Jessica Kyeyune, National Content Specialist at UNOC, offers guidance to SMEs on participating in the Oil and Gas Value Chain.

Jessica Kyeyune, National Content Specialist at UNOC, offers guidance to SMEs on participating in the Oil and Gas Value Chain. 

Charity Namala: Good morning, Jessica. Could you tell us about yourself and what you do? 

Jessica Kyeyune:  My name is Jessica Kyeyune. I am the National Content Specialist at the Ugandan National Oil Company (UNOC). The Uganda National Oil Company (UNOC) is mandated to manage Uganda’s commercial aspects of petroleum activities and its participating interests in the petroleum agreements. The UNOC roles are specifically to:

  1. Develop in-depth local expertise in the Oil and Gas subsector.
  2. Promote and participate in joint venture initiatives in the Oil and Gas subsector.
  3. Develop the capacity of Ugandan citizens and enterprises in the Oil and Gas subsector.
  4. Champion initiatives to support community contractors’ growth and enable them to provide services and materials to the Oil and Gas industry.

UNOC also ensures value is gained across the value chain segments from exploration, production, export pipeline and refinery.

 

Charity Namala: What is the current landscape of the Oil and Gas Value Chain in the country?

Jessica Kyeyune:  The Oil and Gas Value Chain is phased in nature, and at the moment, the industry is awaiting the Final Investment Decision (FID).

The value chain projects include exploration, production, export pipeline, refinery, refined products storage terminal and an industrial park. The first oil projects’ exploration was completed, and next will be the development and production phase, which can only begin after the FID is made. The power to announce FID is vested in the Minister of Energy & Mineral Development. The FID will be announced after the joint-venture partners sanction the commercial viability of the first-oil projects.

After the FID announcement, the field development stage will commence, and the country will see its first oil within a 3 to 4 year period. The development phase is the most resource-intensive but shortest stage of all and presents enormous SMEs’ opportunities to tap into. Given its nature, SMEs need to prepare and plan for short term financing and investments.

The construction of the central processing facilities and the related infrastructure and the export pipeline from Hoima to Tanga Port, Tanzania, provides SMEs with opportunities. They will deliver construction materials, manpower, logistics services, food, hotel accommodation and other services. It is important to note that although the country is moving into the development phase, more oil exploration is still ongoing. This will ensure continuity of using the already developed sector infrastructure to ensure commercial viability.

 

Charity Namala: What kinds of SMEs are participating in the Oil and Gas Value Chain? 

Jessica Kyeyune: There are various SMEs engaged in contracts across the Oil and Gas Value Chain.

We have to remember that for SMEs to benefit from the sector, they do not necessarily have to be directly involved in the Oil and Gas Value Chain. Today, 16 sectors were ring-fenced for Ugandan companies. These are (a) Transportation, (b) Security, (c) Foods and beverages, (d) Hotel accommodation and catering, (e) Human resource management, (f) Office supplies, (g) Fuel supply, (h) Land surveying, (i) Clearing and forwarding. (j) Crane hire, (k) Locally available construction materials, (l) Civil works, (m) Supply of locally available drilling and production materials, (n) Environment studies and impact assessment, (o) Communications and information technology services, (p) Waste management, where possible. These are sectors directly linked to the Oil and Gas Value Chain, but SMEs still can get indirect and induced work along the chain like Mobile Money services, hairdressing, recreation services, and many more.

I can give you an example of this kind of participation. Suppose you own a hair salon, and you are strategically located in or near the Oil and Gas region. Many people working in the Oil and Gas sector will come for a haircut or hairdressing. When a customer pays for the haircut, the salon operator pays her suppliers, employees, landlord, etc. The person who transports the Oil and Gas field workers to the salon equally benefits from the value chain.

I have another example of catering and food supply in the oil camps. A farmer growing tomatoes will indirectly benefit from the Oil and Gas sector by supplying the tomatoes to SMEs that offer catering services directly to the oil companies. This shows the multiplier effect of the Oil and Gas sector for SMEs via indirect and induced participation.

Charity Namala: How is UNOC supporting SMEs to participate in the Oil and Gas Value Chain? 

Jessica Kyeyune: UNOC is implementing the National Content Regulations, which have ring-fenced specific goods and services for SMEs, among other things.  

National Content Regulations give first priority for Ugandan to be contracted for all the Oil & Gas contracts, provided that they have the technical capacity, competence and financing to carry out the contract. In case the Ugandan SMEs cannot participate in the first option, the second option is for a Ugandan company to enter into a joint venture with another company or an international company to provide the service. If the joint venture option fails, then the last option is for the international company to supply the required goods and services on its own.   

National Content Regulations also require the international companies to subcontract all work within a contract that can be done by Uganda companies to Ugandan companies. They also have to transfer knowledge to these SMEs to deliver well on the contracts subcontracted. The international companies conduct quarterly supplier development workshops to support SMEs in understanding the opportunities available and bridge any gaps in required standards. Unfortunately, there is always a low turn up of invited suppliers, but those who attend the workshops have benefited. For example, One SME had never received any contract within the Oil and Gas sector. After attending a seminar held in Hoima on how to enter into partnerships and joint ventures, the company implemented the acquired knowledge. Now, they have a partnership supplying sand to the road construction companies. 

UNOC is set to work with the Petroleum Authority of Uganda to facilitate SMEs business linkages to the East African Crude Oil Pipeline through skills upgrades with support from the African Development Bank (AfDB). We also share a lot of information on our website to guide prequalified suppliers on fulfilling the contracts effectively. 

 

Charity Namala: What challenges do SMEs participating in the Oil and Gas Value Chain face? 

Jessica Kyeyune: There are several challenges, but the most significant challenge SMEs face is liquidity. 

