Sunday January 12 2014

Free land to investors good, but check abuse

Minister for Investment Gabriel Ajedra has announced new measure that will see investors access free land in the government-built industrial parks in various parts of the country without going through the bureaucracy and hassle of Public Procurement and Disposal of Assets (PPDA) rules. The overall aim, according to the minister, is too make it easier for investors to do business in the country.

While it is okay to simplify business rules and lower bureaucratic barriers, sufficient measures need to be put in place to prevent abuse by bureaucrats and fake investors who may take advantage of the relaxed rules and procedures to acquire public land (directly or through proxies) and then trade it off to real investors for a fortune.

This is not without precedent; it has happened in the past where firms that have nothing to show and politicians at various levels, acquired land in the Kampala Business and Industrial Park at Namanve and yet did not have the capacity to erect any structures. They instead started peddling their leases to real investors with the land titles acquired free from the state as their proposed equity contribution.

Even when the government in the past decided to give tax waivers on raw materials for investors, especially construction and furnishing materials, still many investors and the bureaucrats supposed to supervise them abused the provision, bringing finished goods and passing them off as raw materials or bringing in duty free electronics and furnishings which ended up in retail shops.

In addition, the government needs to be clear about this new policy. For instance, it proposes to give priority for free land to investors in minerals, hospitality and tourism, agro-processing and ICT sectors but the nature of the investments in these sectors cannot be crammed into industrial parks and the government may not necessarily own the land in locations where these businesses would thrive best.
A little more thought, therefore, needs to go into this policy else it will open just another avenue for abuse of public resources.