprises; this is aimed at ensuring that Ugandans can meaningfully benefit from the oil and gas economy.

This conference was timely as it helps bridge the knowledge gap to ensure that SMEs are aware of the opportunities that exist for them and what is required of them in terms of registration and compliance,” Eng. Batebe said.

CAPACITY TO COMPETE

Building the capacity of local enterprises to enhance their competitiveness was highlighted as one of the most important areas of focus for the Government and stakeholders in the private sector.

“Right from our inception as a subsidiary of Stanbic Uganda Holdings Ltd, our focus was to directly work with local enterprises to build their capacity to compete in the emerging oil and gas economy.

“This conference is just one of the vehicles to achieve that, to ensure SMEs in different service areas can network and discuss partnerships to enhance their ability to compete for big budget contracts in the oil sector,” Tony Otoa, the chief executive of the Stanbic Business Incubator Ltd, said.

Patrick Mweheire, the chief executive of Standard Bank Group, said SMEs are the engine of the region’s economic growth as they employ the largest number of people. However, he said many SMEs still find it hard

to access affordable credit to grow and expand their operations.

“That is why the Standard Bank Group, through its Stanbic Bank brands in East Africa, is directly involved in this journey in line with our mantra; Africa is our home, we drive her growth.”

Mweheire, who is also the chairperson of Uganda Chamber of Mines and Petroleum, said a developing country like Uganda requires sustained economic growth, and focusing on the SME sector is critical to unlocking the country’s economic potential.

“Uganda’s gross domestic product is about $30b. The emerging oil and gas economy alone is worth $20b. This is an enormous opportunity to double the country’s economy and doing so through local enterprises is the surest way of ensuring that the impact of that growth reaches most Ugandans,” he said.

Local SMEs have a low capital base and poor financial record-keeping makes it difficult for banks to extend financial services to many of

them. This opens doors for foreign entities that are better organised and have a solid financial track record as well as governance structures.

“Merging with foreign enterprises is one way of building capacity and ensuring that we enable native enterprises to drive local content in the oil and gas economy. The opportunities are massive, with conferences such as EASOG, local SMEs should stop complaining and arm themselves with information to build their capacity,” John Walugembe, the executive director of the Uganda SMEs federation, said.

BIG BUDGET OPPORTUNITIES AWAIT

According to data from Uganda Investment Authority, SMEs in Uganda account for more than 70% of the entire private sector and employ over two million Ugandans.

The UNOC, which is mandated to hold 15% participating interest as the Government’s nominee in the petroleum production licences, is providing leadership on project stakeholder engagement, securing government preinvestment in some enabling infrastructure, providing technical expertise in upstream and refinery operations as well as national content leadership.

The PAU said the April signing unlocked investment into Uganda’s economy, which includes the implementation of the Tilenga Project (about $4b), the Kingfisher Project (about$1.5b) and the East African Crude Oil Pipeline (about $3.6b).

This is in addition to the ongoing investment in the Hoima International Airport (over $500m) and 700km of oil roads (about $900m).

Contracts worth $167m out of the $1.362b for the Tilenga and Kingfisher projects will be awarded directly to Ugandan companies.

Overall, at least 28% or $4.2b of the $15b investment during the development and construction will go to Ugandan companies through provision of various goods, services and works.

Otoa said: “That is why the Stanbic Business Incubator has over the last few years been training SMEs in a range of business skills to further bolster their capacity to compete successfully for service contracts in the emerging oil and gas economy.”