Uganda Investment Authority needs sharper teeth

 

MORRISON RWAKAKAMBA

I take this opportunity to thank the Honorable members who constitute the Parliamentary Committee on Finance, Planning and Economic Development. I want to specifically thank the Chairperson of the Committee Hon. Henry Musasizi for seeking me out of the woods.

As a citizen of this Country, it’s a great honour to appear before this honourable committee to present my thoughts on the captioned subject.

First of all, I want to start by appreciating the Minister of Finance, Planning and Economic Development, stakeholders in civil society, Private sector and this honourable Committee for excellent work that has so far gone into the Bill. I want to say that it is moving in a direction that myself and perhaps many other Ugandans anticipated and expected.

Therefore, my contribution today is  indeed contributory and aimed at achieving a singular purpose – Giving Uganda Investment Authority (UIA) sharper teeth and sliver tongue to both enforce its mandate and amplify its effectiveness to attract and empower investments, and generate rewarding jobs in Uganda.

I state the foregoing because, the major fault line of the 1991 Investment Code Act, Cap.92, currently considered for repeal is that it created an institution without clear and specific enforcement powers to achieve its broad mandate – what we see as UIA is an Authority without authority.

To date, there are a number of companies in this Country with investment licenses, which remain constrained with other long and tedious regulatory procedures by sectorial government agencies – and UIA has had no capacity to mediate or enforce time frames to ensure that licensed investments materialise to fruition and benefit the Country.

This also adversely affects the investment image of the country and could keep away other prospective investors.

Coupled with the fact that investments relating to production and service delivery are time sensitive, unreasonable delays and bottlenecks create uncertainty and have the effect of defeating the purpose of investment.

Hon. Members, you realize, I have simultaneously used the word “enforce”. It is the gist of my presentation today. The Bill at this stage is still shying away from giving Uganda Investment Authority – the teeth – and the authority  - to deliver. I hope my contribution will strengthen the Authority’s ability to bite.

Hon. Members, Page 7 of the Bill, Clause 3 (2), tackles Objects of the Authority; Object (a) reads thus;

“to promote, attract, advocate, facilitate,  register and monitor the development of all forms of investment and activities in Uganda”

I want to suggest that this changes to;

 “to enforce, promote, attract, empower, advocate, facilitate, register and monitor the development of all forms of investment in Uganda”

Hon Members, Enforcement should also be explicit under Clause 8 of the Bill that refers to Functions and powers of the Authority and specifically function 2, which reads thus;

“The Authority shall have power to monitor the processing of investment approvals that are by law the mandate of other Government agencies”

If Uganda Investment Authority is envisaged by law to be a one-stop center, why then should other agencies of government approve investment licenses? The multi-layered and conflicting mandates lead to duplicity, bureaucratic delays and service inefficiency.

Only “Power to monitor” may be construed as power to witness and advise on the process but not to effect or enforce it and be accountable for it.

To cure this, function 2, of the authority should be out rightly potent.

I propose it to read thus;

“The authority shall have power to monitor and enforce processing of investment approvals whose all or part of processing mandate administratively falls under other Government agencies”

Page 11, function 3 of the authority should also be devoid of any ambiguity that will inadvertently give space to the Authority to have excuses for inefficiency. It reads thus;

“The public service Agency to which an investor in possession of an investment certificate issued by the Authority applies for a secondary permit shall give priority to the application and shall issue the necessary license, permit or approval with in the shortest time possible”.

Hon. Members, “Shortest possible time” is a subjective term open to many interpretations depending on the circumstances. I want to propose that, the phrase “Shortest possible time” be replaced with “within a period not exceeding 7 days after submission of application”.

 Page 12, Clause 9 deals with Uganda Investment Authority’s (UIA) Cooperation with other government Agencies in execution of its mandate. Paragraph (3) states thus

 “…Government ministries, departments and agencies shall sign agreements with the Authority that will define the service commitments and maximum delivery timelines for the services they offer to investors”

This is good, but not good enough. It should be concrete and clear on enforcement parameters and its own time lines.

I therefore want to propose that UIA secures itemised and enforceable agreements from agencies referred in subsection (2) with in four (4) months from the day when this bills shall be passed and codified into law.

Hon. Members, Page 13, Clause 12 on Minimum Investment capital requirement for investment registration and specifically paragraph(1) thus;

“The Minimum investment value proposed by a domestic investor to qualify for registration and issuance of an investment license by the Authority under this act, shall be not less than fifty thousand United States Dollars or the equivalent in shillings”

 Hon members, it is mostly investors and not traders that create jobs. The 2016 Uganda census results indicate that 58% of Ugandans are not working. The census further states that for those Ugandans who are above 25 years of age, the situation is worse, with over 90% of them unemployed.

We also need to note that as of 2016, Uganda’s Gross Domestic Product per capita income was recorded at $662.10. This situation has not significantly changed.

So, where will majority Ugandans find USD $50,000 to invest and be able to benefit from the now democratised incentives put forth by this Bill, create the much needed jobs and contribute to a greater society?

I therefore want to propose that Capital requirements for Ugandan (domestic investors) be slashed to USD $25000 and for domestic investors who are citizens from other East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) Partner States be kept at the proposed USD $50,000.

Hon. Members, you realize on meaning of ‘domestic investor’ I have added citizens of COMESA partner States, because   Common Market is a meaningful level of integration and there is more to benefit attracting investment flows from Countries where there is already meaningful harmonisation of investment, trade and business environment laws.

Hon. Members, it is also for the foregoing reason that I also proposed introduction of word “empower” in the main Objective of the bill to allow legroom for the Authority to nurture, skill and accelerate mostly Ugandan investors- especially those in the informal sector, agriculture value chains and young multi-sectoral innovators.

Finally, on clause 4 (3), which lists categories of persons/nominees to constitute the Board of UIA, I want to suggest that it includes Permanent Secretary or his/her nominee not below the rank of Commissioner from a Ministry responsible for Foreign Affairs. This is important for coordination with Uganda’s Foreign Missions (Commercial/Investment attaché’s) for they are Uganda’s first lane contact/gatekeepers for Foreign Investors/Foreign Direct Investments.

With the foregoing adopted, Uganda will have a strong and empowering Authority, critical to – guaranteeing property rights, enhancing fair competition, providing strong, favourable and competitive business environment, an expanded tax base and public revenue.

It will be an Authority driving jobs growth, strengthening export capacity, pulling down the public debt, powering inclusive and common prosperity, facilitating expansion of social services and delivering economic growth and development – and most of all, a greater society.

Thank you so much. God bless you.

The author is the founder of Agency for Transformation (www.agencyft.org). He delivered this presentation to the parliamentary committee on Finance, Planning and Economic Development.