November 24, 2020

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AfDB gives Shs 1.85bn to Ugandan SMEs targeting oil and gas deals

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Ugandan micro, small and medium enterprises working within the petroleum sector have received US$ 500,000 (Shs 1.85bn) from the African Development Bank to boost their chances of partaking of the opportunities that will accrue during the construction of the East African Crude Oil Pipeline (EACOP) project.

Kampala, Uganda | RONALD MUSOKE | The EACOP is a 1,443km, 24-inch diametre heated and buried crude oil pipeline that will start from Kabaale, Hoima in western Uganda to Chongoleani, Tanga in Tanzania.

Local entrepreneurs on either side of the border have been preparing for years to have a share of the US$ 3.5bn (Shs 13 trillion) that is expected to be spent during the construction phase of the pipeline. However, many of them lack technical capacity to partake of the opportunities.

AfDB’s grant agreement that was signed on Sept. 17 by Swazi Tshabalala, the AfDB Acting Senior Vice President and Chief Finance Officer and Matia Kasaija, the Minister of Finance, Planning and Economic Development is therefore intended to develop capacity of local firms in Uganda, enabling them access new market opportunities, and building linkages with larger, national, regional and international companies.

According to a statement from AfDB issued on Nov.12, the grant has been given in response to a request from Uganda and Tanzania for assistance in preparing local business communities to be able to retain a portion of the US$3.5 billion investment in the construction of the crude oil pipeline.

Through the Fund for African Private Sector Assistance (FAPA), the AfDB will contribute US$500,000 to the project while the Ugandan government through the Petroleum Authority of Uganda (PAU) will provide counterpart funding.

AfDB says it targets to have at least 100 local micro businesses in Uganda and Tanzania trained to do business as well as link at least 70 business enterprises or other relevant business transactions undertaken on the pipeline project, creating at least 500 jobs.

Uganda government and the oil companies are expected to reach a Final Investment Decision soon, paving the way for project implementation ahead of oil production in three-four years’ time.

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