By Ben Ssebuguzi
In the 2024/25 financial year, parliament approved the government to spend Shs 362b on the Uganda Secondary Education Expansion project, in the construction of 600 seed schools in subcounties. This proves to be a fertile ground for the Bazzukulu to actively participate in the bidding process to secure jobs for the youths of Uganda.
Considering that the newly amended PPDA law recommends the allocation of 20% of all public works to local contractors and 30% of consultancy works to local firms, there are still many bottlenecks that make local private sector firms fail to highly compete with foreign firms during government expenditure. Foreign firms usually have technical knowledge and financial muscle over local firms.
In a move to liberate local companies to fully compete with foreign firms, President Yoweri Kaguta Museveni has yet again made a special preferential directive to Minister of Finance and Economic Development Hon Matia Kasaija, to drop the requirement of bid bonds to local contractors by government.
In the letter that Watchdog published dated 23rd September 2024, Museveni informed the line minister to take charge of the new directive. According to the President, he notes that he was approached by SMS Construction company which narrated to him the expensive process of obtaining guarantees for performance during bidding.
In his letter, the President finds the process of bid bonds as extortionist, and development and against the ideologies of NRM. “They have for instance staked all their properties to the banks in order to secure those guarantees”, the President exclaimed.
The President further cited the process as unfair and prohibiting fair competition and can disadvantage some able contractors to execute their work. He emphasized that it is enough to assess that the company is able to do work.
“If they don’t perform, do not pay them and after some set time, terminate the contract. However do not encumber our people with extra costs of bank guarantees”, he noted.
A bid bond guarantees compensation to the bond owner if the bidder fails to begin a project hence becoming a prerequisite for bidding in government works. Given the petition to the petition by SMS Construction to the President, there are so many other similar companies that are in a similar situation which clamps on government efforts in empowering indigenous people which is in line with NRM’s people ideology.
As Bazzukulu from the Office of the National Chairman managed by Hajjat Hadijjah Namyalo, we applaud the National Chairman of NRM for always demonstrating to future leaders the ideals of NRM that favour the masses. We shall always inform the President if the Elites are positively responding to this directive.
In a similar situation, this directive will help industry players like the National Roads Authority (UNRA) to reduce the costs of due diligence and the low absorption of funds due to bureaucracy in trying to establish the authenticity of performance bonds.
It is common knowledge that foreign companies are synonymous with almost taking all our domestic projects because they use financial statements and profiles of their holding companies which indigenous companies can fail to secure during bidding processes. This predatory tendency by foreign companies against indigenous companies is what General Museveni is trying to clamp down and create more jobs on top of reducing capital flight too.
In conclusion, as we hail the President for the bold move, UNRA a major stakeholder in the construction industry has been also building capacity in local contractors over time through training. In their 2021 performance report, UNRA contracted 38% of road works to local firms. Their Executive Director, Allen Kagina disclosed to the public that they contracted over 40 local companies which become beneficiaries of local content policy.
According to the PPDA Act, as amended, the Ministry responsible for local content is the Ministry of Finance and shall undertake public education on local content. Unfortunately, as is almost the norm, the elites are always ready to stifle good government policies in infancy.
The writer is Head of Research ONC / [email protected]
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