Works and Transport (Sector, then and Program, now) takes between 10 to 20% of the annual budget. UNRA takes a lion’s share of that sector allocation.
For many years, we have argued that giving construction contracts to Chinese and foreign firms are counter productive for 3 reasons;
1. The foreign companies procure cement, steel and other inputs from their countries especially China. This leads to capital flight and financial outflow which hurts the economy.
2. The Foreign firms come with their people and skill transfer does not happen even where the (lame) UNRA guidelines prescribes for some form of local content.
Many of our people are employed in menial and less skillful jobs. There is no framework to capture and report on any skill transfer. Perhaps UNRA has one and I am not aware of it.
3. Technology transfer doesn’t happen. For so many times, we have sounded warning that attracting foreign investment without a comprehensive framework for technology transfer is an attempt in futility.
For your information, technology transfer is not about physical machines but rather the intellectual properties; Patents, utility models, industrial apps, Copyrights etc are the cornerstone of any transfer of technology. UIA is yet to show us any attempt in this regard. We praise China but have no clue how they did theirs.
For the above reasons, many have argued, including yours truly, that empowering local companies to rise up to the occasion is a must for us to close the gap. However local companies suffer one fundamental problem: capital cost.
I have argued before, that giving Dot Services the contract to redo Iganga-Mbale Road was a controversial but strategic move. The quality of the road has improved. The equipment is top-notch. We were told the government injected money into it. Although the beneficial ownership of Dot Services is a subject of intense public debate, empowering them to achieve that quality, is a model we can look into.
Below are my humble suggestions to Mr. President;
1. Don’t disband UNRA. Restructure it and make it lean and efficient. They are self accounting and somehow, have been left to grow into a gigantic money eating entity. A lean structure will deliver. We need the experience it has gained over this time.
2. Develop a Local Firm Development Policy to guide which firms can be supported for which period and under what conditions. In the same vein, the Policy should be clear on how we can use the Engineering Arm of the UPDF to partner with all Firms. The Process of selecting the Firms should be open, competitive and accountable.
3. Scale down on road construction. We still have barely 6000km of good tarmac to write home about. And yet we seem to be a construction yard. Sequence the roads and spread it over a 15 year period.
4. Use concessional loans from the World Bank and other finances and don’t allow the government to be arm twisted into accepting conditions of using foreign firms.
5. And most importantly, reduce the cost of electricity for cement and steel producers. If possible, give them at 3cents per kwh and let the government underwrite the energy costs for those firms. When prices of cement and steel become cheap, firms will buy them and keep the money here.
6. Lastly, Reform the Public Infrastructure Management process. How infrastructure projects are identified, prioritised and executed. The budget and planning process needs close oversight especially for investments that take a huge toll on our revenues. Local governments have no PIM capacities at all.
My tongue is still in cheek whether this government (or rather, the people in current government) can undertake the Rationalisation of Ministries, Departments and Agencies within the stated frameworks. I don’t think so!
The Author is a Policy Analyst and Partner at ABNO Advocates