Professional Documents
Culture Documents
January 2010
FOREWORD
The National Construction Industry (NCI), comprising both the building and civil
engineering sectors, performs an indispensable role in the economy of Uganda and in
the region as a whole. It delivers the physical infrastructure that is central to the
country’s economic development. Its activities create business to suppliers,
manufacturers and offer employment to professionals, skilled and unskilled labour. It
transforms private and public plans for capital formation and renewals from paper to
reality.
Over the years Government has increasingly realized that the management of the
country’s physical infrastructure requires collaboration of the public and private
sector. Government is also increasingly divesting itself of direct service delivery in
order to improve the efficiency and effectiveness of public services. It is, therefore, a
duty and an imperative of Government to ensure that there is a well-developed NCI
to implement physical infrastructure projects.
However, the NCI is generally fragmented and unsupported due to lack of both a
definitive Government policy and a strong institutional framework. Without a strong
NCI the development and maintenance of physical infrastructure will remain a
nightmare. The growth and development of the economy will be retarded.
Initiatives have been taken in the past to train local contractors and also create an
enabling environment, especially in the road sector, to ensure increased participation
of the local firms in physical infrastructure development and management. Although
tremendous achievements have been realised, the past initiatives to develop local
firms were not backed by appropriate Government policies and strategies to sustain
the continued growth of the construction industry.
(i)
perform its crucial role in development and maintenance of the physical
infrastructure.
This Policy has the full support of Government and therefore I urge all those in
positions of responsibility, both in the public and private sectors, to embrace and
implement the recommendations contained in this Policy for the continued social and
economic development of our country. Successful implementation of the policies,
strategies and action plan will undoubtedly go a long way in fulfilling Government’s
obligation towards the development of the national construction industry.
My thanks further go to the Consultants for their in-depth study, analysis and
preparation of the documents that culminated into this Policy Statement.
I wish to thank my Permanent Secretary and his Staff for the invaluable time they
spent in preparation of this Policy document.
(ii)
TABLE OF CONTENTS
Page
FOREWORD ................................................................................................................................................................. i
TABLE OF CONTENTS ......................................................................................................................................... iii
ABBREVIATIONS AND ACRONYMS .............................................................................................................. vi
GLOSSARY ............................................................................................................................................................... viii
EXECUTIVE SUMMARY ........................................................................................................................................ ix
PREAMBLE................................................................................................................................................................ xiii
(iii)
3.4.3 The Surveyors Registration Board .............................................................................. 20
3.5 Universities and Technical Colleges ..................................................................... 20
5.1 Harmonise Roles and Responsibilities of the Public and Private Sector .............. 26
5.1.1 Training and Capacity Building ................................................................................... 26
5.1.2 Strengthening Public Institutions ................................................................................ 27
5.1.3 Improving Service Delivery by Private Sector ............................................................... 27
5.2 Regulate and Coordinate the National Construction Industry ............................. 27
5.2.1 Establishment of a Uganda Construction Industry Commission ...................................... 27
5.2.2 Strengthening and Supporting the Regulatory and Professional Bodies ........................... 28
5.3 Develop and Strengthen Local Capacity for Effective Participation..................... 28
5.3.1 Supporting UNABCEC ................................................................................................ 29
5.3.2 Supporting UACE ...................................................................................................... 29
5.3.3 Supporting other Business Associations....................................................................... 29
5.4 Increase Access to Equipment, Credit and Work ................................................. 29
5.4.1 Facilitating Establishment of a Plant Hire Pool .............................................................. 29
5.4.2 Reviewing of Tender Conditions ................................................................................. 29
5.4.3 Establishing a Construction Guarantee Fund ................................................................ 30
5.4.4 Contracting Work to Local Firms ................................................................................ 30
5.4.5 Ensuring Mandatory Sub-contracting .......................................................................... 30
5.5 Promote Use of New and Appropriate Technology .............................................. 30
5.5.1 Promoting use of Labour-based Technology ................................................................ 31
5.5.4 Undertaking Research in New Technologies................................................................. 31
5.6 Remove Restrictive Practices to Participation of Marginalised Groups ............... 31
5.6.1 Integrating Issues of the Marginalised Groups ............................................................. 31
5.6.2 Incorporating Needs of the Marginalised Groups in Design and Execution of Works ......... 31
5.7 Promote Sustainable Economic and Social Development .................................... 32
5.7.1 Protecting the Environment ....................................................................................... 32
5.7.2 Promoting Occupational Health and Safety at Work ...................................................... 32
5.7.3 Providing Security to Service Providers in Insecure Areas .............................................. 32
(iv)
6.1.2 Supporting Training Centres and Institutions of Higher Learning .................................... 34
6.1.3 Improving Implementation of Works and Service Delivery Mechanisms .......................... 35
6.2 Regulation of the Construction Industry ............................................................. 35
6.2.1 Regulating the Construction Industry .......................................................................... 35
6.2.2 Supporting the Regulatory and Professional Bodies ...................................................... 36
6.3 Strengthening Participation of the Local Entities ................................................ 37
6.3.1 Strengthening the Contractors’ Association (UNABCEC) ................................................ 37
6.3.2 Supporting the UACE ............................................................................................... 38
6.3.3 Supporting Other Business Associations ..................................................................... 38
6.4 Facilitating Access to Equipment, Credit and Work ............................................. 39
6.4.1 Establishment of a Plant Hire Pool ............................................................................. 39
6.4.2 Reviewing of Tender Conditions ................................................................................ 39
6.4.3 Establishing a Construction Guarantee Fund ................................................................ 40
6.4.4 Increasingly Contract out Work to Local Firms ............................................................. 40
6.4.5 Mandatory Sub-contracting ....................................................................................... 40
6.5 Application of Labour-Based and New Technologies ........................................... 41
6.5.1 Application of labour-based Technology ...................................................................... 41
6.5.2 Application of Research in new Technologies ............................................................... 42
6.6 Increasing Participation of Marginalised Groups ................................................. 42
6.6.1 Integration of Concerns of Marginalised Groups in Policies and Plans ............................. 42
6.6.2 Integrating Needs of Marginalised Groups in Design and Execution of Works .................. 43
6.7 Supporting Sustainable Economic and Social Development ................................ 43
6.7.1 Protecting the Environment ....................................................................................... 43
6.7.2 Promoting Occupational Health and Safety at Work ...................................................... 44
6.7.3 Providing Security to Service Providers in Insecure Areas .............................................. 44
(v)
ABBREVIATIONS AND ACRONYMS
(vi)
UPK - Uganda Polytechnic Kyambogo
USA - Uganda Society of Architects
UTRP - Uganda Transport Rehabilitation Project
VAT - Value Added Tax
WTO-GATS - World Trade Organisation- General Agreement on Trade and Services
WURMCBP - Western Uganda Road Maintenance Capacity Building Project
(vii)
GLOSSARY
Consultant: Any firm, or individual, joint venture or team of firms and/or individuals
engaged to give professional advice or service at a fee, but not as an employee of
the party that engages it, him or her.
