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Back to Colonial times – Govt makes a U-turn on Uganda Development Corporation

Published 2 years ago -


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Hon Amelia Kyambadde, Minister of Trade, Industry and Cooperatives

The Committee of Parliament on Tourism, Trade and Industry is currently finalizing their report on the Uganda Development Corporation Bill, 2014, which if adopted by the House, will see the rebirth of the Uganda Development Corporation, commonly known as UDC which was repealed in 1998 with the privatization of government parastatals.

With the signing of the 1900 Buganda Agreement between the British and the Kabaka of Buganda, Daudi Chwa (who was an infant then), represented by his three agents, and signing a similar treaty with Ankole in the following year, the British looked to consolidate their presence in Uganda. They quickly set up administrative structures that was set to govern Uganda throughout their colonial period to facilitate the exploitation of Uganda’s minerals for their benefit.

However, following continuous call for an end to colonialism in Africa, the British protectorate resolved in 1952 to establish the Uganda Development Corporation (UDC) with a view that it would facilitate industrial and economic development of Uganda in various ways. For the first two decades, UDC witnessed very sound establishments and Uganda exported surplus to the neighbouring countries. However, with the expulsion of Asians, and the nationalisation of their companies, UDC became too big to be adequately administered by the then board. The 1982 Obote administration resolved thereafter to liberalise the economy, returning the companies to their previous owners.

The NRM government, in their 1988-1991 Corporate Plan sought to rehabilitate and reconstruct the Ugandan economy. They resolved that UDC and its group of companies turn-around their production from between 0 and 30% to 70% at the end of the four years. Few years later, the government resolved to privatise state owned enterprises, thereby making UDC inapt.

On 13 November 2014, the then Minister of Information, Hon Namayanja made a statement revealing Cabinet position which was reached in 2011, to revitalise the defunct Uganda Development Corporation. “Cabinet approved the principles for the drafting of the National Development Corporation on May 22 2014 and authorized the attorney general to liaise with the Ministry of Trade, Industry and co-operatives to draft the bill on the principles that were approved” she said.

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Subsequently, on the 26th of February 2015, the Minister of trade presented to Parliament a Bill, entitled “Uganda Development Corporation Bill, 2014” whose objects are to establish the Uganda Development Corporation as a statutory body to be an investment agency on behalf of the Government of Uganda and or in partnership with the private sector; and to promote and facilitate the industrial and economic development of Uganda.

The Uganda Development Corporation Act Cap 326 of 1952 was repealed by the Public Enterprise Reform and Divestiture Act, Cap 98 section 35(1). This vested the undertakings of the Uganda Development Corporation into Uganda Development Company Limited instead of a statutory body. The UDC Bill, 2014, therefore seeks to revive the Uganda Development Corporation as a statutory corporation by adopting the repealed UDC Act Cap 326 of 1952 with some modifications.

While the Committee was carrying out public hearings in the consideration of the Bill, there were certain clauses thereof that raised concern among both the members and witnesses alike. For instance, the Private Sector Foundation noted that there ought to be clarity that investments of government will focus in areas where Private Sector has no major interest to go it alone. This they observed that would help to avoid unfair competition by government especially where they are using public or donor funding.

The Minister of Trade and Industry, Hon Amelia Kyambadde clarified to the Committee that UDC should concentrate on capacity building and leave such other fields for companies that have proven their capabilities to adequately the said industries.

The Members of the Committee observed that there were several companies which were originally under UDC but following privatisation, their assets have been abandoned, or are under the usage of individuals who are not paying rent to government. The status of some assets are uncertain, for example government investment in Phenix Logistics and Munyonyo Commonwealth Resort among others. Accordingly, the committee demanded that the Ministry of Trade and Industry avails a list of all government investments before they could finalise their report.

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The new UDC will be composed of a Board of seven (7) members to ensure effective cohesion and efficiency in the management of the corporation. This was borrowed from URA which has only five (5) Board members.

The Minister also informed the committee that the Cabinet had approved Ugx 300 bn Shillings as the initial capital of the corporation, but observed that the initial capital would not be sufficient to kick-start the corporation.

UDC will be the leading agent for the industrial and economic transformation of Uganda; both on its own and in partnership with the private sector is currently operating under Uganda Development Company Limited, whose mandate will be shifted the statutory body once the Bill is passed. The committee however observed that the liability of the company should not be transferred to the corporation for it would cripple before it even starts.

What is not clear is whether the government just recently realised that the colonial government was right to establish the corporation in the first place, or that privatisation would not deliver the economic development that it foresaw. There are so many assets of UDC that were supposedly privatised but the people who purchased them have not even finished the payment of the sale prices, for example Lira Hotel which was valued at Ugx 250 Million has only received Ugx 50 Million towards its payment.[1] Could this be some of the reasons for the U-turn? Does government finally think Ugandans deserve better services?

[1] http://www.saprin.org/uganda/research/uga_privitazation.pdf

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