Public Private Partnership in the Automotive Industry in
Uganda
Enhancing Policy
Dialogue and Advocacy through automotivesubsectorassociations and stakeholders
Public Private Partnership in transport and automotive
industry in particular (PPPA) is often defined as primarily a set of
institutional relationships between the Government and various actors in the
private sector. The Government of the Republic of Uganda seems to recognize the
dominance private sector participation in the automotive industry. On this
basis, Automotive Industry Development Alliance (AIDA) is proposing to automotive
industry stakeholders to forge and formulate the Automotive Industry PPP
Strategy and Implementation Guidelines, as a means of improving the sector and
augmenting the limited public resources with the private sector’s resources.
The Automotive Industry PPP Guidelines will provide a
framework structured and managed by the Public Private Partnership in Automotive
Industry (PPPA) Committee or PPPA Technical Working Group PPPA/TWG and the Ministry
of Transports and Works, together with its partners.
One of the effective strategies is when sector industry
associations, privatecompaniesand investors, stakeholders and operators engage
in industry sector planning through coalitions working inpartnership with
government with the overall goal of enhancing regulatory reform, policy,
incentives and endorsement to improve the automotive industry sector that will
in turn create an organized industry.
The Government retains the core state functions, services and
assets that are to provide the services expected of the State. The PPPAStrategy and
Guidelines will be informed by several other national policy documents,
development plans and international best practices. These include:
§ National PPP
framework,
§ National Transport
Policy Framework,
§ MOWT Strategic
Plan, and
§ Public Private
Partnership in Transport Discussion Papers,
§ National
Development Plan (NDP), and
§ MOWT Roadmap.
§ Private Sector
Manifesto
§ International
Best Practices and Evidence-based practices for Automotive Sector Governance
A
strategic public-private partnership relationship will ensure a sustainable
transport in Uganda. With strong political commitment and clear objectives and
priorities; the appropriate mix desired for attaining efficient mobility in
Uganda’s urban system would be ensured. It is recommended that Government
should concentrate on legislation, regulation and creating conducive
environment and less of being an operator; it should forge partnerships with
the private sector and other stakeholders in policy formulation, reform and
implementation. The road transport sub-sector accounts for more than 90 percent
of internal passenger and freight movement in Uganda.
The Public Private
Partnership in the Automotive Industry Strategy and Guidelines will set out its
Vision, Mission, Objectives, Rational and Principles that define parameters as
way to ensure sound strategic intend and focus needs and challenges of the automotive
industry sector.
Institutional Setup and Responsibilities for the PPPA
Institutional setup is to be designed to cover all the
concerned stakeholders in such a way that each handles the roles within its
competency and within the context of the prevailing laws. i.e
1.
Automotive Industry Associations
2.
Motor Industry Sector Associations
3.
Trade Associations
4.
Corporate Companies
5.
Development Partners
6.
CSOs
7.
Vocational and Technical Institutions and Associations
8.
Consultancies and Research Organizations
9.
Etc
In executing its functions, the PPPA will be supported by the
PPPA Project Steering Committee or PPPA/TWG, which will be composed of
permanent members representing the various functional departments of the
Ministry, and relevant bodies or associations representing the Private Sector,
as well as ad hoc members that may be appointed from time to time for
specific purpose of their expertise. Until such time that there is deep experience
in the management of PPPA, there may be a need for occasional hiring of specialized
advisors and expertise such as engineers,consultants, financiers, insurance
experts, economists, sociologists, business people, logistics and transports
specialists to support the PPPA Unit in the development and implementationPPP
programs.
As far as possible, each private sector association should
develop the necessary in-house skills and structures to carry out its own duties.
The most important
aspect to consider in determining capacity requirement is to recognize that it
is crucial for the PPPA Unit to have multiple skills, which include expertise
in the areas of auto industry, private sector governance, engineering and auto
mechanics, business development and economics, government relations and
regulatory affairs. Additionally, anotherimportant consideration in determining the capacity
requirement for A/PPP is to know what the key success factors are for PPP Units
in general.