Most Oil and Gas contracts require significant capital expenditure, and many Ugandan companies may not have the capacity to take them on. To perform the contract, SMEs need some liquidity, which they do not usually have and sometimes cannot quickly get a loan because they lack relationships with their bankers.

The next challenge is related to the “how” of doing business. You find that many people get into a business without the required skills, which compromises business standards. For instance, SMEs could sell food but not follow the storage standards and do not possess the necessary permits for the staff and premises. As a result, they will not secure additional contracts in the sector. 

The sector has many stringent demands as participation calls for additional requirements to supply some goods and services. In the transportation of goods in the Oil and Gas sector, specific gadgets and technologies are required for tracking the goods. This technology ensures that the vehicles being used are in good condition and allow for real-time transportation updates. Many SMEs don’t usually have the technology and expertise required for this.

 

Charity Namala: What can be done to increase the level of SME participation in the Oil and Gas Value Chain? 

Jessica Kyeyune: A lot of effort is required to increase SME participation in the Oil and Gas Value Chain. 

Let me start with what the Stanbic Business Incubator is doing to build SME capacity and share sector opportunities. UNOC has also partnered with the Incubator to provide additional training for SMEs on up-skilling and upgrading to meet the required standards. This is critical if we want to see SMEs participating.

Secondly, SMEs need financing. The government plans to put an Oil and Gas fund in place to finance the sector contracts’ performance will increase participation. The fund will provide low-interest loans to SMEs for ease of entry in sector activities. SMEs also need to develop good working relationships with their bankers and maintain the necessary financial records to access the required financing. 

Information sharing is also critical for participation. Information is only shared with SMEs registered on the National Supplier Database (NSD). Therefore, SMEs are advised to register on the National Supplier Database to access this information. We also believe several players can support the dissemination of information. Such players include banks, certification bodies, and other private sector players. Apart from receiving information, SMEs need to aggressively search for knowledge and ensure that they are responsive to available opportunities. Most contracts are advertised in the newspapers, yet SMEs ignore reading newspapers, thus missing out on a chance for participation. 

SMEs need to become Information Technology (IT) savvy to search and send information online since many bidding processes and training are happening online. The Covid-19 pandemic effects have shown us that you will lose out if you do not have an IT savvy mindset. Reports indicate that businesses that have embraced IT have actually thrived during this Covid-19 period. These businesses are also likely to benefit significantly in the Oil and Gas Value Chain. 

Lastly, all companies that want to be contracted and subcontracted for the Oil & Gas contracts must be registered on the National Supplier Database of the Petroleum Authority of Uganda (PAU). The National Content Regulations state that companies not registered on the NSD shall not be awarded contracts within the Oil & Gas Sector. I encourage SMEs to register online to the NSD for free by logging onto the PAU website to participate as contractors and subcontractors for Oil & Gas contracts.

 


Moses Kisembo of Shiloh Farms shares how his agriculture business benefits from the Oil and Gas Value Chain.

The Covid-19 Business Info Hub spoke with Stanbic Business Incubator alumni Moses Kisembo of Shiloh Farms to learn how his agriculture and catering business benefits from the growing Oil and Gas Value Chain.

Charity NamalaGood Afternoon Moses, could you tell us about yourself and what you do? 

Moses Kisembo: Thank you, my name is Moses Kisembo. I work with Shiloh Farms Uganda Ltd., an agribusiness company.

We are engaged in developing agriculture projects, mechanizing on-farm activities, agriculture supplies and training. Our products include; agriculture plans, farm establishment services, mechanization services, and training in agriculture standards and compliance. We also bulk high-quality agriculture produce and offer catering services. 

We deliver these services to individuals engaged in farming and those who would like to invest in agriculture but are constrained by expertise and time. We also work with communities through Government projects like the Agriculture Cluster Development Project of the Ministry of Agriculture Animal Industry and Fisheries (MAAIF).

 

Charity Namala: What is your level of participation in the Oil and Gas Value Chain? 

Moses Kisembo: Our participation is in the area of food production, supply and delivery. 

We know that workers in the Oil and Gas industry will need to feed every day. The Petroleum Authority of Uganda (PAU) indicates that over 160,000 people will work in the oil fields, and these will be followed by over 1,000,000 people. All these people will need to feed. And unlike what we are used to in this country, the food that these people will eat must meet specific standards. 

Therefore, as a company and as host communities in the oil region, we have a crucial role in producing the required food, supplying it following the standards needed, and then delivering it as catering companies in a compliant way.

Together with other partner companies, we are preparing ourselves to meet the anticipated growth in the market. Preparations include; building internal capabilities like hiring the appropriate human resource, skilling in quality, health and safety standards, food safety standards, sustainable production systems and compliance issues. We have also engaged farmers within communities to forge collaborations since it is impossible to do this alone. We advise them on what to grow and how to grow it, focusing on consistency in quality, quantity and supply that meet the required standards. For example, if one is interested in supplying eggs. They need knowledge of the number of birds necessary to consistently produce a certain number of eggs per day. They also need a feeding plan that will enable them to deliver quality and consistency. We support the farmers in this planning and execution process, hoping that some will be our future suppliers. 

 

Charity Namala: What opportunities does the Oil and Gas Value Chain present for SMEs?  

Moses Kisembo:  There are several opportunities for SMEs, especially in the agriculture and food space.

First, it is essential to note that the Government has a ring-fenced supply of food items to Ugandan companies. The caveat is that “if the Ugandan companies can meet the requirements for quality, volumes and consistency”. If they can’t meet those, then suppliers of food to oil companies will import. Imagine importing beans, maize flour, rice, tomatoes and onions to Uganda. The market is there, the need is there, and Uganda has the potential. But these Oil and Gas workers are not going to eat potential. They need food. So we must organize ourselves and execute while the opportunity is still open to us. 

