Contractors want projects below sh30b reserved for local firms

Dec 07, 2018

“We pray that this is introduced in all government financed projects. Road and bridge works worth sh30b and below should be reserved for domestic firms,” Karuhanga said.


KAMPALA - The association of civil engineers and contractors have asked government to introduce a threshold system that favours local contractors from undue competition with foreign firms. 

The National Association of Building and Civil Engineering Contractors (UNABCEC) president, Francis Karuhanga, said setting up a national reservation scheme to entrench and deliberately cater for domestic owned companies would enable them implement mega infrastructure projects.

"We pray that this is introduced in all government financed projects. Road and bridge works worth sh30b and below should be reserved for domestic firms," Karuhanga said.

Addressing the 25th UNABCEC annual general meeting at Silver Springs hotel In Kampala on Thursday, Karuhanga said that competition for contracts should start with projects worth sh30b to sh50b.

Competing companies must have made profits for the last seven years.

UNABCEC promotes and protects shared interests of members in the construction industry through mobilization, advocacy, networking and innovative service provision.

It also lobbies and advocates with the key decision makers to improve the policy and regulatory environment for the construction Industry and also builds capacity for improved competitiveness of national construction industry operators and stakeholders.

For civil works, projects worth sh15b reserved for domestic firms and those above sh15b to sh30b could be competed for by both domestic and foreign contractors.

The contractors and engineers have called for classification and registration contractor in order to promote transparency and fair competition in procurement of works and services in the construction industry.

"Currently, there is no specific registration of construction contractors in Uganda. This should be implemented in haste in accordance with relevant provisions in the National Construction Industry Policy," Karuhanga said.

He said a similar system is used in Ethiopia has helped the Ethiopian domestic contractors to win contracts in the region.

In a number of resolutions reached at, UNABCEC wants government to establish an annual construction guarantee fund with a minimum of sh92b onto a construction guarantee trust for the next five years to facilitate growth of small and medium sized companied.

Karuhanga said construction contractor, particularly the small and medium scale contactors continue to face a dilemma in complying with the regulations that require them to furnish bonds and guarantee for the purpose of bidding and executing construction contracts.

They also want facilitation of a revolving construction lease fund of sh194b that offer good financing terms not exceeding 6%. The fund may be managed by Uganda Development Bank.

The justification is that cost of construction equipment is very expensive for domestic contractors in Uganda considering that fact that the average annual turnover for most construction companies range between sh1b and sh5b yet single construction equipment can cost close to sh1b.   

"This has continuously pushed that domestic construction firms out business and instead favors the big international companies that have easy access to equipment through favorable financing and asset leasing terms and lines of credit," Karuhanga noted.

UNABCEC elected a new ten-man board of directors for 2019-2021 period. Karuhanga was re-elected president. Other members are: Collin Agaba, Edwin Agaba, Jamesone Olanya, Mark Nsubuga, Moses Tebirondwa, Robert Ssenozi, Ronald Mugabi, Sybella Namirembe and Alice Bongyeirwe.

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