Policy: Course of action that has been officially chosen and agreed upon by
Government or an organisation.
(viii)
EXECUTIVE SUMMARY
Background
The National Construction Industry (NCI), comprising both the building and civil
engineering sectors, performs an indispensable role in the economy of Uganda and in
the region as a whole. It delivers the physical infrastructure that is central to the
country’s economic development. Its activities create business to suppliers,
manufacturers and offer employment to professionals, skilled and unskilled labour. It
transforms private and public plans for capital formation and renewals from paper to
reality.
Over the years Government has increasingly realized that the management of the
country’s physical infrastructure requires collaboration of the public and private
sector. Government is also increasingly divesting itself of direct service delivery in
order to improve the efficiency and effectiveness of public services. It is, therefore, a
duty and an imperative of Government to ensure that there is a well-developed NCI
to implement physical infrastructure projects.
Government will promote open dialogue amongst stakeholders in the NCI to ensure
that issues affecting the industry, identified in this Policy, are discussed and resolved.
(ix)
continuously improving institutional framework. The Government’s strategic objective
is that 80% of all services, in monetary terms, in the national construction industry
are provided by the private sector by June 2015.
a) Harmonising roles and responsibilities of the public and private sectors for
effective management of the national construction industry. Strategies include:
training staff in Government departments to improve performance in their roles;
strengthening public institutions to manage their roles; and improving service
delivery and implementation of works using the private sector.
d) Facilitating local firms in the construction industry to access equipment, credit and
work. Strategies include: reviewing Clauses in the tender documents related to
Advance Payment and Performance Guarantees to make them less stringent and
enable local firms to access up-front financing of projects; contracting of physical
infrastructure maintenance works funded by Government to local firms; and
formulating a Reservation Scheme in line with Procurement and Disposal of Public
Assets Act (PPDA) for physical infrastructure development works and consultancy
services funded by both Government and Development Partners.
(x)
to be applied. Strategies include: Promoting labour-based technology as the
technology of first choice in construction of roads; and undertaking further
research in the use of new and appropriate technologies for construction and
maintenance of physical infrastructure facilities.
(xi)
Key Benefits of Implementing the Policy
The benefits accruing from implementation of the Policy include: improved regulation
and coordination of stakeholders in the construction industry; improved efficiency in
planning and management of physical infrastructure projects by the Central and
Local Governments; and easy access to finance, construction equipment and work by
the local firms. The other benefits are: increased turnover by local contractors and
consultants resulting into better value-for-money and more retention of profits in the
country; lower cost of works and increased savings on the part of employees
accruing from increased local participation; resulting job multiplier effect on the
medium and long term economic performance; and better quality and safe physical
infrastructure in the country.
(xii)
PREAMBLE
Recognising the need to have in place a clear, well-focused and people centred
National Construction Industry Policy;
Appreciating the important role the construction industry plays in the socio-
economic development of Uganda; and
Bearing in mind the commitment of the Government to economic and public sector
reforms for the country’s development;
(xiii)
1.0 INTRODUCTION
Uganda has registered high achievements in all sectors of the economy since 1986,
with a consistent growth of GDP greater than 5% per annum. The economic success
has been achieved through deliberate reforms implemented by the Government, with
the support of international financing institutions and donor agencies. This
performance has resulted into the expansion of the country’s physical infrastructure
in all sectors i.e. transport and communications; housing and buildings; water and
sanitation; energy; health; education; and agriculture.
1.1 Background
The construction industry which comprises which comprises the building, civil
engineering water, sewerage, power, telecommunications and other physical
infrastructure works, plays a significant role in the socio-economic development of
the nation. It directly offers employment to many households. With easy access to
the markets and the farms assured through the provision of the transport physical
infrastructure, agricultural production is stimulated leading to improved welfare of
the population. Through employment offered by new work, rehabilitation and
maintenance, the industry contributes significantly towards the country’s GDP.
In the global context, construction is one of the industries that are of most common
socio-economic and political significance. Its role cuts across the different resource
endowments, social policies and existing levels of development. Its wide range of
outputs often sets the nation’s political agenda and provides the basis for social and
economic development as well. However, in Uganda it has remained weak, largely
undeveloped and in need of a policy, strategies and actions to promote its
sustainable growth. Development of a strong construction industry will yield the
following main benefits for the country:
a) A skilled work force together with a strengthened public sector for contract
planning, financing, procurement, monitoring and evaluation;
b) Improved quality and efficiency leading to better value for money in private and
public sector construction projects;
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Development and Strengthening the National Construction Industry
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c) Reduced incidence of insolvency and failure to complete work by contractors,
leading to reduced costs to clients;
d) Improved prospects for a greater share of national construction work being
undertaken by local contractors and consultants;
e) Improved work continuity leading to greater employment security;
f) Greater retention of construction profits in the country; and
g) Better quality and safety of physical infrastructure.