Opportunities for SMEs cut across the value chain from food production, processing and delivery. There are opportunities for input suppliers, extension services providers, farm services providers, producers of crops and livestock. Mechanization services are critical because they offer efficient and cost-effective options for farmers. It is cheaper to hire efficient weed and pest management services than to buy spray equipment and accompanying specialized labour, given the fact that a farmer will use them only a few times in the year. I advise young people to get organized and offer spraying, weed management, planting and harvesting services to farmers.  

Other opportunities include storage, handling, transportation, processing, packaging, and delivery like catering. SMEs can also offer human resources, accounting, and financial management services to support agribusinesses. When businesses use these outsourced services, they can reduce their overhead costs while accessing high-quality professional assistance. 

 

Charity Namala: How is your company positioned to take up the available opportunities? 

Moses Kisembo:  We are making preparations, and these started some years ago when we joined the Stanbic Business Incubator program. 

Today, we are implementing activities based on the capabilities we acquired and partnerships established during the program. For example, I had always wanted to offer catering services, but I had no clue how to start. During the incubator training, we met with some colleagues who were already in the catering business. They helped us start our own catering business. Some have helped us in operation safety and health. The catering service is growing, and we are ready to offer the service when Oil and Gas production activities start.

Secondly, we partner with the Stanbic Business Incubator program to offer training to other SMEs in standards and compliance. We are also building more partnerships to enable us to improve our capabilities. For example, we approached one of the leading financial consulting firms – Acclaim Africa, to help us with governance issues. Despite the delays brought on by Covid19, we expect to soon formalize a relationship and benefit from the great products they have tailored for SMEs. 

Through participation in events, accessing bulletins and staying close to organizations like the Petroleum Authority of Uganda (PAU), Uganda National Oil Company (UNOC), Uganda Chamber of Mines and Petroleum (UCMP) and the international oil companies, to keep abreast with developments in the sector. We are listed on the national supplier database compiled by PAU, which offers many networking opportunities.  

We are working on obtaining international certifications, and in the long run, qualifying to offer auditing services for international standards in food safety. We are also proactively raising awareness in various fora about the looming opportunities and what it will take to access them. These activities have positioned the company to embrace the opportunities available in the sector.

 

Charity Namala: What challenges are SMEs facing to participate in the Oil and Gas Value Chain? 

Moses Kisembo: The major challenge SMEs face is building internal capabilities and capacity to meaningfully participate in this space.

It requires awareness and adequate resources to identify the gaps and implement measures to resolve them. Secondly, SMEs are used to working on their own, and because they are small, they are unable to take on assignments of such a scale as presented in the Oil and Gas sector. The solution is to collaborate and form joint ventures, which is relatively new in Uganda.

When it comes to acquiring international certifications and going through the process before certification, management appreciation and commitment of resources are required. SMEs need to realize this – which the Oil and Gas industry is like an express-way where only the qualified are allowed to drive. 

 

Charity Namala: What can be done to increase the SMEs’ participation in the Oil and Gas Value Chain?

 

Moses Kisembo: Government has put in place the necessary policies and enabling environment for SMEs to meaningfully participate in the Oil and Gas space. 

What needs to be done is to increase awareness and catalyze platforms and fora for SME engagement. This will enable them to identify the opportunities and prepare for them. The Petroleum Authority of Uganda (PAU), international oil companies and other stakeholders should continue to organize periodic dialogues and publications that inform SMEs about the sector developments. This information is critical for SMEs to make informed business decisions. 

SMEs need to understand that they cannot do it alone. They need strategic alliances, partnerships, and joint ventures to help them participate more meaningfully in the Oil and Gas sector. 

Finally, we hope that with the existing enabling environment, preparation, resources – if available, and strong partnerships in place, SMEs’ participation will be evident across the different Oil and Gas Value Chain segments. 


Daniel Kaggwa of Conexus Oil and Gas explains how partnerships can aid SME participation in the Oil and Gas Value Chain

Charity Namala: Good Morning Daniel, tell us about yourself and the company you work with. 

Daniel Kaggwa: Thank you for hosting me. I am Daniel Kaggwa, the Managing Director with Conexus Oil and Gas. Conexus Oil and Gas is a local Ugandan company providing quality-driven services across the Oil and Gas Value Chain. Our core work areas are machine shop services such as; fabrication and precision welding.

We offer testing and certification laboratory services like testing materials, chemicals, equipment, welds and others. We are also undertaking training and certification services in the Oil and Gas sector.

Whilst we are a local company, we have established several partnerships with international companies. For example, we partner with OGINS in India and other global players in Dubai and Italy. The partnerships’ objective is to tap from these players’ experience and knowledge to develop local content in Uganda’s Oil and Gas Value Chain.

Charity Namala: What is the landscape of the Oil and Gas sector in Uganda? 

Daniel Kaggwa: The Oil and Gas sector has three major operational phases.

The exploration phase, which we went through before 2004, led to discovering the oil reserves, followed by the development phase, which is about putting in place the necessary infrastructure to support the third phase of production. When drilling the oil out of the ground starts, the required infrastructure to transport and processes should already be in place. The phases are dependent on each other.

The sector has moved from the exploration to the development phase. This is evident in Hoima District, with a lot of infrastructure development taking place. Contracting discussions with companies are ongoing for further development from the oil fields – upstream to the crude oil pipeline-midstream and the refinery. Many research studies have been done on the upstream and midstream segments. The results will inform the Final Investment Decision (FID).

The Final Investment Decision (FID) is set to happen when the international oil companies and government confirm the project viability and approve capital investment for operations. The FID was earlier anticipated in 2020; however, this did not happen. The significant delays on the FID were due to several reasons, including the Covid-19 pandemic; however, we speculate that the decision will be reached by the end of April 2021 to kick off the several activities. The total expected investment is USD 20 billion in projects split into the production, crude oil pipeline and the refinery.

