Uganda Must Depend on her Strength to Develop
Roofings Group “The Strength of the Nation” is the leader in the steel manufacturing sector, building a household brand for over 20 years. Now that Government has decided to promote the Buy Uganda Build Uganda (BUBU) policy, this is seen as a major step towards real empowerment of local industry; as Dr. Martin Francis Kyeyune Finance and Economic Adviser ROOFINGS GROUP explains.
The steel industry keeps growing each day. Though in the past, foreign contractors preferred working with materials from their country of origin or preferred suppliers outside this country. This hurt Ugandan industry since the market for Ugandan products was being taken up by foreign goods; yet most of these Ugandan products have either equivalent or superior quality to the imported ones.
So when Trade Focus asked Dr. Kyeyune whether the BUBU policy is the right fit for Roofings Group, he said.
“The BUBU strategy is definitely the perfect fit for Roofings Group and for all products produced in Uganda. When you look at investment, inviting investors to manufacture or provide services to industry or otherwise – you must assure them a sustainable market to realize their required return on investment. They look at the revenue as this is their top line that will inform the bottom line. It is our belief therefore that BUBU assures investors of the market they are looking for.”
Major victory
We all know that as far as Uganda is concerned, Government is the biggest buyer. Government’s firm position to support Ugandan made products through procurement means more money will be retained within the economy, unlike when goods are imported making Uganda lose millions of dollars instead. In other word, such a policy direction ensures the multiplier effect as the demand created through Government expenditure injects money into the circular flow of income and expenditure resulting into expansion of Uganda’s GDP cycle as opposed to spending the injected money in other countries’ GDP cycle.
Dr. Kyeyune acknowledges this huge step, though patience will be needed for it to be fully successful.
“Yes it is a victory. BUBU was commissioned by the Right Honourable Prime Minister earlier this year and Roofings Group, among other industrialists have benefited through some supplies. For this, we are thankful to the Government and importantly, Honourable Amelia Kyambadde for her relentless effort to have BUBU realized; as well as the Ministry of Trade, Ministry of Finance, Uganda Manufacturers Association (UMA) and Private Sector Foundation, Uganda (PSFU).
However, to have full implementation through the entire Government procurement, we expect this will take some time. The policy is now in place, the strategic implementation plan is also in place; however, the laws, as well as the administrative structures, are yet to be achieved. Likewise, we have seen some amendments to the Public Procurement Guidelines to incorporate local content but we are aware that the Public Procurement and Disposal Authority (PPDA) has little control on the Engineering, Procurement and Construction (EPC) projects. Therefore, Monitoring and Evaluation of that policy remains largely fragmented amongst different Government Ministries, Departments and Agencies.”
Further, he explained that some of the impediments are external in nature but self inflicted through our negotiations with the development or financing partners.
He continued: “First, some of these projects are financed through EXIM banks of other countries. The countries where this money is coming from also have an interest in promoting their own products and services. So when we are faced with this kind of challenge, we need to negotiate to allow for local-foreign partnerships or specific procurement of certain goods that our industries can supply. Secondly, some foreign contractors like working with the foreign suppliers of goods and services they are familiar with. They will insist on a few technicalities such as high cost or inferiority of Ugandan goods or lack of adequate supplies. This is countered by taking stock of Uganda’s capacity in partnership with Government and local manufacturers (UMA) to agree on key alterations to match the contractors’ requirements. This kind of dialogue has occurred with the Standard Gauge Railway (SGR) and Government has committed its assistance on cost management, while manufactures are in process to make a few modifications to meet the Chinese requirements. With regard to quantity, the steel industry is ready for the SGR quantities for iron sheets and reinforcement bars”
“I would like to expound on this aspect due to its sensitivity. There has been misinformation by some contractors from China that preference to import goods for EPC projects is informed by the “fact” that Ugandan products don’t meet the standards. This is totally false because Ugandan Standards or East African Standards for steel are benchmarked on British Standards largely, as well; the Chinese Standards were benchmarked on the British Standards. So if a project requires steel products with specifications for either British, American or Chinese Standards, Roofings Group technology is robust enough to be configured to provide the products meeting the respective specifications in time to meet the customer requirements.”
On the issue of quantity, he explains that infrastructure projects come once in a number of years and Uganda needs to leverage on them to enhance the effectiveness and efficiency of Ugandan manufacturers so as to allow these manufacturers to bid for similar projects outside Uganda.
Further still Kyeyune explains the challenge of the policy space.