Uganda has developed a national strategic vision (Vision 2035) as a basis for national
development over a thirty-five year horizon. Vision 2035 embodies strategic actions
to guide Government policies for both the public and private sector. Based on the
strategic framework of Vision 2035, Government has developed this National
Construction Industry Policy aimed at the investment into, and management of, the
physical infrastructure for sustainable development.
The Vision for the National Construction Industry is to have an effective, efficient and
sustainable construction industry in which both the public and private sector are
informed, conscious and actively involved in decision-making on matters that affect
them.
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Development and Strengthening the National Construction Industry
2
and artisans to execute construction and maintenance work. Measures have to be
taken by Government to ensure that there is adequate construction and maintenance
work for contractors and consultants besides enabling the growth of private
contracting and consulting firms. Finally, Government must put in place a regulatory
framework to monitor and direct the practices of the sector investors, contractors
and consultants.
The main objective of this Policy aims at improving regulation and development of
the construction industry thereby addressing the above constraints.
Under the Ten-Year Road Sector Development Programme (RSDP) a Study and
Technical Assistance for the Development of the LCI was identified. Accordingly, in
September 1999, Danida supported a preliminary study on development of the local
construction. The study established the necessary measures and made
recommendations to Government on how to strengthen the domestic construction
industry.
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Development and Strengthening the National Construction Industry
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Following the recommendations of the study, a Task Force, comprising senior officers
in the Ministry of Works and Transport was established in October 2000 to prepare a
Policy Framework, Strategies and a comprehensive Action Plan aimed at the
development and strengthening of the LCI.
As a matter of procedure, Government must widely consult the people during policy
formulation process. The Task Force therefore, carried out consultations locally with
key stakeholders which included contractors, consultants, academia, professional
bodies, and line ministries, among others. The Task Force submitted a first draft
Policy document in June 2001 which was discussed internally in the Ministry of Works
and Transport.
A second draft Policy document was prepared and presented at the first national
consultative workshop of key stakeholders held in Kampala on 17 February, 2005. A
Consultant (M/S MBW Consulting Engineers) was engaged to harmonise the report of
the Task Force with other related studies, incorporate comments of the workshop
and come up with a Draft Policy Framework, Strategies and a comprehensive Action
Plan detailing the Technical, Financial, Administrative and Human resource
requirements to support the development and strengthening of the local construction
industry.
The third draft Policy document was prepared and presented at a second
stakeholders’ workshop held in Kampala on 30 August, 2007. The Task Force
accordingly incorporated comments of the workshop and prepared a final Policy
document which was subsequently submitted for approval in September 2009.
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Development and Strengthening the National Construction Industry
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During consultations, the stakeholders advised Government to:
a) Develop a policy that covers the entire construction industry and not to limit it to
a few sections, groups or disciplines;
b) Harmonise the roles of the public and private sectors in the construction industry;
c) Establish a Commission to regulate the construction industry;
d) Institute mechanisms for timely payments to providers for work done and
services rendered;
e) Facilitate local firms to access credit, secure adequate work and increase
equipment holding; and
f) Set minimum thresholds for work to be sub-contracted to local contractors and
consultants by foreign firms as a means of increasing gainful participation of local
firms in the work that takes place in the construction industry.
Strategies and a plan of action have been incorporated in this Policy after wide and
in-depth consultations with the stakeholders. The persistent demand for a policy by
the stakeholders particularly the associations of contractors and consultants has
resulted into urgency for the Policy.
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Development and Strengthening the National Construction Industry
5
2.0 RELATED POLICIES, PROGRAMMES AND PAST
INITIATIVES
Most public works, in the past, used to be executed by Government direct labour
units (force account) situated in districts. Over the years this method proved
inefficient and wasteful, resulting in extensive deterioration of physical infrastructure.
Government has consequently adopted a policy of divesting itself from direct labour
units to increasing use of the private sector with the objective of improving the
effectiveness, efficiency and sustainability of service delivery. The policies,
programmes and past initiatives aimed at growth of the construction industry are
discussed in this chapter.
PEAP is premised on four pillars and priority areas namely: Economic management;
Production, competitiveness and incomes; Security, conflict-resolution and disaster-
management; Good governance; and Human development. The core challenges
therefore, that are identified by PEAP include, enhancing income, reducing inequality,
removal of constraints to agricultural sector, ending insecurity and improvement of
quality of lives of the poor, among others.
Under the Highly Indebted Poor Countries Initiative, the Development Partners have
supported PEAP by writing off substantial interest accruing on loans that Government
has acquired over the years. The funds thus realised are being invested by the
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Development and Strengthening the National Construction Industry
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Government in the districts and urban authorities through a modality known as
Poverty Action Fund (PAF) for physical infrastructure development and maintenance.
The mission of the Uganda Public Service Reform Programme is: “to develop a Public
Service which delivers timely, high quality and appropriate services at the least cost
to the nation, supports national development and facilitates the growth of a wealth
creating private sector.” This mission thus clarifies the direction and provides
performance indicators of the Programme. It also spells out the relationship between
the Public Service and the private sector. The Public Service is obliged to provide a
conducive environment in which the private sector creates wealth for the nation
albeit without compromising efficiency and effectiveness in service delivery.
The role of Public Service is therefore limited to providing only those services which
cannot be performed timely or to an acceptable standard by the private sector such
as strategic planning, setting standards, regulation and monitoring.
2.1.3 Privatisation
2.1.4 Decentralization
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Development and Strengthening the National Construction Industry
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a) Central or National
b) District Local Council (LC V)
c) Municipal Local Council (LCIV)
d) Sub county or Town Council or Division of a City (LC III)
Lower local governments are encouraged to pursue policies and strategies that are
crucial to the fulfilment of national goals. The decentralisation policy favours growth
of local contractors in all parts of the country.
