UPDF is cheap because it is subsidized

By Andrew Niwamanya

The UPDF Engineering Brigade has received praise for constructing some government infrastructure at a lower cost than private companies. The argument of cheap costs is not necessarily true. The biggest cost pushers in our industry are among others:  Material/ inputs, labour, equipment and capital.

UPDF by far would beat any private company because we are not on a level playing ground. Its inputs are tax exempt, its labour is on a regular payroll shouldered by tax payers and most of its equipment is purchased using tax payer’s resources, its capital is interest free thus UPDF has a good head-start on any project. Any other local firm would beat UPDF given the same conditions. It is not that UPDF is cheap, rather it is because it is subsidized. If anything its costs would surpass that of most companies in an open competition. 

On corruption, for the private sector players, Government accountability institutions exercise oversight. The office of the Auditor General often does value for money audits which have shown consistent improvements in spite  of a few challenges like poor quality in puts. These reports inform the Public Procurement & Disposal of Assets Authority (PPDA) and the Inspectorate of Government to streamline our industry. Every year PPDA suspends unscrupulous firms found to have violated the law or ethics. UPDF reserved expenditures, do not necessarily have to be  audited.

In his argument, His Excellency the President emphasized delays in public procurement and corruption. Is UPDF immune to corruption? No.  A quick google search, shows that there have been instances of corruption in the army as well. Take two examples, The Observer Newspaper of November 29 2020, reported 2 charged over fuel theft of Shs 32 billion, and another in which senior commanders were charged of stealing food in Somalia (The Daily Monitor August 3, 2016), Extortion and impersonation by army personnel is common.

His Excellency the President needs to realize that the reason government is terrible at doing competitive business is because there is no reward for innovation yet the consequences of failure are high hence people concentrate on not breaking the law than actual work. The cost of compliance in Government is what drives costs high. If a road is supposed to be completed in two years but  takes an extra one year to be completed because of the Government bureaucracy, all designed to reduce corruption, then you won’t expect such a road to be cheap.

I propose the following feasible solutions to address the President’s  reservations on the private sector;

  •  The President should issue a directive to fast track automation of Government procurement with deadlines. PPDA has released a circular that it will transfer our data to the new system on 15th July 2021. This can eliminate delays and corruption since the system can be made with strict implementing deadlines.
  • Capitalize UDB with a construction fund for growth of the industry employing thousands of Ugandans. The agricultural fund has made us a country of surplus. Construction industry will be a major export in the region if well-developed.
  • Provide federal guarantees to reduce the procurement costs and give local companies  muscle to compete with international players.
  • Empower the office of the Auditor General and IGG to do timely audits and intervention on government projects
  • Engage stake holders with knowledge of the industry like Uganda Institute of Professional Engineers (UIPE), Engineers Registration Board (ERB), Uganda Association of Certified Engineers (UACE) and Uganda National Association of Building & Contractors (UNABCEC)
  • Streamline investment policies and encourage fair taxation.
  • Reserve and build capacity for UPDF to compete with foreign companies instead of with our local small, medium companies.

The men who built America were individuals with innovation not government bodies shielded from competition and its economy is still by far driven by Silicon Valley companies. NASA and CIA still uses private contractors for efficiency.

Mr. President, failure to reverse this decision will kill the construction industry in Uganda. The economy will continue to be foreign-led, and the State of Uganda will continue to serve the interests of this foreign capital.

For God and My country. I SERVE

Andrew Niwamanya, a civil engineer, is a Graduate Member of Uganda Institute of Professional Engineers and is a director of a construction company. He can be contacted on E-mail: niwandy@gmail.com

Editors Note: The views expressed in the Op-Ed section are those of the authors and not of The Infrastructure Magazine or its publishers. We welcome contributions from readers on topical issues on the sector.

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