Five years ago, the Government of Uganda passed the “BUY UGANDA BUILD UGANDA POLICY” in response to the Private Sector’s pleas to take policy decisions and promote practices that encourage the consumption of locally-produced products.
Under the jurisdiction of the Ministry of Trade, Industry and Cooperatives (MTIC), the BUBU Policy is formulated within the framework of several national development Policies and Strategies. These include the National Trade Policy (NTP), the National Industrial Policy (NIP), the National Standards and Quality Policy (NSQP), the National Cooperatives Policy, the National Textile Policy, the National Sugar Policy, the Public Procurement & Disposal of Assets Act (PPDA) and the Development Strategic Investment Program (DSIP).
The National Trade Policy (NTP) of 2007 affirms that it’s the Government’s role to: “Encourage the consumption of locally-produced goods and services.” While prompting the use of local materials in the production process with a view of stimulating growth, it also supports the consumption of locally-produced goods and services and provides for an affirmative action to be taken as part of Government procurement processes. On the other hand, the National Industrial Policy (NIP) of 2008 emphasizes the need to develop domestic resource-based industries and the promotion of competitive industries that use locally-produced raw materials. It further encourages existing industries and new investors to utilize the services of local technologies and consultants as a means of developing national technological capabilities.
Yet, despite the Private Sector’s important contribution to the growth of domestic demand, Uganda continues to import finished products worth billions of dollars, to the disadvantage of local producers, suppliers, and consumers and the economy given the important role local producers play in ensuring food security and higher household incomes. A S.W.O.T analysis conducted by the MTIC on BUBU made interesting revelations.
Backed by a strong political will to support private sector growth, Uganda continues to enjoy relative political stability since 1986 and a number of economic reforms have been introduced over time.
Uganda’s economy is dominated mainly by the Agriculture, Industry and Services sectors. Production and export of agricultural products consist of: coffee, tea, cotton, fruits, spices, cut flowers, oil seeds, fish, cattle products, cereals, honey and vegetables. The country manufactures beverages, processed foods, textile, clothing, footwear, leather, paper products, pharmaceuticals, building materials, wood and metal products, and handicrafts. Ugandans are also engaged in the supply of tradable services such as – education, tourism, distribution, Business Process outsourcing (BPO), logistics, health, and professional services.
The growing middle class in urban centres has income security and capacity to maintain a moderate lifestyle. Uganda has the youngest population in the world at 83% with 77% below 30 years of age, according to World Bank statistics. It is also estimated that more than 90% of the informal sector is dominated by young workers. If fully utilized, the youth could be a tremendous asset for the country.
Uganda’s Private Sector comprises of 90% MSMEs of which 80% are located in urban areas. These provide employment to approximately 2.5 million people, and contribute 75% of the Gross Domestic Product. If BUBU policy is implemented fully, it would enhance the growth of MSMEs by assuring them of a ready market hence impacting on their incomes and growth.
There is still much bureaucracy and red tape in registration processes, which make it hard for local companies to formalize. Additionally, meeting the minimum requirements such as a certificate of company registration, a Tax Identification Number (TIN), Barcode/ EAN number, proper packaging, expiry dates inscribed on products, and listing of product ingredients, has made it difficult for small producers.
For example, the certification process demanded by UNBS Certification Scheme is very laborious and expensive. The approval process requires users to either apply for a certification (quality ‘Q’ mark) or a standard mark referred to as ‘Q&S’ mark, which force many producers to just give up.
There’s huge opportunity to produce locally what is being imported though largely untapped.
The worsening trade balance from a deficit of $2.4 billion in 2010/11 to $2.5 billion in 2011/12 (UBOS) means that Uganda continues to export primary products that yield low revenues and on the other hand imports finished products that fetch higher cost. This presents a big opportunity to BUBU companies.
Also, the discovery of oil, amounting to over 2.5 billion, presents a window of opportunity for local manufacturers and producers to supply the sector. Indeed, Ugandan oil laws mandate oil companies to ensure local content.
Additionally, the growing Services Sector accounts for 52% of GDP. For example, the Education Sector alone does present a huge market for scholastic materials, uniforms, school meals, furniture, and pharmaceutical items thereby creating opportunities for local producers and manufacturers.
Global brands and their aggressive and costly marketing strategies, branding and advertising, pose a serious challenge for local products, which find it hard to compete favorably.