The Road Sector Development Programme (RSDP) was initially formulated for only
National Roads and agreed with Development Partners in 1996 for the period
covering 1996/97 – 2005/06 at an estimated cost of US$ 1.5 billion dollars. This
programme was subsequently revised in 2002 to include District, Urban and
Community Access roads and placed on a rolling framework. The RSDP (2001/02–
2010/11) has been estimated to cost USD 2.3 billion and will be updated on a rolling
framework every 5 years. The major objectives of this programme are to:
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Development and Strengthening the National Construction Industry
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The Programme also addresses environmental protection, HIV/AIDS prevention,
gender mainstreaming, road safety, occupational health and safety as well as
mainstreaming concerns of persons with disabilities (PWD) in road management.
DHSP has enabled Government to deliver health services to the communities through
improved access provided at the new sub-district health centres and at the
rehabilitated Government hospitals. Physical construction works characterised this
project with the participation of a sizeable number of local contractors.
The objective for the rural water and sanitation sector reform has been spelt out by
Government as:
To ensure that services are provided and managed with increased performance and
cost-effectiveness and to decrease the Government’s burden while maintaining the
Government’s commitment to equitable and sustainable domestic water provision
and sanitation services in the rural areas.
In 1999 Government launched the Water Sector Reform Programme to identify and
address barriers to the delivery of water and sanitation facilities in the rural and
urban settings on target dates agreed in past international fora. The outcome was an
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Development and Strengthening the National Construction Industry
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investment plan for each of the rural districts and rural growth centres; and the
urban and peri-urban areas respectively. The investment plan, to be implemented in
a 15 year horizon effective from FY 2000/2001 complete with the financial and
physical resources required together with the proposed institutional and human
resource development plans, is being supported by the Development Partners.
Foreign contractors are involved in the construction of boreholes and pump
installation, construction of sanitary facilities in public institutions, water pipeline
network laying and bulk storage construction. The local contactors are mainly
engaged in construction of water point sources, production of sanplats and as sub
contractors and suppliers.
Since 1988 to-date Government, supported by the World Bank, German Government,
British Government and European Union, DANIDA, African Development Bank, JICA,
IFAD and ILO has undertaken a number of projects on the national roads that has
had sub-components specifically targeting the local contractors in the road sector.
Implementation of the road projects has contributed to achievements in development
of the national construction industry.
However, because the NCI was so much retarded in the 1980s and early 1990s the
impact has so far been limited and only felt in the following areas:
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2.2.2 Establishment of Fixed Unit Rates
In 1994, Government adopted a strategy to phase out force account operations for
maintenance of national roads, in favour of contracting. However, at the time the
few contractors that existed were ill equipped and lacked the capacity to
competitively obtain jobs. The Government therefore came up with the Fixed Unit
Rates (FUR) contracting Programme that became effective from that year. The
programme had the following attributes:
One of the biggest issues within the industry in general and in the road sector in
particular is the lack of access to equipment. In 1994 Government commissioned a
study to determine the feasibility of establishing a Plant Hire Pool as a way of
supporting the industry initially starting with road construction and maintenance and
later to support the entire industry. The main target as a source of equipment was
the numerous pieces of Government road equipment, which were already in the
country but evidently under-utilised for various reasons. The study concluded that a
Plant Hire Pool run on commercial principles was viable.
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2.2.4 Contractor Capacity Building under District Roads
Both contracting and direct labour operations have been used in rehabilitation and
maintenance of district, urban and community access roads. All routine maintenance
activities are now executed through small-scale contractors and petty labour-based
contractors. Rehabilitation and periodic maintenance activities have largely been
carried out under heavy equipment and direct labour operations because of
inadequate labour and machine-based contracting capacity in the districts. Labour-
based petty and small-scale contractors have carried out routine maintenance
operations on district roads.
Since 1990, Government has carried out a number of training programmes both on-
the-job and at training institutions. The training delivered on-site benefited a number
of selected contractors especially the petty contractors in the area of labour based
methods of road maintenance. The formal training has been conducted at the Public
Works Training Centre, Kyambogo, Mt. Elgon Labour-Based Training Centre (MELTC)
in Mbale, Makerere University, Uganda Polytechnic Kyambogo (UPK), Uganda
Management Institute (UMI), Bugembe Mechanical Workshop, Kisii Training Centre
(Kenya) and overseas institutions. The trainees have consisted of headquarter staff
and district personnel, politicians and lower cadre district staff. Skills and awareness
have been imparted resulting in improvements in the implementation of the
maintenance programmes. Training was provided by the following projects:
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2.2.5 Uganda National Association of Building and Civil Engineering Contractors
In the early 1990’s prominent contractors at the time were invited for a series of
discussions which resulted into the revival of the Uganda National Association of
Building and Civil Engineering Contractors (UNABCEC) which had ceased to function
in 1973. All contractors were encouraged to join and subscribe through membership
fees, periodic and annual general meetings. To-date the Associations is slowly
increasing its membership due to shortage of operational resources.
In the past 30 to 40 years, the country has undergone very sharp fluctuations in the
housing construction sector. The period was characterised by a vibrant economy in
1960s at attaining independence, followed by a sharp decline during the military rule
in the early 1970s. When peace was restored in 1986, marginal attention was initially
accorded to construction generally including housing, in favour of resettling displaced
communities. Global inflation caused agriculture to take priority so as to stimulate
production. Alongside other essential services i.e. health and security, the road
sector was also given prominence to enable access to the farmers and the marketing
of agricultural produce. The result was that the housing sector continued to be
distressed for some time before it started to recover at a slow pace. In 1990, the
Government recognised the need to support and guide the development of the
housing sector starting with establishing the size of the sector, assessing needs for
stimulating the growth of the sector, undertaking an inventory of all active
contractors, and identifying their capabilities.
