Support ‘Buy Uganda Build Uganda’ policy, Trade Minister tells Central Bank
Trade Minister Amelia Kyambadde has asked Bank of Uganda Governor Emmanuel Mutebile to support some government policies such as ‘Buy Uganda Build Uganda’ (BUBU).
BUBU is a policy geared towards promoting use of locally manufactured goods and use of local skills / personnel.
While speaking at the 12th International Private Sector Uganda Trade Expo at Lugogo on Tuesday, Ms Kyambadde said: “I am a bit disappointed – I think you need to interest yourselves (BoU) with some of the policies by government. I would like the Governor to revise this issue. BoU is supposed to be the champion of the economy and support us.”
Ms Kyambadde was responding to the Governor’s speech read for him by deputy director research David Sajjabi, in which he, for the second time, criticised the BUBU policy saying it will jeopardise Uganda’s export trade with her neighbouring states in the East African community (EAC).
Mr Sajjabi said: “The proposal for BUBU legislation would, if implemented, offer domestic producers preferential treatment on the domestic market over our EAC partners, for example, through preferential public procurements policies.”
According to Mr Mutebile, BUBU offers trade protection through administrative measures rather than tariffs.
“It is therefore inconsistent with the EAC customs protocol which bids any EAC partner state from undertaking any administration measures which discriminates in favour of its own producers at the expense of those of its partner states,” he added.
He said a level playing field for producers in all partner states is a fundamental principle of the Customs Union and the common market. BUBU is not consistent with this proposal.
“We therefore need to reflect on the potential and adverse repercussion of the BUBU proposal. If it is implemented BUBU will invite retaliation from other partner states why should they offer a level playing field yet Uganda is not doing the same,” he added.
The EAC market has become indispensable for Uganda’s products we can choose one but not both.
Ms Kyambadde said BUBU is not conflicting with regional exports but supports through the competition generated locally.
“What you should know is that all other partner states have restrictive public procurement policies that restrict local content globally. Even if you’re the best you will not wake up and compete,” she explained.
She added that BUBU will not retaliate because there is already an agenda to promote government procurement locally.
“BUBU is premised on the PPDA clause which – it came from a PPDA Act which talks about preference of 23 per cent which is built into a policy and then into a local content bill. Please support us,” Ms Kyambadde said.
Exports to EAC
Over the last 10 years, Uganda’s exports to other EAC member countries have risen rapidly at an average of 20 percent.
In 2016/17 fiscal year Uganda exported $1.3 billion (Shs4.6 trillion) of goods to the EAC which amounted to 41 percent of all Uganda’s total merchandise exports.
“The EAC is also our fastest exports growing market, ten years ago, it accounted for only 25 per cent of Uganda’s exports. For Uganda’s manufacture exports, the EAC is even more important accounting for 54 per cent of all Uganda’s manufactured exports in 2016,” Mr Sajjabi said.
He added that if Uganda is to develop a vibrant manufacturing export base, create employment and export earnings-exporting to the regional market is an essential first step in that development.
Providing opportunities, strengthen productivity, learning by doing and chipping in the economies of scale.
However, Mr Moses Ogwal, PSFU manager policy advocacy, said that BoU spends at least 9 per cent of the country’s GDP which equivalent to $3 billion (Shs10.8 trillion) every year to stabilise the economy.
“If this same amount is spent on supporting the local producers through BUBU, it will stabilise the economy,” Mr Ogwal noted.
He said if BUBU is supported, BoU would save this money.
60 per cent of the National Budget goes in development and most of it is for construction. Out this, 90 per cent is done by foreign companies and once this money is paid, it is remitted back to the respective countries.
On the claim that BUBU will jeorpodise the EAC export market agenda, Mr Ogwal proposed that the policy be harmonised at regional level.