Charity Namala: What is the nature of SMEs participating in the Oil and Gas Value Chain? 

Daniel Kaggwa: The scope of SMEs in the Oil and Gas Value Chain is wide.

There is room for any SME to take part in the Oil and Gas Value Chain. Participation can be in three areas: specialist oil and gas, specialist (across the sectors), and non-specialist players. The local SMEs have mainly engaged in the non-specialist space. The National Oil and Gas policy encourages SME participation in value chains by incentivizing sector resources and ring-fencing local firms’ opportunities.

Some funds are paid to local SMEs dealing with goods and services to fuel participation in different spaces. Currently, over 1,000 SMEs have provided services across the chain. Some of the services include logistics, civil works, environmental consulting services, catering and hotel accommodation, cleaning and fumigation services, transportation, communication, medical services and manpower/ recruitment services.

Charity Namala: How is your company supporting SMEs to explore the available opportunities? 

Daniel Kaggwa:  We support SMEs through capacity building and knowledge sharing.

We have partnered with the Stanbic Incubator and will soon roll out a programme for 2021 to provide SMEs training, mentoring and awareness workshops. The programme will equip SMEs with the necessary knowledge about the sector. Apart from classroom training, we provide hands-on training through placements for skills acquisition. Our SMEs’ critical training areas are business management, health and safety, and environmental standards. We are also linking the SMEs with other international firms for joint ventures and service provision.

We have established a critical partnership with the Mangala Oil field project in India for knowledge and information sharing. Mangala presents a similar structure and characteristics to that of Uganda. Both countries have waxy and heavy crude oil transported in a heated or insulated heating pipeline. The Mangala pipeline development of 200km is currently the longest heated pipeline globally. Once the East African Crude Oil Pipeline (EACOP) of 1400 kilometre is completed, it will be the longest heated pipeline. Such information is critical to guide the SMEs on how to engage in the value chain.

Charity Namala:  What policies and regulations exist in the Oil and Gas Value Chain?

Daniel Kaggwa:  Uganda has a robust legal framework to guide operations in the Oil and Gas sector.

We have the Draft National Content Policy and The Petroleum (Exploration, Development and Production) Act 2013. The regulations are clear and support local participation, with 16 areas ring-fenced for Ugandans to provide goods and services.

These areas include; Transportation, Security, Foods and beverages, Hotel accommodation and catering, Human resource management, Office supplies, Fuel supply, Land surveying, Clearing and forwarding, Crane hire, Locally available construction materials, Civil works, Supply of locally available drilling and production materials, Environment studies and impact assessment, Communications and information technology services.

Similarly, the policies provide for production sharing agreements through joint venture partnerships with international oil companies. This allows local SMEs to participate in spaces where they would not have had the capacity to deploy independently. The policies also advocate for oil companies to invest in SMEs training and development for compliance.

Charity Namala: What can be done to increase SMEs’ participation in the Oil and Gas Value Chain? 

Daniel Kaggwa: To increase SMEs participation, we need to look at the challenges they are going to encounter.

While we identified training and accreditation as critical areas of participation, finances are needed for implementation. Therefore, it is necessary to establish a fund to support national content development through SME participation. SMEs need to understand contractual obligations and get the appropriate financing to execute the contracts. We are taking steps to work with the SMEs to understand the sector, interpret the contracts, and source appropriate funds.

Participation can be increased by establishing an industry enhancement center to support SMEs through private and government partnerships. SMEs can also embrace joint ventures with international companies that have experience and knowledge in the industry. This will facilitate the transfer of knowledge to the local SMEs, thus empowering them to participate in the value chain’s different stages.


Virtual Workshop on opportunities available for suppliers in the Oil and Gas Sector

The Uganda National Oil Company (UNOC) is organizing a virtual workshop for businesses to discuss how National Content and Quality, Health, Safety and Environment Management (QHSE) can be incorporated in the bidding documents. The workshop will highlight different opportunities available to the suppliers in the Oil and Gas Sector. Businesses will also learn about standards and certifications required for goods and services delivery.

The online workshop will take place on 31st March 2021, starting at 10:00 am.

This workshop follows a survey UNOC carried out among SMEs participating in the sector, which indicated the need for more information on incorporating National Content and QHSE in bidding documents. UNOC is mandated to implement the National Content Strategy. To fulfil this, it ensures the bidding processes include local content requirements and comply with the National Content framework.

UNOC has a partnership with Stanbic Business Incubator, which will be presenting at the workshop. The Incubator provides Business skills training to the Oil and Gas Sector suppliers to enhance their bidding process performance. The training focus on governance, compliance, standards, financial management and access to markets. The Incubator also provides networking opportunities plus mentoring and coaching for entrepreneurs.

To participate:

Please find the link with a registration form.  https://forms.office.com/Pages/ResponsePage.aspx?id=F3Q9QeGKDU2BWYeu67XCCWi5w9hY_bxErbAXmiEhucpUQkFFOFNDSlpGWjNKTkdKVVM1SzFONVRBSC4u

Kindly respond by 25th March 2021 to allow us to effectively plan for the workshop. Note that only those who send in their registration form will receive the log-in information.

For more information about the virtual Workshop: Call +256312444600 or Email: info@unoc.co.ug


Stanbic Business Incubator Chief Executive gives an overview of the opportunities for SMEs in the Oil and Gas Value Chain in Uganda

Ernest Wasake:   Good morning, Comrade Tony Otoa; I hope this finds you well. How have you been holding up during this period of the pandemic? 

Tony Otoa:   Thank you very much for hosting me. I have been great.

I have had a great time of learning, growing and understanding how to do things differently—and now we are getting used to doing different things to make things happen.