To make matters worse, there’s a mistaken mindset among the increasingly-sophisticated consumers that Ugandan products may be inferior to foreign products. This mindset has to change.
Policy actions to support BUBU
In 2013, Parliament amended the Public Procurement & Disposal of Public Assets (PPDA), which provides for the application of preference and reservation schemes under public procurement. The schemes guarantee the Government to take an affirmative action to encourage supply from small medium industries when procuring for goods, works or services. The rewards of this, it was anticipated, would not be limited to producers, manufactures and suppliers of local produce, but would also have a positive spillover effect on all sectors of the economy. This legal framework is in line with what has been done by other countries in the region and beyond.
In order to attain the objectives set out in this policy, the BUBU Policy aims to achieve the following strategic targets by 2020:
i. 20% of Government procurement by value should be of local products and services.
ii. 50% of shelf space in supermarkets should be populated by local products.
iii. All MDAs strictly abiding by PPDA Act during procurement processes.
iv. 50% of local products conforming to national standards.
v. 50% local resources and raw materials being utilized in production.
It further calls for Government partnership with the private sector and the promotion of synergies with the private sector in the implementation of the BUBU policy. Also, the Government is mandated to support the Private Sector in the development and marketing of Ugandan brands through supporting Private Sector initiatives such as the BUBU Expo and other trade fairs.
To achieve BUBU objectives, Government is to:
i. Carry out an inventory of locally-produced goods and services.
ii. Carry out an inventory of locally-consumed products.
iii. Facilitate bulk marketing and adherence to commodity standards through Cooperative Societies and Area Marketing Cooperative Enterprises and Farmers Groups.
iv. Oblige industrial enterprises to use local materials and/or products in their production processes.
v. Through a Public-Private Partnership to develop a market information system to facilitate the collection; analysis and dissemination of trade information.
vi. Facilitate local suppliers to organize and attend Trade Fairs, Exhibitions, and Bazaars that will help promote Ugandan products in the market.
vii. Provide incentives to local producers in order to promote the BUBU Policy.
To achieve the objective of conformity to quality standards, the Government shall:
i. Create awareness among the local private sector producers and manufactures regarding conformity to standards and quality requirements.
ii. Encourage and support the acquisition and use of appropriate technology.
iii. Create consumer awareness on standards and quality certification marks.
iv. To promote innovation, value addition, and exploitation of local materials.
To achieve the objective of providing training and capacity-building programs for BUBU companies, the Government shall:
i. Enhance the capacity of local producers and suppliers to comply to supermarket requirements such as bar-coding packaging, business registration and standard certification.
ii. Address other supply-side constraints to influence acceptability and increased shelf space in leading supermarkets.
iii. Undertake capacity-building programs with a view of boosting the capacities of socially and economically-disadvantaged sections of the community.
iv. Design and implement appropriate strategies to promote value addition, production of high-value-low volume products, and niche marketing.
v. Increase public awareness of the BUBU policy through local leaders and District Commercial offices.
BUBU Support Institutions:
Ministry of Trade, Industry and Cooperatives (MTIC)
Finance, Planning & Economic Development (MoFPED)
Justice, and Constitutional Affairs (MoJCA)
Local Government (MoLG)
Education and Sports (MoED)
Agriculture, Animal Industry and Fisheries (MAAIF)
Housing, Urban Planning and Development (MoHUPD)
Information, Communication, and Technology (MoICT)
Tourism, Wildlife and Antiquities (MoTWA)
Works &Transport (MoWT)
Foreign Affairs (MOFA)
Gender, Labour and Social Development (MoGLSD)
Water & Environment (MoWE)
Internal Affairs (MoIA)
Energy & Mineral Development (MoEMD)
Department and Agencies
Uganda National Bureau of Standards (UNBS)
Uganda Bureau of Statistics (UBOS)
Uganda Registration Services Bureau (URSB)
Uganda Investment Authority (UIA)
Uganda Prisons Service (UPS)
Uganda Police Force (UPF)
National Drug Authority (NDA)
Uganda Revenue Authority (URA)
Uganda Public Procurement Disposal of Public Assets Authority (PPDA)
Kampala City Council Authority (KCCA)
Private sector Agencies
Uganda Manufacturers Association (UMA)
Private Sector Foundation Uganda (PSFU)
Uganda National Chamber of Commerce and Industry (UNCCI)