Industrial Competition Bill to protect infant enterprises — Bahati
Dec 07, 2022
Without regulation, oligopolies emerge among steel manufacturers, oil companies, sugar companies, transport companies, tire manufacturers and dealers, supermarket chains and telecommunication companies
David Bahati the State Minister for Trade, Industry and Cooperatives.
A new law, the Industrial Competition Bill 2022, has been mooted by the Cabinet to protect micro, small and medium size companies from being mauled up by big and giant enterprises.
The Bill that has been approved by Cabinet is expected to be tabled in Parliament for its first reading in the coming weeks.
David Bahati, the State Minister for Trade, Industry and Cooperatives, indicated that there is a growing unfair competition rising in some industries that are hurting the consumers and the industries.
Bahati said there is a growth of oligopolies in some sectors that are consuming and killing the small players and companies. An oligopoly is a market situation where a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other.
“We want to have fair play between companies. We don’t want SMEs to be consumed by big competing companies,” Bahati said.
Without regulation, oligopolies emerge among steel manufacturers, oil companies, sugar companies, transport companies, tire manufacturers and dealers, supermarket chains and telecommunication companies.
The economic and legal concern is that an oligopoly can block new entrants, slow innovation and increase prices, all of which harm consumers.
He stressed that factories being built across the country have important roles in creating jobs. He added that the Consumer Protection Bill 2022 was being processed.
The Bill will provide for remedies actionable in law in case of non-compliance with those standards as well as prohibit unfair or misleading trade practices.
The minister noted that inflation has risen to 10.7% due to factors arising from outside the economy. He explained that the supply value chains for raw materials were affected by COVID-19 and the Russia-Ukraine war.
The minister said that the government has established a strong foundation for industrialization to increase value addition and ensure growth.
The interventions include; investment in improving the business environment by increasing industrial support transport infrastructures such as roads, railways, air, water, ICT, and construction of industrial parks. Others are strengthening investment and financial institutions, standards, quality assurance, research and vocational institutions.
The industry sector's contribution to the economy has increased slightly from 26% in 2016/17 to 27.5% in 2020/21. The minister noted that this is still lower than the global average of 35% of the GDP which is significant to lead a country into the attainment of middle-income status.
The government came up with the revised National Industrial Policy in 2020 to provide a strategic direction for the country’s industrialization direction.
The goal of the policy is to increase manufacturing value added to the GDP from 8.3% in 2018/19 to 16% in 2029/30, which will make Uganda achieve a 35% global average contribution of industry to GDP.
The minister cited the Uganda Development Corporation as the major industrial development agency of the government. UDC has supported industrial entities associated with it to obtain, improve and retain the skills, knowledge, tools, equipment and other resources they need to do their jobs better.
The UDC investment strategy promotes domestic industries using locally available materials to cause a reduction in the imports of locally consumed goods and increase the export of high-value-added products. These include; mainly foods and beverages, textiles, medical products and construction materials.
UDC is expected to expand its investment portfolio to include; coffee roasting and grading factories in Kazo and Sironko districts, a mango processing factory in Yumbe district, a veterinary medicine production plant and a surgical glove-making plant in Kampala and the expansion of Atiak Sugar Factory.
On the availability of cheap capital for local companies, the minister said that the government has increased funding to the Uganda Development Bank to be accessed cheaply for long-term investments by local companies.
He explained that all domestic investors are entitled to 10-year tax holidays as long as they can invest $10m (sh37b) in industrial parks. He added that these domestic investors are entitled to free land as long as they meet the condition of employing Ugandans.
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