Ernest Wasake:  Could you give us an overview of the Oil and Gas Value Chain in Uganda?

Tony Otoa: The Oil and Gas Value Chain is a very vast and intense one. It is a great value chain with many opportunities, especially in the local context.

The chain has upstream, midstream and downstream project segments. The upstream project is about the drilling, construction and civil works. In the midstream project, you have the oil pipeline of 1400-kilometre from Hoima in Uganda to the Tanga Port in Tanzania. The downstream, which is already evident in the country, is available for many local entities to deliver the final oil products to the consumers. There is less local participation in the upstream and the midstream projects because they are technical and capital intensive.

The Oil and Gas Value Chain in Uganda is an exciting opportunity for many local people. Opportunities include a wide range of jobs created plus the provision of services and goods in the downstream operations. With close to 15,000 workers to be employed directly, there will be a big need for food, accommodation, and health services, among others. When we talk about food, agriculture becomes a critical focus area, presenting many opportunities to benefit from.

Ernest Wasake:  Great, please tell us about the Stanbic Business Incubator Limited’s role in the Oil and Gas Value Chain?

Tony Otoa:  The Incubator’s role is very interesting and has been evident for quite some time.

We do not see ourselves as a stand-alone financial entity but as an entity supporting Oil and Gas Value Chain players. The Stanbic Business Incubator has concentrated on training and making Ugandan businesses astute over the last three years. When I speak about astute, I mean ensuring the visibility of demand, letting them know what opportunities are coming their way, and training them to become efficient, sustainable, and thrive.

There is no doubt that Ugandan businesses will seize the Oil and Gas sector opportunities with the Incubator’s support. For example, some companies that have come out of the incubator program are now huge players in the Oil and Gas space. One of the companies is Inspecta Africa, a company providing services to the Chinese National Offshore Oil Company (CNOOC) and has gone on to forge international partnerships with businesses across the region.

We also want to create stories that speak to employability for young people and steer financial rotation in the sector. We hope that as we support local businesses to become better, we can see many companies improving and actively participating in the industry. In the early times, not many Ugandan companies actively participated during the exploration and the appraisal phase. Many of them were sub, sub, sub, subcontractors. We want our companies to be contractors or subcontractors who are making real revenue and not breadcrumbs.

Ernest Wasake: Thank you for the excellent overview. What opportunities exist for SMEs in the Value Chain?

Tony Otoa:  Enormous opportunities exist for SMEs in the Value Chain.

As you all know, the Government of Uganda has been very deliberate in ring-fencing some areas for local businesses. So Ugandan SMEs have priority when it comes to these opportunities. Some of these include civil work construction, transport logistics, catering, hospitality, security, manpower, etc. SMEs simply need to understand and prepare to apply for the opportunities.

As a business, you might have been in operation for a long time, but for as long as you have not gone the extra mile to make yourself known and active in the Oil and Gas space, it will be hard to participate. First, the Oil and Gas sector is capital intensive. Businesses need time to develop and become attractive to financing. That financing is now readily available.

Second, seek to understand the sector more by engaging with the different sector actors. We now see a trend of the Oil and Gas sector now coming back into the arena. Businesses need to seek partners to make this a reality through joint venture partnerships with local and international companies. If SMEs can do that, then we are doing well as a country because the sector proves that growth is possible.

Ernest Wasake: What policies exist to encourage SME participation in the Value Chain? 

Tony Otoa:  Uganda has done well in terms of policy and regulations for the Oil and Gas sector.

When we compare with countries like Nigeria, which has been producing oil for over 60 years, their local content regulations and laws came into play around 2010/2011. For Uganda, even before the Oil and Gas activities were fully operational, we created those laws, regulations and policies, which is a good step. We have policies that support the participation of local businesses in the Oil and Gas space under the local content policy. Some sector activities are ring-fenced for Ugandan companies, which is a great starting point.

These laws and policies are great, but if we do not have Ugandan SMEs who can manage to participate in that space, the law also allows foreign entities to take over the space. So it is upon us to take advantage of the policies and maximize the available opportunities.

Ernest Wasake: What would it take to increase SMEs’ level of participation in the Oil and Gas Value Chain? 

Tony Otoa:   We can do a lot to increase SMEs’ participation in the Value Chain.

I will share a story to answer the question. In 2018, I knew a company while I was at Total E&P as National Content Manager. This company wanted to do what the big players like Schlumberger, Halliburton, and Baker Hughes were doing. The company kept on bidding for those opportunities, but unfortunately, they kept falling off the grid. Why? They did not have what it took to participate in the sector. They had no policies in place. When we brought them on board at the Incubator, we trained them on a three-month program and coached them for close to nine months. During the same time, we supported them to get ISO certification and other certifications. As I speak today, the same company supports CNOOC in various operations and project work for an international logistics company.  That shows you that it is possible in a short period for a small company to become a great participant in the Oil and Gas Value Chain, employ many people and create value in the country. This story speaks to the many businesses that still have the dream and hope of participating in the Oil and Gas sector.

Lastly now that the Final Investment Decision (FID) is soon, it is a signal to an excellent start for Ugandans participating in the Oil and Gas sector. But like the gun at a race, if you are not ready when the sound goes off, you are not prepared, and whoever is prepared will take on this whole race. Therefor SMEs need preparation to benefit from this value chain. As the Stanbic Business Incubator together with our partners we support SME preparation through training, information sharing and creating visibility over demand. We are positive that with these interventions we shall have more SMEs participating in the Oil and Gas value chain.


Davidson Bagambagye, Director of 2Fumbe, shares how his company is planning to benefit from participation in the Oil and Gas Value Chain

Davidson Bagambagye, Director of 2Fumbe, shares how his company is planning to benefit from participation in the Oil and Gas Value Chain

 

 

Charity Namala: Good afternoon, Davidson. Could you tell us about yourself and what you do? 