The A/PPP Strategy will be born out of the commitment of the MOWT
to deliver on its mandate “to oversee, monitor and regulate automotive sectors
in the provision of transport services and ensuring quality, safety, standards,
affordability and sustainability”.Despite
its dominance in the economy and employment sector, the automotive industry
sector is highly fragmented in Uganda. Apparently, there is no current specific
data for the various subsectors of the automotive industry in Uganda. This may raise
issues relating to monitoring, regulation, quality, safety, standards and
consumer protections.
The
Automotive/PPP Framework is underpinned by the following assumptions and
observations:
1. That
there exists a multiplicity of automotive agencies and automotive groups;
2. That
there is erratic funding of public road agencies;
3. That
there is escalation of prices of new vehicles and their spare parts;
4. Mobility
crisis in rural areas;
5. That
most roads require rehabilitation instead of routine maintenance;
6. That
there is increasing rate of road accidents and high fatalities;
7.
There are limitations on the part automotive industry sector
in terms of its governance;
8.
That private sector is well positioned in terms of its
financial, commercial and managerial sources to bring about significant and
sustainable improvements in the automotive sector;
9.
That the entry of the private sector into the partnership is
sufficiently profitable;
10. That appropriate
framework is needed to ensure predictable and consistent implementation and
regulation of the Automotive/PPP strategy;
11. That appropriate
allocation of risks between the public and the private operator is possible;
12. That there is
efficiency gain to be derived as a result of the partnership;
13. That the
automotive industry sector is a significant contributor to the economy but it is
highly fragmented and inadequately represented;
14. That there is
little or no regular formal interaction between traffic regulators, police and
the general automotive industry players, stakeholder and consumers;
15.
That
there is complex vehicle registration criteria and processes;
16.
That
there is inconsistentenforcement of laws and regulations, leading to corruption
and misuse of regulation as source of income;
17. That there is a widening automotive
industrysector whichis underrepresented, fragmented and insufficiently regulated;
18. That is there is low compliance
of international environmental laws and standards in the automotive industry
sector;
19. There is there is a big gap and poor
or no aftersales services from the main auto manufacturers and the automotive
end users;
20. A sizeable percentage of Uganda’s
workforce is employed in the automotive industry;
21. More than 70% of Ugandan vehicles
are used machines;
22. More than 80% of Ugandan vehicles
are from Asian countries with Japan dominating the industry;
23. The auto industry generates
billions of shillings in direct and indirect taxes to Uganda’s Treasury;
24. There is poor or no automotive
industry R&D center in Uganda which is coupled with shortage of modern
engineers with industrial, mechanical and electronic knowledge;
25. Increased globalization exposes
Uganda’s automotive industry to economic instability and regulatory pressure
meaning Uganda must prepare now for continuing global changes;
26. Current taxes and policies create
vague environment for automotive investment in Uganda.
27. The pace of global change will
intensify, driven by customers, markets, safety standards, technology and new
global OEM and Suppliers entrants;
28. Uganda requires a comprehensive
strategy focusing locally and regionally to strengthen its automotive industry
for the future;
29. There is a growing middle class
and growing population with more women owning cars.
30. There are no formal national
periodical automotive industry analysis reports to inform policy, planning,
investment and governance.
From
the above therefore, there is need to collectively manage the automotive
industry sector to help maintain the safety and standard of the industry. Recognizing
the complexities in the provision and maintenance of transport, there is
further need to evolve effective, reliable and functional management objectives
and policies that could yield public-private partnership framework in Uganda’s
automotive industry. With
the Automotive PPP Strategy, the MOWTtogether with its agencies will be passing
the operational issues to the private sector/operators through their respective
associations, while retaining and increasing its focus on core responsibilities
of regulation, big infrastructures, supervision and provision of core services
such as policies and compliances, in line with directive of the National Transport
or Automotive Policy. On the basis of this line of argument, efficiency gain is
obvious. However, this initiative has to be accompanied by equally important
improvements in various management processes and systems of stakeholders on
this program.
