Uganda losing $1bn in the ongoing infrastructural projects

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By our reporter

 

The government of Uganda is undertaking a number of infrastructural projects including the Standard Gauge Railway (SGR), Karuma Dam, Isimba and Agago, Oil refinery and implementation of Phase III of the National Broadband Infrastructure projects. These projects are expected to spur growth in the long term.

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The other proposed infrastructural projects are: industrial substations, upgrade of the Entebbe International Airport, various roads among others. Government is spending billions of borrowed funds to finance these projects.

 

The 600MW Karuma Power Dam and 183MW Isimba hydropower dams are being constructed at a cost of $9 billion. The 274 Km SGR project Malaba – Kampala route, is expected to cost $2.3 billion (Ugx. 7.6 trillion).

Usually, such huge infrastructural projects would boost the economy as they stimulate demand and production in the economy. Not in Uganda.

Read: Kampala cement market share jumps to 10% as Hima Cement races farther

 

Recently, members of the Uganda Manufacturers Association made a presentation to President Museveni on the use of local content in the ongoing construction of the three power dams of Agago, Karuma and Isimba.

 

The UMA members told the president that Uganda would have made a combined saving of Uganda Shillings Seven billion if the government had put emphasis on the use of local content in the ongoing projects particularly the three power dams of Agago, Karuma and Isimba.

READ: Uganda Manufacturers set to takeover Luzira Prisons land

The meeting was also attended by the Trade Minister, Minister of Works and Transport, and Permanent Secretaries of the line ministries.

 

In their presentation, the manufactures urged the president to grant them rights to at least supply 40 percent of materials used in the ongoing power projects. They particularly want to supply Cement and steel products. There are three main manufacturers of cement in Uganda: Tororo Cement, Hima cement and new entrants- Kampala Cement.

 

The president is said to have been overwhelmed by the proposed saving.  The president promised to act.

Data on how much cement, steel bars needed for the ongoing infrastructural projects in Uganda is not freely available.

However, across the border, data from Kenya Ports Authority reveals that China Rail and Bridge Corporation, (CRBC) had imported at least 7,000 metric tonnes of the building material five months after SGR was launched. The Kenya SGR project requires 1 million tons of cement.

 

Speaking recently on Radio Simba, Hon. Muwanga Kivumbi revealed that local content has been ignored in the ongoing projects. He singled out Karuma Dam where Chinese import nearly everything they are using, including cement, steel products among others.

 

‘‘They even import the pork they eat. They rare their own chicken, never mind that Northern Uganda is the home of local chicken.’’ he said.

 

While presenting the 2016/17 budget, Finance Minister Kasaija revealed that the government had allocated Ugx. 3.7 trillion, for infrastructure development. The biggest share of the country’s 2016/17 fiscal year budget. On the other hand, Energy sector was given Ugx. 2.4 trillion.

 

Unfortunately, nearly all this money is taken away by foreigners firms as local content has virtually been ignored.

 

Speaking recently on the validation meeting for the draft report on Uganda-Netherlands bilateral investment treaty in Kampala, Hon.  Kenneth Lubogo, the Bulamogi constituency Member of Parliament, and chairman parliamentary trade and industries committee, called on government to reserve some sectors for Uganda.

He cited Ethiopia and Rwanda that has reserved some sectors such as banking, telecommunication and retail businesses for its nationals. Hon. Lubogo said it is time some sectors be preserved for Ugandans.

He added: Almost every sector of the economy has been taken over by foreign investors whose impact is not seen. The capacity of the locals does not match those of foreigners. He said.

Reports indicate foreigners now own huge chucks of land and tuned into commercial agriculture. With more foreigners taking on pretty trade, infrastructural    projects, agriculture, services, it remains to be seen what will be left for Ugandans.

 

It had been hoped that the Uganda’s economy would bounce back in 2017 mostly driven by the multibillion dollar infrastructural investments and related infrastructure. It had been hoped that these would offset the effects of the weak external sector and put the economy on good footing net year.

With this revelation, it remains to be seen whether this projection will come true.

 

 

 

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