Davidson Bagambagye:  My name is Bagambagye Davidson, and I am a Director at 2fumbe Ltd. 2Fumbe Ltd supplies assorted kitchen items for domestic and commercial use to restaurants, hotels, and homes. Today, we are participating in the Oil and Gas Value Chain because of the knowledge acquired through the Stanbic Business Incubator programme we attended in 2019/2020. The programme enabled us to identify market opportunities to expand into this sector.

Charity Namala: What is your current level of participation in the Oil and Gas Value Chain?

Davidson Bagambagye:  Our current participation is in the Value Chain is still a work in progress.

With the knowledge gained during the training, we now understand the sector’s upstream, midstream, and downstream operations. We plan to participate in the downstream segment to supply goods and services given our current resources and capability by:

  1. Providing standard kitchenware that hotels and restaurants will use within the oil districts.
  2. Offering catering services to feed the people who will be working in the refineries.
  3. Partnering with another company to start fabricating stainless steel commercial kitchens and related equipment.

We are also profiling other potential partners, sensitizing them about the available opportunities, and exploring how we can benefit from them when we jointly offer services.

Charity Namala: Could you share some of the opportunities for SMEs in the Oil and Gas Value Chain? 

Davidson Bagambagye: There are several opportunities in this value chain.

For the broader SME sector, the opportunities include supplying goods and offering services such as Human Resources, Accounting, Legal, Environmental, and Health and Safety. Apart from providing kitchen equipment, we see an opportunity to diversify and deliver Information Technology (IT) services. We plan to provide operation management systems for inventory, communication, procurement and logistics. We have experience in using systems to deliver efficient and effective operations in day-to-day company activities.  

Charity Namala: How are you positioning the company to embrace the opportunities?

Davidson Bagambagye:  We have taken several steps to prepare for these opportunities.

We are implementing the necessary policies and procedures to comply with the required international standards to get essential certifications this year. Today, we take records of all our operations and have the health and safety requirements in place. We registered with the Petroleum Authority of Uganda, and our information is shortlisted on the National Suppliers Database.

Charity Namala: What can be done to increase SMEs’ participation in the Oil and Gas Value Chain? 

Davidson Bagambagye: SMEs need information and financial support to increase their participation.

At the moment, we get most of the information from third parties, and sometimes it is not credible. It would be good if the mandated organizations like the Uganda National Oil Company (UNOC) directly engage with SMEs to share sector updates. I also wish that we had more forums to dialogue as stakeholders, especially the private and government sectors. This information is critical for SMEs to prepare and plan resources for future activities.

Although regulations and infrastructure are available, SMEs still need financial support to supply goods and services to the Oil and Gas Value Chain. Through the Stanbic Business Incubator, SMEs have been trained on investment readiness and how to attract finance from financial institutions. However, we do not know whether our local banks can support us to execute the anticipated enormous contracts. When issues on information and finance are addressed, we shall see increased SMEs’ participation in the Oil and Gas Value Chain.


Unveiling Opportunities for SMEs in the Oil and Gas Value Chain

This month, the COVID-19 Business Info Hub will explore opportunities for SMEs in the Oil and Gas industry. We will feature insights from different players, including SMEs, regulators, and organizations involved in the sector. Through these interviews, we will learn about how SMEs contribute to the chain and the challenges they face. We will also highlight the different initiatives to empower SMEs to actively participate in the Oil and Gas value chain during the Covid-19 crisis.

For entrepreneurs considering to venture into the Oil and Gas industry, the end result could be lucrative. The industry presents unique opportunities that can steer sustainable economic development for businesses and the country at large. Uganda’s Oil and Gas value chain has three segments: upstream, midstream, and downstream. The upstream segment involves the exploration for extraction of petroleum crude oil and natural gas. The midstream segment involves storing, marketing and transporting petroleum crude oil, natural gas and other byproducts. While the downstream segment involves the refining of petroleum crude oil and processing of raw natural gas. Players operating along the value chain range from oil companies, natural gas producers, petrochemical firms, and power generation companies to regulatory agencies, SMEs, and household consumers. Presently, the most notable players in the sector are Total E&P Uganda, Tullow Uganda Operations Pty Limited, and China National Offshore Oil Corporation (CNOOC). Government is putting in place infrastructure for facilitating developments to support the commercialization of sector, efforts that will provide opportunities to new players to emerge in the industry.

Despite the opportunities it offers, businesses that work in the Oil and Gas industry face ongoing liability risks, especially when it comes to environmental hazards.  Regulation helps to shield businesses, employees, and the general public from these risks, just as it protects the environment from pollution. There are two key regulatory bodies in the industry. First, there is The Petroleum Authority of Uganda (PAU). PAU monitors sector operations to ensure efficient management of petroleum resources. Second, the Uganda National Oil Company  (UNOC) has a mandate to investigate and propose new upstream, midstream, and downstream ventures for local and international investment. UNOC is also responsible for implementing the national content plan to drive local participation in the oil and gas value chain, which aims to generate local employment, investment in skills development, and greater participation by SMEs.

Are you interested in learning about the opportunities available for your business in the oil and gas value chain? Keep following The Covid-19 Business Information Hub this March to learn more about the industry and the government’s efforts to expand the sector through infrastructure and partnerships.

 

 

 

 

 

 

 

 


Harnessing youth entrepreneurship for employment and SME growth

For the month of February, the Covid-19 Business Info Hub focused its efforts on tackling the topic of youth entrepreneurship in Uganda – exploring the ways youth entrepreneurs are making their mark on the country’s economy, understanding the challenges they face, and identifying the different institutions that work to support them. While unemployment among youth remains one of the biggest challenges that Uganda is facing today, youth entrepreneurship can play an important role to provide employment and economic development for the country. So, what did we learn?

