Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
The Public Procurement Disposal of Assets Act requires that all public procurement be based on key principles including non-discrimination, transparency, accountability and fairness, competition, confidentiality, economy, efficiency, and ethical conduct. Except for situations where exigency or other factors demand otherwise, the law requires that all government procurements are sourced through a public tendering process. In some instances, with the influence of President Museveni, several large infrastructure contracts are awarded without a competitive process. The Act takes precedence over any regional or international agreements on procurement to which Uganda is a party.
Procurement applications are handled by procurement and disposal committees established at both the central and local government levels.
The Public Procurement and Disposal of Public Assets Authority (PPDA) audits government procurements, oversees the public procurement processes, and monitors compliance by all government entities at both the central and local levels. Government procurement requests must include: a procurement schedule for every bid notice issued; standard formats for invitation of bidders (bid notices); and specified time frames for all government procurement activities. All bid evaluations must begin within 14 working days from the date of closing the bid. In practice, bid decisions often take several months, and several businesses have accused officials of soliciting, or being influenced by, bribes while analyzing bids. More information about PPDA is located on its website: PPDA.
Laws regulating the petroleum sector include “national content” provisions that require contractors to employ a certain percentage of Ugandans and prioritize the use of local goods and services. Specific national content requirements are provided in The Petroleum (Exploration, Development, and Production) Regulations, 2016
The government requires companies engaged in the petroleum sector to submit an annual report documenting compliance with the local content provisions. A broader draft National Local Content Bill (returned to parliament by President Museveni in August 2020) is aimed at extending these provisions to other sectors by making it obligatory for all government contractors to prioritize using locally sourced goods and services when they are available and are of competitive quality.
Uganda often finances public works projects through borrowing from multilateral development banks and individual country Export-Import banks. Please refer to the “Project Financing” section in “Trade and Project Financing” for more information. Uganda is not a party to the World Trade Organization (WTO) Agreement on Government Procurement (WTO - Parties, observers, and accessions).
U.S. companies bidding on government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
The government generally finances major projects with debt from multilateral development banks, individual country Export-Import banks, and grants from international donor agencies. Prior to the COVID-19 pandemic, the government negotiated non-concessional loans from the Export and Import Bank of China for the construction of hydropower dams, roads, and upgrades to the Entebbe International Airport. With the pandemic ravaging tax revenue, the government has returned to concessional loans from multilateral donors. While existing loans from the Export and Import Bank of China are at below market terms, they are more costly than loans from multilateral donors and have significantly contributed to Uganda’s growing debt burden. AGRC’s agreement to build the oil refinery using private equity funds is Uganda’s first major private sector-financed infrastructure project. U.S. companies’ project proposals are often disadvantaged due to a lack of readily available financing. Following passage of the Public-Private Partnership Act (2015), private contractors may also finance projects undertaken in collaboration with the Ugandan government.
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from multilateral development banks (MDBs). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks. The U.S. Department of Commerce’s International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at five different MDBs: the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank. Learn more by contacting:
- Commercial Liaison Office to the African Development Bank
- Commercial Liaison Office to the World Bank