Published on 16/07/2024
Lt. Gen. James Mugira, Managing Director of National Enterprise Corporation (NEC), staunchly defends the preferential treatment of NEC Construction Works & Engineering Ltd, countering allegations of detriment to Uganda’s construction sector. Emphasizing a strategic vision, Mugira asserts the initiative’s primary goal: nurturing a robust national construction entity while curbing capital outflows to foreign firms. His stance underscores NEC’s role in boosting local infrastructure capabilities, resonating with broader economic independence objectives.
Lt. Gen. James Mugira, the Managing Director of National Enterprise Corporation (NEC), has refuted claims that the preferential treatment given to NEC Construction Works & Engineering Ltd is harming Uganda’s construction industry. Mugira argued that this move aims to build a national construction company and reduce the outflow of funds to foreign companies.
Mugira made these remarks before the Committee of Commissions, Statutory Authorities, and State Enterprises (COSASE) last week, responding to concerns from Martin Muzaale (Buzaaya). Muzaale highlighted that the Army’s proximity to the government grants NEC, a commercial arm of the Ministry of Defence access to capital, creating unfair competition for the private sector.
Muzaale remarked, “It is a challenge for Ugandans who are using their own money to build the construction industry, compared to a government entity receiving resources from the government. Our tax body, when they hear it’s NEC and the Army, they feel it’s a no-go zone. Just on the road, when a vehicle with a UPDF number plate comes, even if it’s a lorry, roadblocks just open.”
In July 2021, President Museveni directed the health and education ministries to use the Army Construction Brigade for government construction projects, citing delays and corruption in the current system.
Mugira countered that the construction industry is dominated by foreign players, mainly Chinese companies. He emphasized that NEC Construction Works & Engineering Ltd is distinct from the UPDF Engineering Brigade and aims to develop into a national construction company capable of handling major projects. “NEC Construction is coming in to build capacity and execute major infrastructure projects in this country, saving our resources from being repatriated,” Mugira stated.
The Amuru District Women Representative Lucy Akello inquired whether NEC Construction procures its materials from the UPDF army shop. Mugira clarified that NEC sources materials directly from manufacturers, not the Army shop. “We have memorandums of understanding with manufacturers like Roofings and Tororo Cement, allowing us to buy materials at factory prices and on credit due to our established trust,” Mugira explained.
NEC’s arrangement with manufacturers has reduced costs and improved efficiency, supported by permission from the Public Procurement and Disposal of Assets Authority (PPDA) to use an alternative procurement system. “This approach helps us construct cheaply and quickly,” Mugira added.
Muzaale supported a request of his counterpart, Allan Mayanja of Nakaseke Central Constituency for NEC Construction’s asset schedule to ensure NEC pays the relevant taxes on imported equipment and does not exploit its proximity to the Army. “We need to understand whether NEC is paying taxes on imported equipment or operating under UPDF to avoid taxes,” Muzaale argued.
Eng. Brian Buhanda, General Manager of NEC Construction Works & Engineering Ltd, denied allegations of preferential treatment from the Uganda Revenue Authority. “We pay taxes like any other private company. In 2022/23, we paid UGX 217M in PAYE, UGX 45M in income tax, and UGX 1.026Bn in VAT,” Buhanda noted.
Mugira’s remarks illuminate a contentious policy’s rationale, framed amidst ongoing debates over fostering indigenous industry prowess and sustaining financial retention within Uganda.
