By choosing to continue, you are consenting to the use and functioning of this site as is in accordance with our Privacy Policy.

ORIGINAL THINKING
find an article

 
PRINT | |

ENSight

 

05 Feb 2024
BY Phillip Karugaba AND Martha Mutamba

Competition concerns as President directs bus monopoly in Kampala

A Presidential directive granting Metu Bus Industries (“Metu”) exclusive rights to run a bus service in Uganda’s capital, Kampala, continues to cast doubt over the government’s sincerity and commitment to the fair competition and consumer protection principles in the Competition Act, 2023 (the “Act”). The President recently assented to the Act and it is expected to be gazetted and come into force shortly.

In his directive, the President stated that the exclusive rights granted to Metu will allow it to not only fabricate buses but also operate transport services, therefore empowering Uganda’s manufacturing sector. The fly in the ointment is that not too many years ago, another presidential directive granted a similar concession to Tondeka Bus Service (“Tondeka Bus”), and today their bright orange buses are a pretty sight criss-crossing Kampala City.  Interestingly, Tondeka Bus is expected to be a major buyer of the electric buses produced by Kiira Motors, a government enterprise. It is not clear what the fate of Tondeka Bus will be in light of the presidential anointing of Metu. Another bus service, by the Uganda Taxi Owners and Drivers Association (“UTODA”), prophetically named “Ewakula Ennume”, has lime-green buses that also ply the Kampala streets. The name of this bus company is derived from a local proverb which translates to “there is never one bull in the kraal”, in other words, there is always competition.

Competition concerns

While a Presidential directive does not have the force of law, such directives are usually fully and enthusiastically enforced. The effect of the Presidential directive is to grant Metu a monopoly over mass transit services in Kampala which will likely be implemented through an exclusive agreement.

However, the Act prohibits anti-competitive agreements which include those that provide for exclusive supply or distribution arrangements. In addition, the Ugandan courts, including the Constitutional Court, have an excellent track record in striking down exclusive agreements as offending the constitutional rights to practice a profession, lawful occupation, trade or business, as demonstrated in Spedag Interfreight v Attorney General. Similarly, in Prime Media v Uganda National Roads Authority, the court found exclusive agreements to be discriminatory and a violation of the right to equality.

Conclusion

The balance between promoting fair competition and addressing pressing challenges in a country is a delicate one. However, one would argue that this is more reason to have an effective competition law and policy in place. These challenges are better addressed in an environment with healthy competition with the consumers reaping the benefits.

 

Phillip Karugaba

Partner | Uganda 

pkarugaba@ENSafrica.com

 

Martha Mutamba

Associate | Uganda 

mmutamba@ENSafrica.com