New law to give local companies preference

By Billy Rwothungeyo

Unlike Kenya and Tanzania, Uganda does not have preference schemes for local companies in public tenders.

The local industry’s growth has been compromised as foreign companies with bigger capacity often outdo Ugandan companies to do business with the Government.

However, the preference schemes in the amendments to the Public Procurement and Disposal of Public Assets (PPDA) Act of 2003 promise to be the much needed shot in the arm for many a local contractor and service provider to compete favorably.

Currently, the PPDA Amendment act is before Parliament for approval after the Cabinet’s approval.

The new law will apply preference schemes to goods, works and services, where open domestic or open international bidding methods are used.

It will require that public entities procuring goods, works or services under open bidding shall grant margins of preference. For examples, goods manufactured, mined, extracted or grown in Uganda will have a 15% advantage over the rest.

Works undertaken by local contractors or services provided by local consultants will get a 7% edge.

As regards the construction industry, local contractors and consultants will qualify for preference if they meet incorporation, registration and legal parameters.

Why we need preference schemes

Isaac Kyaligonza, the head of the Procuring and Disposing Unit of the education ministry says the schemes will help vulnerable groups like women and youth get a chance of doing business with the Government.

He says this scheme will bode well for developing of the country’s nascent capacity, especially when it comes to competition with foreign companies.

“Preferential treatment towards our local firms will be positive discrimination. Right now, anyone can bid for any tender,” he says.

“For example, if Uganda is constructing a dam, the steel should not be bought abroad, but rather from a local player,” Kyaligonza, who was a member of review task force, says.

However, Kyaligonza argues that this and other advantages that local players will enjoy should be clearly stated from the onset.

He also says the scheme must be transparently executed from the onset.

The private sector in Uganda is increasingly facing competition from foreign companies in the award of tenders.

The apex body of the local private sector; the Private Sector Foundation of Uganda (PSFU) urges government to act quickly on this front.

PSFU executive director Gideon Badagawa said such schemes would be in good shot in the arm for local companies in their quest for better capacity.

“We have been urging the Government to give local firms preference when there is a tender, For any big contract awarded to a foreign company, there should be mandatory sub-contracting to locals.