Advertisement

Common Market at stake over restrictive trade terms

Wednesday March 29 2017
trucks

Trucks carrying goods headed for Uganda from Kenya. Kampala has released guidelines on reservation schemes to promote local content in public procurement. PHOTO | FILE

Uganda has become the latest country in the region to introduce measures that protect procurement, contrary to the East African Community’s Common Market Protocol.

After unveiling a new push of the Buy Uganda, Build Uganda (Bubu) strategy, Kampala last week released guidelines on reservation schemes to promote local content in public procurement.

Finance Minister Matia Kasaija said that the guidelines provide a mechanism for increasing the input of local labour, goods and services in the procurement of public sector projects within the country. He said Bubu would help small enterprises to improve their quality and quantity so as to meet the demand for big projects that are under Vision 2040.

According to the guidelines, local manufacturers who import raw materials will be exempted from taxes, while those who import already finished goods will pay higher taxes.

The guidelines contravene Article 35 of the Common Market Protocol which provides that “the partner states shall not discriminate against suppliers, products or services originating from other partner states, for purposes of achieving the benefits of free competition in the field of public procurement.”

But Uganda is not alone.

Advertisement

In 2016, Tanzania passed the Procurement Amendment Act (2016), which tightens participation by EAC-domiciled firms in public procurement by making it mandatory to include local experts and firms in consultancy assignments, and setting minimum compliance thresholds and require that a “local firm” be wholly owned by Tanzanians.

Zanzibar’s Public Procurement and Disposal of Public Assets Act, 2016 also mandates local content in public procurement, providing preferential treatment to goods and services sourced in the Isles, and mandates joint ventures with Zanzibaris.

In Kenya, the Public Procurement and Asset Disposal Act, 2015 flouts Article 35 of the Protocol by defining a citizen contractor as a firm wholly owned or controlled by persons who are citizens of Kenya, and reserving 21 per cent of total score in procurement evaluation for citizen contractors.
The reservations in Uganda will follow price and percentage bands of the various procuring entities for both good and services.

“A reservation shall apply to procurements for supplies, works and services by threshold and to benefit local providers. The target groups for the reservations are all procuring and disposing entities in Uganda,” Mr Kasaija said.

Exclusive reservation will apply to procurement of services whose estimated cost is Ush1bn ($274,000) and below; road works of Ush45 billion ($12.4 million), consultancy services below Ush1billion ($274,000) and non-consultancy services of Ush200 million ($55,000) and below.

The government says Bubu is aimed towards achieving at least a 50 per cent share of shelf space of local produce in supermarkets, and for services.
The guidelines place a 30 per cent reservation of the value of works to be subcontracted to local providers for projects above USh45 billion, especially in those that involve the ministries of Works and Transport, Water and Environment, Local Government, and Health.

Uniforms and related clothing materials for items like bed sheets and curtains have been capped at Ush100 million ($27,500) and above especially for ministries of Defence, Police, Prisons, Health, the Uganda Medical Stores and the Uganda Wildlife Authority.
Eligible suppliers will be required to have a manufacturing facility based in Uganda, use locally grown cotton and have their products certified by Uganda National Bureau of Standards (UNBS).

According to Cornelia Sabiiti, the executive director of the Public Procurement and Disposal of Public Assets (PPDA),  the guidelines on the reservation scheme will apply to procurement funded by the Ugandan government as well as those funded by development partners except where conditions of funding limit the application of reservations.

“The procuring and disposing entities shall disclose their procurement plans and the plans shall be subjected to this reservations scheme,” she added.
Other reservations include the procurement of medicine and medical supplies whereby eligible suppliers to Uganda national medical stores and public health facilities should have a manufacturing facility in the country, be certified by the national drug authority, and be registered on the PPDA register of providers.

In the reservation of procurement of electric cables and conductors, whereby an entity is procuring goods worth Ush100 million ($27,500), all eligible suppliers should have a manufacturing facility in the country, certified by UNBS and registered under the PPDA register of providers.

The new guidelines state that no entity shall procure requirements whose market price is more than 15 per cent of the assessed market price prior to the commencement of procurement.

Advertisement