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3.0 INSTITUTIONAL FRAMEWORK
Physical infrastructures such as roads, railways, the built environment, water sources
and supply systems, dams, power transmission lines, and telecommunications that
are constructed and maintained by the construction industry play a crucial role in the
social and economic development of the country. They facilitate the movement of
passengers and goods, communication between distant places, provide shelter and
accommodation at work places, homes and manufacturing facilities among others.
The key stakeholders in the national construction industry are the Government,
Donors, private investors, consultants and contractors. The core support
organisations form the tripartite arrangement comprising client, contractor and
consultant. In addition there are other organisations that support the industry to
develop and improve productivity. They include the learned professional societies,
regulatory bodies, business development organisations, commercial banks, insurance
companies, universities, trade unions, education & training organisations and
equipment & materials suppliers.
The Government ministries that play a central role in the national construction
industry include:
The key role of the above Ministries in relation to the construction industry is policy
formulation, strategic planning, setting standards, monitoring and evaluation.
Physical infrastructure development and maintenance works is executed by
contractors and supervised by consultants. Contractors and service providers are
procured by the respective ministries on a competitive basis to undertake the works.
Justice, law and order plays a central role in the construction industry by ensuring
safety of the constructed physical infrastructure and security of people who construct
the works and those that use them particularly those in the conflict infested areas of
the country. The rights of the people, peace, law and order during construction of
works are ensured by the sector.
The conflicts between parties that arise in the construction industry are handled
through arbitration or appropriate courts of law which restore thereby improving
contract management in the construction industry.
The Public Procurement and Disposal of Public Assets Act, 2003 established the
Public Procurement and Disposal of Public Assets Authority. The Authority formulates
policies and regulates practices in respect of public procurement and disposal
activities and other connected matters.
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3.1.3 Uganda National Roads Authority
The Act which established the Uganda National Road Authority (UNRA) became
effective in January, 2007. The core function of UNRA is management of the
national roads i.e. both maintenance and development. UNRA is expected to improve
efficiency and effectiveness in management of national roads. It will also provide
technical advice and assistance to Central Government and Local Governments.
The Agencies and other institutions include National Housing and Construction
Corporation, Uganda Clays Ltd, Housing Finance Company of Uganda, National Social
Security Fund and National Water and Sewerage Corporation, UNRA, NEMA, CAA.
Currently there are only three business development organisations among the
professions in the construction industry: Uganda Association of Consulting Engineers
(UACE), Federation of Uganda Consultants (FUCO), and Uganda National Association
of Building and Civil Engineering Contractors (UNABCEC). These organisations are
further described below.
The organisation runs seminars and lunchtime meetings with guest speakers
covering topics of interest to its members; networks with other national associations
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Development and Strengthening the National Construction Industry
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of consulting engineers in Africa and worldwide; and lobbies Government,
international lending agencies, donors, FIDIC, and the private sector on matters
affecting them. While these approaches are laudable, it is necessary to develop the
consulting profession in Uganda. It is therefore the obligation of Government to put
in place policies and strategies aimed at supporting smaller consulting firms in order
that they can grow to become members and receive support from UACE.
To-date the Association has attracted only a small proportion of contractors. Its
membership of only 300 against an estimated 800 contractors in the country implies
it needs strengthening. Relatively high annual membership subscription charges and
a lack of direct tangible benefits may have discouraged potential members from
joining. Secondly, stiff competition for the few available contracts at a given time
makes the Association ineffective as the sector is perceived as too insecure and
many contractors find themselves falling out of business. The organisation therefore
needs support in order to attract more contractors to the membership.
Professional bodies also known as Learned Societies, take a more regional and global
view of the industry with the aim of advancing knowledge and dissemination of
information in the industry. They typically examine and enrol Engineers, Architects
and Surveyors. They aim to maintain standards, ethics and a high professional
competence among their membership. They also promote interaction with other
bodies in the region
UIPE as a professional engineering institution has been the subject of a DFID funded
study by the Institution of Civil Engineers (UK) aimed at increasing its capacity and
raising the professional standards in the country in line with the national goal of
poverty eradication, the issues of globalisation, and the dictates of the World Trade
Organisation (WTO). Globalisation and the need to remove national barriers to
professional services as required under WTO’s Global Agreement on Trade and
Services (GATS 2000) will only be successfully addressed by the local professionals
purging themselves of incompetence and inefficiency in their professional outlook
and practices, and meeting internationally agreed standards of competence in order
for them to practice across national boundaries. UIPE shall implement systems and
procedures to meet the requirements of global issues and the consequent domestic
challenges. In order to effectively do so, UIPE will need strengthening.
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Development and Strengthening the National Construction Industry
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sets examinations. Members are classified as Fellows, Professional Associates,
Technicians and Student members.
The Institute of Surveyors of Uganda enrols surveyors very much on the similar
procedures as USA. It classifies practising Surveyors as Fellows, Professional
Associates, Technicians and Student members.
The Uganda Institute of Physical Planners, like the ISU enrols physical planners in
this country for purposes of ensuring that they practise under, and follow, a Code of
Ethics.
The Engineers Registration Act, 1969 (amended 1977) established the Engineers
Registration Board (ERB) to regulate and control Engineers and their activities and
advise Government in relation thereto. The Act requires all practising engineers to be
registered with the ERB.
To-date ERB has only 390 registered engineers yet the total number of practising
engineers in the country is estimated to be 2500. There is clearly a gap in
implementation of the law that enables more than 2000 non-registered engineers to
practice. This undermines the authority, responsibility and functions of both UIPE
and ERB in the engineering profession and reduces the two organisations’ financial
revenue and the services rendered.
