The BUBU policy gaps an avenue for exploitation

OPINION

This is a response to an article which appeared in the New Vision of Monday, June 15, 2020, written by Mr Rajesh Chaplot, the Managing Director of Graphic Systems (U) Ltd. In the article, he suggested that local importing companies, since they do not use locally produced goods, should not benefit from the BUBU policy. 

His suggestion is in agreement with the main purpose of the BUBU policy which seeks to increase the local consumption of the locally produced goods and services for the purposes of improving the local business environment through forward and backward linkages to exploit local resources for export promotion. 

The policy itself and Mr Rajesh's arguments are however problematic if taken wholesomely. First, the policy makes a blanket generalization of local companies yet they are totally different based on their ownership, production focus and financial abilities. 

The local companies fully owned by the native Ugandans are struggling with operational capital, human resources, production technology, quality standards and access to markets all of which constrain their local production capabilities. However, there is another category of local companies such as Mukwano, Riham, Roofings, Mulwana group of companies etc that have overtime-built capacity to produce goods and services for their local and regional markets. Such companies can afford the most recent production technology, can hire expatriates in their production processes, meet quality standards and have access to local and international markets. BUBU Policy and several other policies such as preference and reservation schemes seem to favour the latter than the former. 

Failure to draw a distinction between these two categories is to give an opportunity to the elite local companies to work with the corrupt procurement systems to reap from the BUBU policy, unlike the native companies whose underprivileged position may not allow them to work with the corrupt public entities for the local consumption of their goods and services contrary to your earlier observation. The native local companies are always eliminated through formal requirements such as audited books of accounts, income tax clearance certificates, quality standards etc which cannot easily be achieved within their informal settings. It is little wonder, therefore, that local native companies do not live to celebrate their first anniversary because government policies such as BUBU, Preference and Reservation Schemes etc benefit only a few elite local companies who already have the capabilities to look for local and international markets.

While I agree that they do not use locally produced goods and services which increases local consumption, we should not forget that these local companies employ locals, pay taxes and some do social corporate responsibilities. Therefore, any promotion that is geared towards the consumption of their goods would help them increase their production capacity, improve quality standards and increase their negotiating power with their financial institutions for credit support which would generally improve the business environment. Therefore, a good policy is the one that presents equal opportunities for its stakeholders within a particular setting. As it stands now, the inequalities cited in the BUBU and the Preference & Reservation Schemes are only meant to benefit a few privileged stakeholders, leaving out the wider business community struggling on their own. 

WAY FORWARD

The policies need to be re-designed in a way that categorizes its stakeholders and provides support based on the degree of vulnerabilities with the most vulnerable achieving more support than the least vulnerable stakeholders irrespective of whether they import or use local products. The results of this assessment will certainly indicate that the most vulnerable companies are 100% local native-owned proceeded with the elite local companies whose ownership is majorly local but not native-owned. In Tanzania and South Africa, this categorization was strategically done so that they can give support to their indigenous establishments consequently increasing the survivability of the private sector. 

After profiling companies into two categories, there is need to enact a law that would enforce procurement and other accounting officers to adhere to the Buy Uganda Build Uganda rules and regulations across the board - ensuring that the Ugandan taxpayer shillings are used to buy Ugandan-made furniture, textiles, construction materials, feeds, medicines and other manufactured products not only from a few elite companies but much from indigenous vulnerable setups. 

The writer is a Senior Research Fellow, Makerere University Business School.