Local content practices and local firm participation in the road construction sector of Uganda: a case study of local firms

Abstract

The study sought to examine the local content practices that can be implemented to promote local firm participation in road construction sector of Uganda. Emphasis was on assessing how local procurement, technology and supplier development programs affects local firm participation in road construction sector of Uganda. The study was motivated by the observed huge budget allocations being channeled to road construction sector in Uganda and yet the percent of local firms winning the procurement contracts still remains low. The study used a cross sectional survey design where both quantitative and qualitative data was collected from a sample of 198 contractors and suppliers of road construction materials using cluster sampling and simple random sampling methods. Prerequisite tests were carried out where data was tested for normality and multicollinearity. 157 questionnaires were filled and submitted online through the use of Kobo Toolbox. A multiple regression model was performed to establish the percent of variation in local firm participation caused as a result of local content practices of local procurement, technology and supplier development programs. Findings revealed that only 53.8% of the variations in local firm participation is explained by the three constructs that measured local content practices, where local procurement was the most predictor of the variance in local firm participation and also significant (β1= 0.223, t= 4.077, sig = 0.000) followed by supplier development programs with (β1= 0.579, t= 6.889, sig = 0.000). However, technology was insignificant with (β1= 0.151, t= 1.797, sig = 0.074). The study recommends that; specialized institutions be developed to meet the demand for skilled labour force, government of Uganda should put in place limitation on the number of expatriates employed with the view of creating jobs for the nationals, continue to re-enforce reservation schemes and preference margins in the road construction sector to encourage the use of locally available goods and services, establishment of government funded research and development centers to transfer technology to local firms at a lower price, signing of technology transfer agreements between foreign companies and the government of Uganda to allow local firms in the road construction sector to benefit from usage of such technology and finally local firms should be mandated by laws in place to train nationals with the view of gaining skills and experience.