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3.4.3 The Surveyors Registration Board
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4.0 KEY ISSUES IN THE NATIONAL
CONSTRUCTION INDUSTRY
The NCI generally remains fragmented, unsupported due, in part, to lack of both a
definitive Government policy and a strong institutional framework. This has
increasingly encouraged the “informal sector” mentality approach to business in the
industry with no long term view on work continuity on the part of local contractors
and consultants. The full potential of employment generation and the accompanying
multiplier effect based on local capacity have thus not been exploited. Consequently,
the national construction industry tends to heavily rely on the services of foreign
contractors and consultants, even for repair and maintenance works that could
otherwise be more economically handled by local players. The implications on the
economy resulting from the capital flight emanating from this arrangement are
considerable.
The following issues and constraints affecting development of the NCI have been
identified during recent studies in Uganda.
The majority of big constructions are being executed solely by a few international
firms. Only a small percentage of the local firms are able to compete against, or work
in joint-venture with international firms. Consequently, small firms are unable to
develop their capacity and expand their market share to develop into medium-size or
large-scale companies. The small firms are confined, due to their limited size and
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resources, to undertaking only small building and occasionally minor civil engineering
works.
Limited management capacity and business acumen within the contracting sector is
exacerbated by the vicious circle of: no experience → no job → no experience…
Limited access to credit and loan facilities for short term bridging finance required for
project implementation, and long term capital to cover the cost of business
establishment and growth is a serious barrier to the development of the capacity of
private firms.
Limited work continuity due to absence of adequate workload offered by the public
sector wipes out any gains the NCI may have registered from occasional contracts.
To ensure increasing effective participation of local entities in the construction
industry, which will facilitate their growth, measures need to be put in place to
continuously generate work for the contractors.
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4.2.2 Constrictions in Capacity Development
The consultants, like the contractors, are faced with the vicious circle of:
Can’t get work→ can’t get experience→ can’t get registered→ can’t get work.
The role of Government and local councils in project planning and management,
contract procurement and administration is increasingly becoming more crucial in line
with the increasing departure from force account in favour of private sector
participation at the appropriate technology levels. Therefore, there is need for a well-
developed institutional capacity within each individual service provider in the public
service domain.
The human resource skill in the public sector is not well developed in tandem with
the changing public service delivery culture. Project planning and management, and
contract administration skills need to be developed in order to ensure value for
money.
In addition the number of technical professionals in the country is still low. Other
than the Ministries of Works and Transport and that of Water and Environment which
have good numbers of technical professionals other Ministries which are involved in
supervision construction work lack them.
Most training institutions are unwilling to develop tailor-made courses unless there is
effective demand from both public and private sector although they are equipped
with general management skills.
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4.4 Registration and Procurement Issues
4.4.2 Tendering
a) Lowest price – the criteria for award of tenders based on lowest price is
associated with the following problems:
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sub-contract a defined percentage of the work or services, for purposes of
improving the participation and development of our local firms.
d) Cost Variations
i) No cost variations are allowed on maintenance contracts and yet the cost of
some inputs like fuel is erratic.
ii) The fairest method of assessing cost variation is the use of a Price
Adjustment Formula based on Consumer Price Indices. Capacity to develop
and regularly update these indices is required in UBOS to ensure readily
available and reliable data.
i) Bid Security and Advance Payment Guarantee – too harsh for most providers
due to the current requirement of Bank Guarantees.
ii) Performance Guarantees – Both Bank Guarantees and Insurance Bonds are
allowed. However, there are high chances of failure to recover funds
guaranteed with Insurance Bonds.
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5.0 POLICY STATEMENTS
The goal of the National Construction Industry Policy is to enhance delivery, stability,
improved performance, and the growth of the local businesses and professions
within an organised and continuously improving institutional framework. The Policy is
premised on the provisions of the Constitution of Uganda (1995), Vision 2035,
Poverty Eradication Action Plan (PEAP), National Development Policy and Divesture
Policy.
a) Harmonise roles and responsibilities of the public and private sector for effective
NCI management;
b) Regulate activities of the stakeholders and co-ordinate public and private sector
dialogue for the development of the national construction industry;
c) Develop and strengthen local capacity for effective participation in the NCI;
d) Increase access to equipment, credit and work by local contractors and
consultants;
e) Promote use of new and appropriate technologies;
f) Remove Restrictive Practices to Participation of Marginalised Groups; and
g) Ensure that NCI supports sustainable national economic and social development.
5.1 Harmonise Roles and Responsibilities of the Public and Private Sector
Government shall decrease involvement of the public sector in actual service delivery
and effectively disengage from implementation of physical infrastructure
construction. Strategies for implementation of this policy objective shall include:
Staff in Government departments that form the support framework for the NCI will
be trained to improve their performance in the roles of, policy formulation, strategic
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planning, setting standards, monitoring and evaluation, procurement and contract
management.
Government will improve service delivery and implementation of works using the
private sector.
Government shall regulate the activities of the stakeholders and co-ordinate public
and private sector dialogue for the development of the national construction
industry. Strategies for implementation of this policy objective shall include:
The Commission shall be funded from the Consolidated Fund and its main functions
shall be to:
a) Provide leadership, focus and support to the stakeholders in the industry which
will enhance delivery, performance and value for money, profitability and the
industry’s long-term survival in the global context;
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b) Provide a focal point for co-ordination, stimulation and promotion of research and
development, training and advise stakeholders on capacity limitations in the
construction industry;
Government shall put in place a stable and secure regulatory framework and support
the development and the operations of the professional stakeholders in the NCI.
Government will give support to Secretariats of the Regulatory Bodies, review their
Statutes for effective regulation of the industry and review professional Ethics and
Code of Conduct for the Learned Societies in the construction industry.
Government shall develop and strengthen the capacity of the local contractors,
consultants, suppliers and manufacturers for effective participation in the
construction industry. Strategies for implementation of this policy objective shall
include:
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5.3.1 Supporting UNABCEC
Support and strengthen the Uganda National Association of Building and Civil
Engineering Contractors.
Government shall support other business associations that will be formed in the
construction industry during implementation of this Policy.
