Construction sector biggest beneficiary of Uganda’s local content policy
Local Ugandan manufacturers of construction materials and providers of associated construction products and services will be the biggest beneficiaries of Uganda’s local content policy called Buy Uganda Build Uganda (BUBU), given the massive infrastructure projects that the Government is currently executing or has lined up for implementation.
According to BMI Research, a research arm of global financial company Fitch, Uganda’s construction industry monetary value is expected to grow from Shs 7.5 trillion in 2017 to 12.3 trillion in 2021, constituting in value against the country’s GDP of 7.6 per cent to 8.1 per cent respectively.
Uganda has currently lined up a number of massive public infrastructure investments in the Standard Gauge Railway (US$3.2 billion), the oil refinery (US$4.2 billion), the oil pipeline from Hoima to Tanga (US$ 4 billion), expansion of Entebbe Airport and other airports (US$400 million), electricity dams- Isimba (US$590million), Karuma (US$2 billion) and smaller projects like Muzizi (US$50million), NyagakIII (US$14.5 million). The Ayago power dam expected to start construction in 2022 will cost another US$ 2 billion. The new dam across the Nile in Jinja is estimated at (US$ 125 million). As far as roads are concerned, the Uganda National Roads Authority (UNRA) currently has works ongoing on 61 road projects amounting to billions of dollars.
With the new policy, all these will be expected to consume local cement, steel products, timber, stone, and other construction materials and local manpower.
The Buy Uganda, Build Uganda Policy is intended to encourage the consumption of locally produced goods and service, prompt the use of local materials in the production process with a view of stimulating growth. It is also intended to support the consumption of locally produced goods and services and provides for an affirmative action to be taken under Government Procurement.
Local content of a 30 per cent value will see the local sector retain at least Shs 3.6 trillion annually, in direct spending. This will be expected to fund expansion, pay salaries, improve technology and capacity of local manufacturers to provide other regional markets, which will be a reasonable boost to the construction sector in the country, and the economy generally. The amount-Shs 3.6 trillion is equivalent to the current national annual budget spend on roads.
Recently, the Ministry of Works and Transport announced that for the Standard Gauge Railways works, local companies will be given a preferential treatment in areas where they have local capacity.