Entrepreneurship among youth is not just increasing out of necessity but out of passion.

From our interactions with young entrepreneurs, it was evident that they chose the entrepreneurship path out of more than just the challenge in finding rewarding employment in today’s economy; they are increasingly launching their own businesses out of passion. For example Kevin Asinde Founder of Amarin Financial Group started the company to give hands-on skills to youth getting into the accounting field and today, she is excited to watch these youth grow into successful professionals.  Entrepreneurship also offers youth an opportunity to develop valuable skills such as critical thinking, decision-making, innovation, leadership, and teamwork, which are relevant in all aspects of their lives. These skills are also in-demand by potential business partners, employers, and others – making it a valuable experience even for those entrepreneurs who may eventually decide instead to go back into the workforce in a different capacity.

 

Youth entrepreneurs face a number of challenges, including some which they share with their older peers and some which are unique to them.

Despite their strengths, opportunities, and vast entrepreneurial potential, young people still face many challenges while starting and growing their businesses. Many of these have escalated due to the Covid-19 crisis and internet shut down during the elections.

Failure to access capital is the major challenge they face, which is one that is unfortunately common among entrepreneurs across segments. For youth, it may be exacerbated by a lack of credit history or experience managing finances. Access to networks is another key hurdle – many young entrepreneurs we spoke with were unaware of the associations that exist to voice youth issues or mentorship opportunities to draw on for encouragement or inspiration. Youth also encounter moments in their journey where they lack a set of skills or specific knowledge needed to grow their businesses, such as product development, business planning, risk management and financial management.

The Covid-19 crisis and internet shut down were some of the first external shocks faced by current youth entrepreneurs. Some closed businesses during the lockdown since they were not offering essential services, while others saw an opportunity and pivoted their businesses. An example is the Smart Girls Foundation who trained youth to start making face masks during the crisis, which is still the alternative source of revenue. Youth have leveraged technology and are doing business online using social media, e-commerce and website applications. They have reduced the costs of renting physical space, greater reach to the customers and building social networks. However, when online business was recently interrupted due to the internet shut down, many lost revenue. Entrepreneurs are now building resources and critical skills to enable them cease available opportunities amidst the crisis to generate revenues for business survival and growth.

The institutions that work to support youth entrepreneurs recognize the need to work together.

Actors supporting the entrepreneurial ecosystem acknowledge that youth entrepreneurship is a gateway to employment opportunities and can be a way to build a prosperous, secure future. To develop the skills to successfully launch and manage businesses, this means providing youth with quality, hands-on training programs starting from an early age through all stages of the entrepreneurship cycle. Incubation centres like Makerere University Business School (MUBS) Entrepreneurship Centre and StartHub Africa develop innovative youth ideas into viable business ventures. Viable businesses also receive mentoring and support to access early-stage funding. M-Kyala Ventures have specialized in offering technical advice on designing financial products tailored to youth entrepreneur needs and cautions that youth need individual and not group funding. The actors informed us that ecosystems most conducive to successful youth entrepreneurship should offer holistic and tailored support. Therefore, coordination is required among actors to achieve this and support for youth programs they are offering. The coordination calls for an umbrella organization that will profile and harmonize on-going initiatives among the different actors.

 

Young entrepreneurs need responsiveness to identify and decode opportunities in the ecosystem

Even with the enabling environment, youth still need to actively seek knowledge and information through networks to learn about the ecosystem’s initiatives. Looking out and participating in business plan competitions, pitch events for their business ideas to get known and stimulating their potential. Youth have to adopt best practices such as; record-keeping, compliance to regulations, and financial management from the inception stage because they are building blocks for growth and exit/succession. Finally, when faced with challenges in the dynamic entrepreneurship journey, young people should look out for opportunities, on how to scale businesses, innovate new products  and diversify strategies to remain relevant and competitive in the market.

 


Kevin Asinde of Amarin Financial Group discusses business survival in challenging circumstances.

Charity M Namala: Thank you so much Kevin for joining us. Could you please tell us about yourself and what you do? 

Kevin Asinde: I am Kevin Asinde the founder of Amarin Financial Group and a facilitator at The Kampala Entrepreneurship Ecosystem Project. The project is an action research that is facilitating collaboration amongst ecosystem players to enable the players to serve entrepreneurs better. I founded Amarin in 2014 to give hands-on skills to youth getting into the accounting field while supporting SMEs to become bankable and sustainable. We are a team of 12 youth and offer services such as outsourced bookkeeping, accounting, tax advice, business planning, financial modelling and capacity building for SMEs.

We recently launched an application called Souce.io that supports enterprises with source documentation. The application is a cloud-based mobile and web app that automates request and approval of funds, introduces seamless segregation of duties, and facilitates storage of all transaction records. Put simply, staff can request for money from their mobile phones, the necessary approval happens, disbursement follows, acknowledgement of receipt of funds and accountability of funds by uploading the receipt onto the platform. This means initiation of a transaction to its conclusion does not require one to come to office, no paperwork is required, transaction details, receipts and reports are always available and easily accessible, and therefore financial reporting is a lot faster.

Charity M Namala: How has Amarin fared during the pandemic – and what testimonies or lessons can you share with us on business survival?

Kevin Asinde: As a company, we managed to survive during the pandemic because of the typical structure of entrepreneurship in Uganda in its formative years. We bootstrap, so the consultancy money helped us to survive.