Government will retain core plant and equipment and facilitate the setting up of a
Plant Hire Pool initially comprising of the serviceable plant and equipment currently
owned by Government. The uneconomical plant and equipment will be sold off to the
public. A private investor shall manage the plant hire pool and shall be responsible
for leasing and servicing the equipment. The net revenue from leased equipment will
go directly to the Consolidated Fund.
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5.4.3 Establishing a Construction Guarantee Fund
The construction industry makes use of various types of technologies with machines
and labour as resource inputs. A number of factors influence the choice of
technology for any given construction and society. Some of the factors include
design, site conditions, availability of local materials, availability and motivation of
workers, quality of standards, required speed of construction and the costs of the
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different approaches. The choice of technology in physical infrastructure
development is of crucial importance.
Undertake further research in use of new and appropriate technologies and local
materials for construction and maintenance of physical infrastructure facilities.
Government shall remove any restrictive practices which prohibit marginalised groups
(women, youths, physically challenged persons, elderly persons, children, etc) from
gainful employment in the construction industry. At the same time child labour in
construction industry shall be prohibited. Strategies for implementation of this policy
objective shall include:
The strategy shall be to ensure that concerns of the marginalised groups are explicit
and verifiable in the policies, plans and budgets of key stakeholders in the
construction industry. The policies, plans and budgets will take cognisance of
concerns of the marginalised groups.
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Government will ensure that concerns of the marginalised groups are addressed in
the design and execution of physical infrastructure works.
Government will ensure that the environment is protected in the process of planning,
design, development and maintenance of physical infrastructure facilities.
Government will ensure contractors and consultants promote occupational health and
safety of workers in provision and maintenance of physical infrastructure facilities.
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6.0 PLAN OF ACTION
The proposed timeframe for the NCI development strategy is estimated to be 5 years
effective from FY 2009/10. The policy objectives and strategies outlined in the
outgoing sections shall be supported through a number of action plans described in
the following sections.
Government shall build capacity of the departmental staff to enable them take on the
roles of policy formulation, strategic planning, setting standards, monitoring and
evaluation of the construction industry. The central and local government staff shall
be required to administer contracts effectively and efficiently. This will require the
provision of appropriate training to public servants to enable them improve their
performance at work. In the first year of policy implementation, technical staff from
Government shall undergo training in tendering procedures and contract
management with a view to improving the quality of tender and contract
administration.
e) Undertaking general awareness training of the issues for staff through short
workshops or seminars that will be run regionally according to requirements.
Deliver initial short-term training courses to individual staff members. Stand
alone, one off, short courses will not be sufficient, as staff require a further
period to adapt to their new role and to practise before they fully understand the
tasks involved. This will be provided through a mentoring programme where staff
who already have the skills and are more experienced in their revised role are
able to offer advice and information to staff who have only recently been
retrained.
The Ministry in charge of Public Works will be responsible for policy implementation,
oversight on UCICO and the regulatory bodies and for coordination of the line
ministries and other stakeholders. The key actions will include establishment of a
Uganda Construction Industry Commission for effective coordination of key
stakeholders in the construction industry and strengthening of Regulatory Bodies and
Professional Societies for regulating the construction industry.
Government will regulate the stakeholders in the construction industry through the
Uganda Construction Industry Commission (UCICO). UCICO will be legally
established as a regulator of the construction industry. It will be established as a
semi-autonomous and self-accounting body through an Act of Parliament by the FY
2010/11.
a) Periodically review strategic issues that are crucial to the development of the
construction industry, develop priorities and establish reform objectives, targets
and appropriate performance indicators in the construction industry;
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b) Periodically collate information on construction expenditure, monitor construction
costs, propose cost control measures and advise Government on demand and
public sector measures to level spending into the sector in case of elasticity in
demand;
Government will give support to the Regulatory and Professional Bodies aimed at
strengthening the regulatory framework and support the development and the
operations of the professional stakeholders in the construction industry. The
measures will be to:
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b) Periodically review, in conjunction with the stakeholders, Statutes setting up the
three regulatory bodies to render them supportive of the objectives of this Policy
and any amendments necessary will be placed before the Legislature for
enactment;
c) Periodically review Professional Ethics and Codes of conduct for members of each
of the learned societies. Government’s support to professional or learned societies
in the NCI will mainly accrue from a strengthened regulatory body for each
profession; and
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Government measures will be to:
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6.4 Facilitating Access to Equipment, Credit and Work
a) Allow for raising advance payments to a maximum of 30% for both contractors
and consultants on a case-by-case basis;
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6.4.3 Establishing a Construction Guarantee Fund
b) Provide start-up fund of Ushs 500 million per year in FY 2010/11 and FY 2011/12
and
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Regulations. The Scheme will provide for mandatory sub-contracting a minimum of
20% of the contract sum to local contractors and a minimum of 30% of the total
fees and expenses to local consultants.
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d) Compile and disseminate comprehensive labour-based and new technology
design standards and implementation guidelines; and
e) Develop small scale contractors to implement labour-based road works and build
capacity of officials, consultants and contractors in use of labour-based
technology.
Government will continue to advocate for the removal of any practices which prohibit
marginalised groups (women, youths, physically challenged persons, elderly persons,
etc) from gainful employment in the construction industry. At the same time child
labour in construction industry will be prohibited. The key actions will include
integration of concerns of the marginalised groups in planning, development and
maintenance of physical infrastructure facilities.
The strategy will be to ensure that concerns of the marginalised groups are explicit
and verifiable in the policies, plans and budgets of key stakeholders in the
construction industry. The policies, plans and budgets will take cognisance of
concerns of the marginalised groups.
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b) Periodically generate disaggregated baseline data upon which policy-makers and
planners will draw to design efficient and effective interventions that will respond
to the needs of the marginalised groups in the construction industry;
d) Ensure that resources are allocated in a manner that responds to the identified
needs of the marginalised groups.
