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AFRICA DIASPORA INVESTMENT FORUM London UK, 19 th -20 th November, 2004 PRIVATISATION IN UGANDA

AFRICA DIASPORA INVESTMENT FORUM London UK, 19 th -20 th November, 2004 PRIVATISATION IN UGANDA. Michael Opagi Privatisation Unit, Uganda. Uganda Public Enterprise Reform & Divestiture program. Divestiture process is guided by Govt Policy of a private sector led Growth PERD Statute

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AFRICA DIASPORA INVESTMENT FORUM London UK, 19 th -20 th November, 2004 PRIVATISATION IN UGANDA

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  1. AFRICA DIASPORA INVESTMENT FORUM London UK, 19th-20th November, 2004PRIVATISATION IN UGANDA Michael Opagi Privatisation Unit, Uganda

  2. Uganda Public Enterprise Reform & Divestiture program • Divestiture process is guided by • Govt Policy of a private sector led Growth • PERD Statute • Divestiture Guidelines • Procedures Manual • Sector Policy Reviews

  3. The Divestiture Program • Guided by Procedures Manual which has • streamlined the divestiture process. • Enhanced the transparency, integrity and quality of the divestiture process. • Process • Policy guideline/classification -> divestiture strategy • Due diligence • Divestiture Action Plan • Transaction -> Completion • Status • First phase focused on commercial enterprises • Second phase handled Utilities starting with Telecom sector • Complete program end 2005/2006

  4. Investment Opportunities • Investment Opportunities: • Agro Processing: Kinyara Sugar Works Ltd, Ranching, • Housing and constructions : NHCC, Mortgage financing, low cost housing • Financial Services sector: Mortgage Financing, Insurance (NIC), Capital market services in Collective Investment Schemes (CIS), funds management and financial advisory services, Long term development financing for industry and agriculture • Tourism - concessions in the National Parks, provision of alternative high standards hotel facilities, and Mandela National Stadium

  5. Opportunities Cont. • Telecom Sector – Duopoly ending June 2005, other opportunities in broadband IT services like call centers, rural telecommunication services • Electricity sector – Independent Power Producers • Water Sector – Long term lease • Capital Markets: - Future IPOs : Stanbic, UTL, Kinyara, Barclays, Kakira, Apollo • New Vehicle – Privatisation Fund/Unit Trust to provide an open ended fund

  6. Other Opportunities • Procurement related opportunities • Consultancy to provide transaction advisory services in the divestiture process. • All outsourced assignments advertised in local and international media

  7. Achievements • Development of the Capital market and increased Public Participation • 5 Successful IPOs; smaller units to Ugandans achieving 75% • Subsidies have reduced by about 76% from 1994 to 2001. Subsidies have reduced largely as a result of restructuring, privatization, and debt settlement activities. • Improve management of remaining enterprises and utilization of resources through introduction of corporate governance, board representation and prior to approval of operating plans.

  8. Achievements Cont. • Bigger Tax Base for Government • Increased Export Earnings • Development of human resource capacity in Uganda • New technology and better safety conditions in the production process have generally improved working conditions for employees. • Improved worker environment (better pay and benefits) • Enhanced product diversification

  9. LESSONS: • Privatization Outcomes driven by • Recognition of the partnership role • Risk allocation to guide the Govt Role Viz PS • Risk taken by whoever can control it best • Policies to be clearly understood; • Means not an end on its own • Legislative and institutional support • Recognition of stake holders

  10. LESSONS: (cont) • Transition issues • Structure of industry – Role reallocation • Ownership structure Vz Financing • Regulation & resources • Implementing the reforms • Legislative framework (Structure) • Unbundling & Demonopolisation • Regulator – independence!!!

  11. New Government Role • Creating the Enabling Environment • Macro-economic stability • Policies that encourage investment • Political consensus – role of private sector • Truck record on adequate tariffs • Developmental role • Projected to reduce with sector growth • Provide guarantees for; • Utilities with poor credit rating • Political risks (e.g. expropriation)

  12. New Government Role (Cont.) • Regulation • Autonomous/independent • Predictable • Transparent • Socially optimal investment levels • Supportive not inhibitive • Sovereign Powers – PS enabling • Land acquisition • Cross-border issues e.g Joint concesssioning • relation to other supportive legislation

  13. What Govt should not do! • Over-specify • Don’t interfere in managing PS borne risks • Manage over expectation!!!! • Balance pricing & Investment • Inconsistent • Be credible partner • Avoid ending up with litigation • The Private Sector is watching!!!

  14. Conclusion • High level support not enough • Support Legal & Institutional framework • Managing stakeholder expectations • Balancing risks Govt/PSP ref Tariffs • Resolution of sticky issues before/after PSP • Public Education /dialogue crucial for buy-in • One solution don’t fit all (sector/country) • Refine PSP and social responsibility • Regulatory capacity / Dev’t role

  15. THANK YOU

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