“Under the East African Customs Management Act, we consider the aspect of the import duty, or the East African Community Common External Tariff (EAC CET). Here, the duty is 25% or US$ 200 per ton, whichever is higher for most of the steel products. This arrangement is to allow goods manufactured in the East African Community (EAC) to have a leveled playing field with goods that are merely imported in EAC from economies that have lower cost of conversion than EAC. This is meant to encourage industrialisation within the EAC such that goods manufactured in the EAC are consumed within the EAC. Conversely, if the EAC CET is waived or exempted for certain projects, steel manufactured in the EAC cannot be consumed by these projects. This is the case for the current projects such as Karuma, Isimba, etc. It is our appeal that, in future, exemption or waiver of EAC CET should only be limited to goods that are not manufactured within the EAC. When this is done then we are able to compete favourably.”
Multiplier effect
This is where the aspect of consumer, employee and taxes comes in. Economists argue that, preference should be given to local manufacturers because of their multiplier effect in the economy.
“We briefly hinted on this earlier on. When we import goods from abroad, say China or Turkey, the multiplier effect is exported to those countries instead. Because the people who will be employed will be the Turkish or Chinese, and those people will spend in their respective economies, as well as pay taxes in those economies – so we lose the multiplier effect. However for a local producer the multiplier effect remains with us here.” – Dr. Kyeyune.
Expectations
“Currently Roofings Group employs over 2,000 people and supports a number of businesses, large and small throughout the conversion cycle. Our aspiration is that local content should not stop at Government alone, but go to individuals. Let the concept of local content be inculcated in the Ugandan citizens’ spending decisions so that whenever a Ugandan goes shopping either while at home or in a shopping mall abroad, they look for the label “Made in Uganda” first.
Dr. Kyeyune says that when you look at your home and see that 9 out of 10 items are from another country and one item is from Uganda, this shows that you have supported 9 factories from another country and one factory back home. At this point you reflect and see the contribution/ damage you have made to employment of Ugandans as well as weakening of the Uganda Shilling.
As far as Roofings Group is concerned, we cater for all types of consumers. “We have the heavy infrastructure consumer, industrial consumers, commercial constructions and domestic consumers. We ensure the strength and variety in product offering as well as efficient service delivery to meet the expectations of each of these consumers. For example, we have reinforcement bars ranging from 8mm to 32mm in diameter, roofing sheets of all sorts of profile designs, textures and colours and customized lengths, plastic pipes for drainage, water piping and sewage, among other construction materials. It is worth mentioning that our plant in Namanve offers large customers an option to create their colour preference for roofing sheets/ coils as we have a paint mixing plant but this is for large volumes as the line is a continuous and small quantities may not be economically viable.
New developments
He says Roofings has increased its scope into the plastics industry. It has increased production of PPR, PVC and HDPE pipes ranging from 20mm to 200mm in diameter and relevant fittings conforming to DIN 8062:1988,vUNBS.
Besides this, the steel producer has made adjustments in the roofing section.
“We used to galvanise with zinc but we changed to what we call Alzinc. This is the inclusion of aluminium to the zinc, making the AZED sheets up to five times more durable than the ordinary zinc galvanized sheets and is more value for money. This sheet is both in coloured and ordinary galvanized sheet.
The other innovation about the AZED sheets that are not colored is that they are good for the eyes as there is no reflection, so roofers are assured of a safe installation experience as well as the other people who look at the sheets after installation.” – Kyeyune.
We mark our reinforcement bars for every meter with the name of our company, the grade and size in thickness. This is to assure our customers that our bars are 12 meters in length and the thickness is consistent throughout the length of the bar.
Other innovations include ribbing of the BRC to ensure grip with concrete, labeling for most of the products we produce for traceability of Roofings Products in the market.
He continued: “The “Buy Uganda Build Uganda” policy is what Uganda needs right now. Arguably, there is no country that will feel secure when it depends on another economy for most of its essential needs! National security and economic sustainability is largely in the ability of an economy to self-supply its population with the essential needs of security, food, water, shelter, clothing, health, education and energy. All goods that are ingredients to the above essential needs ought to be largely assured through local manufacturing and a policy like BUBU. This is the same policy used in Europe, America and Asia, they buy their own products and hire their own people. This partially explains is why those economies are developed and have relatively lower unemployment figures than most countries in Sub-Saharan Africa.”
“But it shouldn’t stop here, I think in future we should be able to say “Build Uganda, Buy Uganda, Export Uganda”. – Dr. Kyeyune.
Source: Trade Focus News