Research: Factors affecting private sector participation in public infrastructure procurement in Uganda_Full Report

The participation of the private sector in public infrastructure procurement processes has been perceived to be very limited, unfair and unbalanced. From this background, CoST Uganda embarked on assessing the factors that inhibit the private sector from participating in public infrastructure procurement processes.

The purpose of the study was to assess the factors that inhibit the private sector from participating in public infrastructure procurement and; develop recommendations that will increase competition and the participation of the private sector (local and foreign) in public infrastructure procurement processes.

Uganda is implementing massive infrastructure and development projects through five-year National Development Plans and Vision 2040. However, the goals cannot be achieved without having a robust private sector to drive the economy by participating in infrastructure projects. Enhancing the capacity of the private sector is crucial for the successful achievement of long-term plans to deliver what the country and citizens need. The government needs to improve the operating environment to attract the private sector to participate and provide the services needed with integrity.

The study identified and assessed the factors limiting the private sector from participating in public infrastructure procurement processes in Uganda, and these included: clustering of contracts, unrealistic bid qualification requirements, dependency on development aid (grants and loans) and limited implementation of guidelines on reservation and preference schemes, unfavourable procurement laws, financing, and unfavourable competition with resident and foreign providers, and corruption among others. The study found that because of the unrealistic bid qualification requirements, about 80% of civil works contracts in Uganda were undertaken by foreign firms, and a big portion of the construction supplies and requirements were imported for mostly road and energy projects.

The study identified several bottlenecks to both local and foreign firms’ participation in public infrastructure procurement processes, including the unfavourable procurement laws, which are perceived as not enabling local firms but instead favouring the “big boys” in the sector who are predominantly resident or foreign contractors and not locally originated providers/firms.

The study recommends the following in order to increase the participation of the private sector in public infrastructure procurement processes in Uganda: targeted domestic bidding for local firms, operationalization of a diagnostic classification of contractors and consultants, establishment and operationalization of an infrastructure industry development fund, capacity building of contractors especially in preparing quality and winning bids, trust in public procurement system, and establishment of programmes that expose private sector actors, development partners should appreciate and harmonize their procurement systems, PPDA and the local content monitoring committee are encouraged to conduct quarterly monitoring of the implementation of the local content and reservation schemes and revise the guidelines on reservation and preference into regulation, need for a clear definition of a national and resident provider, expedite payments to local firms, operationalizing the national register for contractors and consulting firms, and addressing corruption and its effects.

We invite all stakeholders to use these results to engage on recommendations from this study. Please ensure to acknowledge this piece of work to CoST Uganda.