Government will ensure that concerns of the marginalised groups are addressed in
the design and execution of physical infrastructure works.
Government will ensure that the National Construction Industry supports sustainable
national economic and social development. The key actions will include protecting
the environment, promotion of occupational health and safety of workers, and
provision of security to service providers in insecure areas.
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b) Sensitise stakeholders in the industry on the importance of preserving the
environment and enforce compliance with relevant Government statutes.
a) Ensure that contractors and consultants have comprehensive safety and health
schemes at work places prior to being allowed to participate in physical
infrastructure development and maintenance;
b) Provide security for the contractors and consultants operating in insecure areas of
the country.
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7.0 IMPLEMENTATION STRATEGY AND
FINANCIAL SUPPORT
Soon after the Policy is approved and adopted by the Cabinet, specific actions will be
undertaken to prepare for and ensure timely implementation. It is worthy to note
that some strategies are already being implemented by ministries and Government
agencies through their respective mandates and will be strengthened upon approval
of the Policy.
The specific actions to publicize the Policy, mobilize the required resources and
implement the action plan will include:
Monitoring and evaluation of the plan will be through annual financial and technical
audits and Mid Term Reviews of programmes and projects of Government
departments implementing the policy.
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The key milestones will include:
f) Increase skilled manpower at all levels in the construction industry by June 2013;
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The key areas to be supported in implementation of the Policy are summarised in
Table 7.1 below.
Table 7.1: Budget for Implementing the Action Plan (US$ ‘000)
Support to Government departments shall need a total of US$ 0.24 million (Ushs
0.46 billion) for carrying out studies to review and evaluate potential policies that
may assist the development of the national construction industry.
The support shall ensure that Client Agency staff receive appropriate training in
procurement and contract administration. A training needs review shall be carried out
and training courses developed in association with training organisations. The
existing technical and training centres will be strengthened and equipped to provide
the necessary training and imparting of skills. The support will amount to US$ 0.54
million (Ushs 1.08 billion).
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7.2.3 Establishment and Operationalisation of UCICO
US$ 0.25 million (Ushs 0.50 billion) will be utilised in the first year of implementation
to cater for employment of full-time Registrars and purchase of vehicles for the 3
Secretariats. In the subsequent years a total of US$ 0.09 million (Ushs 0.18 billion)
per year will be used for employment of the Registrars.
The support to strengthen UNABCEC, UACE and other organisations shall aim at
enabling them to provide improved assistance and services to contractors in the
country. The financial support will be 0.89 million (Ushs 1.78 billion) over the 5-year
period. The support will enable provision of Technical Assistance in the first 2 years
estimated at US$ 0.26 million (Ushs 0.46 billion) plus annual operational funds of
US$ 0.12 million (Ushs 0.24 billion) for the Associations.
The operational funds for the Associations will be reduced by 50% in the last two
years. It is assumed that the Associations will have built capacity and expanded their
membership to generate adequate funds to run their business.
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7.2.6 Facilitate establishment of a Construction Levy
A total of US$ 0.52 million (Ushs 1.04 billion) in the initial three years will be used for
establishment of a Construction Levy, managed by UCICO. The funds raised under
the levy will be used to support training programmes and research initiatives aimed
at developing the national construction industry.
Mt. Elgon Labour-Based Training Centre in Mbale will be strengthened and facilitated
to conduct courses in labour-based technology so that the minimum values of work
executed in various sectors by labour are achieved. The support will amount to US$
0.515 million (Ushs 1.03 billion).
The Government Department shall meet the salary and recurrent costs of its staff
working on outputs of this Policy. It shall also contribute local counterpart funding for
supporting the action plan.
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7.3.2 Inputs from other Sources
The funding by World Bank and DFID under the Transport Sector Development
Project is estimated at US$ 1.6 million for Policy and Institutional Reforms for five
years (2010 – 2015).
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8.0 CONCLUSION
The need to develop and support the national construction industry has for the last
decade been a priority item on the national development agenda. Implementation
this NCI Policy shall greatly contribute to the Government’s efforts in addressing the
need for sustainable development based on effective public/private sector
partnership.
The phased implementation of the NCI Policy, strategies and action plans will offer
the Government and all the stakeholders including the Development Partners an
opportunity to participate right from the start in developing, testing, monitoring and
refining a robust institutional framework. However, the success will largely depend
on meaningful cooperation and clear interrelationship amongst the Government,
Development Partners, and the private sector.
The planned eventual elimination of Force Account as a tool for service delivery by
the public sector will effectively lead to a changed role of the public sector from an
implementer to being responsible for policy formulation, setting and monitoring
standards, regulation, public procurement, and project management. Therefore the
client organisations shall identify personnel for training under this Policy, to assume
the responsibilities under the changed roles.
There is a wide scope for donor and Development Partner support to make this NCI
Policy a reality. The reforms that will be introduced in the operationalisation of this
Policy shall need to be supported by the stakeholders including donors and
Development Partners. A total budget of US$ 4.0 million (Ushs 8.0 billion) will be
required for developing and strengthening the NCI in the five-year period following
adoption of this Policy.
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However, further funding shall be required for setting up the physical infrastructure
for the UCICO upon a successful review in the fourth year. Also technical assistance
shall be needed to address the critical areas of training of trainers with respect to
imparting of managerial and technical skills to contractors. Government shall
therefore seek support from Development Partners to fund programmes and projects
resulting from implementation of this Policy.
It is therefore imperative that MOWT will open dialogue with all key actors of the
construction industry and work closely with all donors and other stakeholders in the
development of the national construction industry. The action plans only provide an
operational framework and when need arises, reviews will be undertaken to ensure
success of the stated strategies.
The existence of strong leadership and motivated staff in the business development
bodies, regulatory boards, and professional associations, commitment of Government
ministries to use of local contractors and consultants and positive assistance from all
support organisations to the industry will lead to the ultimate goal of a developed
national construction industry by the year 2015.
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