The company revenues reduced, however given that bootstrapping was already part of how we funded the business, the existing consultancy agreements enabled us compliment the available resources to run business operations. Also, when the pandemic struck, we had already decided to work in a collaborative online environment, and it was a matter of enhancing this with the team. Working with a young team, I had to offer a lot of support and guidance to them to be able to work from home and deliver on their assigned work. The staff that failed to deliver efficiently on work without genuine reasons had their pay reduced until they improved their delivery. After the lockdown, we continued to use a blend of online working and coming into the office.

As an outsourced bookkeeping company, our relationships with clients are not a face to face or a day to day affair. During the restrictions, we continued to guide and support clients remotely using phone calls, WhatsApp and email. An interesting scenario is that during the pandemic we had a lot of inquiries from our existing and new clients requesting financial analysis to support them in making business decisions on whether to close completely or for a given period, where to access finance and how to increase revenue. This, therefore kept us extremely busy at a time when most companies did not have work, we actually didn’t get immediate payment, most of these payments were deferred because of the circumstances where some clients were at the time were completely shut down.  We looked at our support as a way of building a solid relationship with clients with the hope would eventually pay off in the future.

 

 

Charity M Namala: How has Amarin Financial group engaged and supported youth during the Covid-19 pandemic? 

Kevin Asinde:  We were able to engage and support youth that we work with in various ways.

As a start-up, we mainly employ youth that have finished school and are looking for their first job.  We employ a phased approach; some youth start as interns, volunteers, then employees, while those who have been three to four years in the field have a very strict three months’ probation before confirmation. This is because soft skills and self-awareness is lacking amongst the youth in most cases. We therefore provide an opportunity for the youth through our approach get that at an early stage in their careers. Elements like self-assessment, continuous self – reflection and learning through provision of reading materials, linkage to professionals who are on retainer, online courses and a very strict supervisor. With above the roof expectations of everyone also forms our ethos of getting the youth to believe in themselves enough to become global level employees/entrepreneurs. Like one former employee provided feedback after getting her next opportunity. She said; her new employer said she was so confident that that was one of the reasons that made him give her the opportunity. She confessed that without working at Amarin she would have never recognized her own potential, being confident about what she knew and been able to articulate it.

Under our capacity building arm, we continued supporting youth businesses we worked with over the years to make the same decisions that we were supporting other businesses to make.

Charity M Namala: What can be done to increase the participation of young people in entrepreneurship?

Kevin Asinde: I think there are a couple of things to help increase the participation of young people in entrepreneurship.

We need to communicate to young people to think and dream big. Most times we limit youth people’s goals because of our own limited experience. We make youth think that they are capable of 50 yet they can attain 500 [times their potential]. This will build their confidence and get them to know that they are capable of making a difference regardless of the prevailing situation. Young people also need exposure where they can see, hear, read about what others like them have done and are continuing to do. This will make them inspired and develop the attitude of why can’t that be me.

Charity M Namala: Could you tell us about your experience as an entrepreneur during the internet and social media shut down

Kevin Asinde:  My experience during the internet and social media shut down was a tough one and this took me about a month backwards in my work.

I had two very important international client online meetings that were cancelled, which delayed my ability to close some business deals. Given that a lot of our work is done online, business came to a standstill and the ripple effects are still ongoing. We had to quickly adapt to the situation and resorted to using alternative offline accounting systems and use telephone conference calls for our meeting and client engagements. This was a reality check for us, and right now we are trying to do more offline backups [of our systems] so that in case we are faced with a similar challenge in the future we are able to do work with minimal disruption.

Charity M Namala: What advice do you give to your fellow entrepreneurs and youth?  

Kevin Asinde:   I have two things to share with entrepreneurs; the first one is to think about ‘exit’ and the second is think about what type of enterprise they want to be.

As an entrepreneur when you think about exit, I find that it helps you model your enterprise better. When I talk about exit this includes succession. Ask yourself where you see the enterprise in 5, 10, 20 and 40 years dead or alive, what will the enterprise be like?  This will guide you on the structure and systems to put in place that will allow for the kind of exit you are looking for. Exits in three, five or seven years requires that you adopt the required structures from the onset, otherwise you are bound to play catch up all the time.

I would also want entrepreneurs to think about what kind of enterprise they want to be; high growth entrepreneurs, dynamic business, livelihood businesses, because this helps them determine how to structure, decide the best people to talk to, hire and collaborate with. If you want a high growth business you should focus more on iteration of the product, delivery and process whereas when you a dynamic business you might focus more on perfecting the act of revenue generation enough to allow you think about expansion.

For youth find your ‘thing’, obsess over it, be crazy enough to defy the norm and find resources to make it work. Resources in this case does not need to start with cash!

 


Training opportunity for SMEs on Business Development and Financial Literacy

Uganda Development Bank Ltd (UDBL) in partnership with Uganda National Chamber of Commerce and Industry (UNCCI) has organized a regional business Development and Financial Literacy training program for Small and Medium Enterprises (SMEs). The training will address SME capacity needs such as: Business Planning, Management Skills, Financial Literacy, Product Standardization, Record Keeping, Accounting and Finance, Governance Practices, Succession Planning, and Leveraging on Technology and Regulation Compliance.

The beneficiaries will get an opportunity to access further support from UDBL’s Business Advisory Unit and Incubation Program to transform ideas into bankable projects that will be admitted into the pipeline for funding consideration.

 

Who can register?

  • Startups and existing businesses operating in the North, East, West, South and Central regions of the country.
  • Target sectors include Agriculture (Primary & Agro industry), Mineral Based Value Addition, Manufacturing, Tourism, Hospitality, Human Capital and Development (Health and Education), and ICT.

 

How to register

  • Training is free of charge
  • The registration form can be obtained and submitted here.

 

Deadline for registration:  15th March, 2021

For more information: Please send an email to: smetraining@udbl.co.ug or policy@chamberuganda.com

Or call: +256 414 355 550 / +256 784 437 870 / +256 704 437 870