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

By: Isaac Okello

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.

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.

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://​​uganda/​re­search/​uga_priv­i­taza­tion.pdf