Uganda government faults local contractors over poor performance

The government has blamed weak contract management, poor business organisation and unethical procurement practices for the continued struggles of Ugandan companies to secure and successfully execute major public contracts.

Officials from the Ministry of Kampala Capital City and Metropolitan Affairs and the Public Procurement and Disposal of Public Assets Authority (PPDA) said many local firms lose government tenders not because they lack technical expertise, but because of poor project execution, non-compliance with procurement standards and financial indiscipline.

The concerns were raised on Monday during a supplier conference held in Kampala under the Greater Kampala Metropolitan Area Urban Development Programme (GKMA-UDP), one of the country’s largest urban infrastructure initiatives.

Speaking at the conference, Ms Monica Edemachu Ejua, the undersecretary in the Ministry of Kampala Capital City and Metropolitan Affairs, said the government had intentionally created opportunities for indigenous contractors but many firms were failing to meet expectations once awarded contracts.

“It is not that local contractors do not qualify. Government is deliberately supporting the growth of private sector capacity, but many local firms are not responding positively,” Ms Edemachu said.

Her comments come amid longstanding complaints from Ugandan contractors who accuse government agencies of favouring Chinese and other foreign companies when awarding lucrative infrastructure projects.

However, Ms Edemachu argued that many local firms perform well during the bidding stage but struggle during implementation.

“Most of them are good at preparing bid documents, but their actual performance on projects is poor,” she noted.

She observed that although foreign firms often win contracts, much of the physical work is still carried out by Ugandans, raising questions about why local companies have failed to build strong, competitive enterprises capable of independently handling large-scale projects.

“Why are we failing to organise ourselves, build capacity and establish stronger companies that can compete effectively?” she asked.

Uganda’s procurement laws reserve at least 30 percent of government contracts for local firms in selected sectors. But officials argued that the reservation policy alone cannot overcome weak delivery standards and poor financial management.

Ms Edemachu accused some contractors of diverting project funds into unrelated businesses after receiving advance payments, which she said contributes to delayed works and substandard output.

“Once contractors receive advance payments, some divert the money into other businesses, and project performance suffers,” she said.

She further criticised contractors who demonstrate compliance during procurement evaluations but fail to maintain standards after contracts are awarded.

The undersecretary also condemned what she described as “briefcase joint ventures,” where local firms partner with foreign companies merely to earn commissions without taking part in actual project implementation.

“Some companies enter joint ventures with firms that do not even exist, while others only participate to earn percentages,” she said.

Government officials additionally raised concerns about poor compliance with environmental, social and occupational safety standards among local contractors.

Ms Edemachu said modern public procurement increasingly emphasises sustainability, environmental protection and social safeguards, yet many contractors still focus narrowly on physical construction without considering community welfare or environmental impact.

“In procurement today, environmental sustainability and social safeguards are critical requirements, but many contractors still think construction is only about building roads,” she said.

Ms Sophia Nassali Masagazi, a legal officer at PPDA, revealed that a 2025 survey conducted under the GKMA-UDP programme found that many bids submitted by local firms fail during preliminary evaluation because of incomplete documentation and weak joint venture arrangements.

“The biggest challenge identified was in joint ventures. Many bids fail because of basic organisational issues that bidders can address,” Ms Nassali said.

The survey also found recurring weaknesses in environmental compliance and occupational health and safety standards during both bid evaluation and project implementation.

Ms Nassali further warned against unfair competition practices, fronting arrangements and poorly structured partnerships that undermine value for money in public procurement.

She also noted that the Ministry of Finance plans to fully roll out electronic government procurement for all procuring and disposing entities in the next financial year, urging contractors to familiarise themselves with Uganda’s procurement laws and the 2023 PPDA regulations governing consultancy services, evaluations, contracts and joint ventures.

The conference reflected wider government concerns over the slow growth of indigenous contractors despite years of local content policies and state-backed empowerment programmes.

Ms Esereda Bakisula, a procurement specialist in the Ministry of Kampala, said the conference was organised to strengthen the capacity of suppliers, contractors and consultants involved in government projects.

“We have identified gaps in environmental management, health and safety compliance and social safeguards during project implementation. This conference is intended to help improve the capacity of bidders so that future procurement processes become more effective and compliant,” she said.