Uganda is expected to start commercial production of oil and gas in 2020 but before that, a bevy of activities necessitating the services of people working in the logistics industry to render their services will take place.
A reported 800, 000 tonnes of cargo will be moved between Mombasa to Hoima, Buliisa, Nwoya districts and other places in the country that will host key infrastructure projects mandated in production of oil and gas. This cargo will include material to build a refinery, pipelines and as facilities need for oil to flow.
But while the opportunity for local freight forwarders, transporters and clearing agents to participate in the upcoming oil and gas industry, it comes with stringent demands that local firms must meet in order for international oil companies to give them business. There is no compromise and all stakeholders are aware.
With this knowledge available, local services providers in the logistics industry are rushing against time to ready themselves for the oil boom. At a three day Joint Oil & Gas Convention & Regional Logistics Expo 2017 in Kampala, the logistics business fraternity expressed fear that if they don’t build capacity, they stand no chance participating in the oil and gas industry.
Speaking at a panel discussion on the second day of the Summit, Merian Sebnya of Uganda Freight Forwarders Association said: “To simply put it, a failure to develop capacity, productivity and capabilities of the logistics industry will compromise the success which can be achieved,”
She added that there is no better time to share best practices in trade, policy, engage stakeholders, and define roles and responsibilities in the development process to facilitate a competitive environment for the development of logistics industry in Uganda than now.
“We tried to professionalize and today I bring hope to oil industry. We had gaps. We were worried whether we measure up to the task (working in oil industry). I want to tell you that the logistics industry, human resourcewise has been equipped with knowledge and is ready for you,”
She however explained that the pending challenge is the financial aspect because the logistic industry is capital intensive. This coupled with the lack of infrastructure like good roads, a functional rail and water transport make it hard for logistics service providers to operate seamlessly.
She revealed that all five East African countries created the East African Freight Forwarders Association when they saw the advantage of operating in a wider market. They developed a curriculum to take care of the needs of the industry – education and professionalism.
So far 6, 000 people have been trained and certified. “We give them practicing certificate. We also formed a registration board and code of conduct. They have to adhere to the ethics of the industry,” she said.
As a continuation to empower themselves, a model Bill was formed and is being processed to be enacted into law in respective states. “We want to self-regulate ourselves. Revenue authorities and transport licensing boards wanted to regulate us but we said no one can regulate you better than your competitor.”
Kassim Omar, a seasoned businessman who described the logistics industry as the wheel of commerce said that self-regulation will make it easy to do business because they understand their business and challenges better.
He said there are over 3, 000 logistics companies in East Africa, South Sudan inclusive, employing over 40, 000 people with about 8, 000 in Uganda. “Unfortunately it has never been seriously by the powers that be. So much has been said about reducing the cost of doing business but not much has been said about this sector.”
Uganda Private Sector Logistics Strategy with a special focus on private sector needs is being formulated and is in advanced stages. Similarly, the Private Sector Foundation Uganda set up a Logistics Committee called Clearing, Transport and Haulage in 2014.
It was through this committee with support sought from Trademark East Africa that designed and implemented the National Logistics Platform. These efforts are focusing at improving the logistics industry and make Uganda the regional logistics hub.
The private sectors says maintaining and strengthening a competitive position as a logistics hub will require Uganda to make the right policy choices. It is difficult to ignore that alternative routes progressively improve in terms of security and costs for landlocked destinations such as South Sudan, Rwanda, Burundi and the DRC.
Therefore, for Uganda to remain a competitive route, it needs to develop a comprehensive strategy to enhance logistics, private sector players say. Without a clear vision on the development of logistic corridors and the place of Uganda in the regional logistic landscape, it would be difficult to formulate optimal policy to attract investment in the sector. There is a real danger that Uganda and its logistic service industries will lag behind and only stay a market for large regional firms.