MUBENDE; 29th January, 2021 – The Government of Uganda through the Petroleum Authority of Uganda (PAU) and the Ministry of Energy and Mineral Development (MEMD) has launched a $500,000 project to enhance the capacity of Micro, Small and Medium Enterprises (MSMEs) targeting businesses along the East African Crude Oil Pipeline (EACOP) route.
The project is funded by a grant from the African Development Bank (ADB).
The grant was provided in response to a request from Uganda and Tanzania for assistance in preparing local business communities to be able to retain a portion of the $3.5 billion investment in the construction of the EACOP.
The pipeline will start in Hoima in western Uganda, traverse ten (10) districts in Uganda and go through Tanzania to the coastal town of Tanga.
The project’s overall objective is to help develop capacity of local Uganda MSMEs along the EACOP, by enabling them to access new market opportunities, and building linkages with larger, national, regional, and international companies.
The project aims to support inclusive private sector growth and the creation of an estimated five hundred (500) jobs along the pipeline.
The project was launched in Mubende district by Mr. Emmanuel F. Mugunga, who represented the Permanent Secretary, MEMD.
Mr. Mugunga noted that the EACOP has raised the expectation of a significant economic upturn and creation of jobs.
“However, the reality will be different if local MSMEs do not have the capacity and experience to participate in oil and gas activities. We believe that MSMEs have a major impact on economic growth, income and employment,” he said.
Mr. Mugunga also emphasised that in addition to the technical skills enhancement, capacity building for these businesses should focus on soft skills like customer care, hospitality, client retention and referrals.
He also noted the need to address the mindset of the enterprises to appreciate and work towards achieving the specifics needs of the oil and gas project.
The project aims at supporting the communities that will benefit from opportunities presented by the oil and gas industry development and support alternative sources of livelihood to improve their wellbeing.
This intervention is in line with the Intergovernmental Agreement (IGA) between Uganda and Tanzania that was signed in 2017 to promote cooperation in the development of the pipeline and enhance participation of the pipeline host communities.
Ms. Juliet Byaruhanga, the Senior Private Sector Officer at ADB who represented the Country Manager re-echoed the bank’s commitment to supporting Uganda actualise her development strategies.
She called upon the district leadership and technocrats to provide the necessary support for the seamless implementation of the project.
Mr. Ernest Rubondo, the Executive Director of the PAU, noted that the project is in line with the PAU’s mandate of ensuring national participation by Ugandans in the oil and gas activities in order to create lasting value.
The two (02) year project commenced on 17th September 2020 with the signing of the Grant Treaty between the Government of Uganda and ADB and will end in 2022.
The ten (10) districts that will benefit from the project include Mubende, Hoima, Gomba, Kyotera, Rakai, Lwengo, Kikuube, Kakumiro, Sembabule and Kyankwanzi.
In her remarks, Ms. Mary Baguma Nyakwera, the Resident District Commissioner for Mubende district acknowledged that the proper implementation of the project will improve household incomes.
“The project success will indeed go a long way in ensuring community development,” she said.
About the project
The project will be implemented in collaboration with the respective district local governments. The target is to have at least one hundred (100) local micro-businesses in Uganda and Tanzania trained to do business on the pipeline project.
It is also expected to link at least seventy (70) business enterprises or other relevant business transactions undertaken on the pipeline.
- Specifically, the project will involve:
- Capacity building of at least two hundred (200) SMEs. This will enable the enterprises to meet the supplier criteria of large companies, meet the lending requirements of commercial banks, and increase their potential of accessing new markets;
- Establishment of a minimum of fifty (50) business linkages between Microenterprises and SMEs and twenty (20) linkages between SMEs and large companies; and,
- Establishment of a framework for the sustainability of business linkages programmes between SMEs and large companies in Uganda and Tanzania.
- It is expected that the growth of the MSMEs will lead to higher economic growth. The programme will contribute towards the ability of local MSMEs to participate in business and job creation opportunities presented by EACOP and the oil and gas sector in general.
- At the end of the project in 2022, the following achievements are expected:
- At least one hundred (100) local micro-business enterprises formalised for purposes of doing business on the EACOP project;
- At least seventy (70) Memoranda of Understanding (MOUs) signed for business linkages between enterprises or relevant business transactions along the pipeline;
- An increased number of MSMEs including women and youth-owned/led enterprises supplying the oil and gas sector – at least two hundred (200);
- New job opportunities created for at least five hundred (500) people as a result of the activities by MSMEs along the EACOP; and,
- An increased number of enterprises both in Uganda and Tanzania joining the National Supplier Database (NSD) in order to supply goods and services to Uganda’s oil and gas sector.
- An independent experienced firm will be source to spearhead the implementation of the project under the direct supervision of the Petroleum Authority of Uganda, the firm will be sourced through a competitive bidding process.
- The targeted beneficiaries include the local business enterprises. It is estimated that two hundred (200) MSMEs along the EACOP will benefit directly.
- The target is to have at least 20% of the targeted MSMEs owned by women. Other beneficiaries will include local communities who will benefit from job opportunities, the associations of oil and gas service providers together with the private sector foundations in Uganda and the commercial banks, which may lend to the enterprises.
- The main contractors will also benefit from buy-in by the communities since they will benefit and contribute to the project.
The development of local business enterprises to supply the oil and gas sector is one of the key objectives of the National Oil and Gas Policy of 2018.
The implementation of the project is an additional intervention to ensure that lasting value is retained and achieved from the oil and gas sector for the benefit of the country.