According to Musasizi, Roko has been faced with severe liquidity challenges that have constrained its ability to execute 10 contracted projects, which have in turn affected its (Roko’s) ability to pay various suppliers and the financial sector. He added that Roko is currently significantly indebted. Its indebtedness as at May 31, 2022 is Shs 202.4 billion and also has contingent liabilities from bank guarantees of Shs. 130.9 billion.”
Musasizi premised the government proposal of investing in Roko on an October 2019 directive by President Museveni to Finance minister Matia Kasaija. In the letter, Museveni directed Kasaija to negotiate the government of Uganda’s acquisition of shares in Roko.
According to Musasizi, Museveni’s directive was premised on the absence of a government-owned company, which subjected the government to the use of private companies nearly wholly foreign-owned and domiciled yet the government currently spends Shs. 950 billion per annum on projects in the roads and power sectors that are implemented by foreign companies.
Museveni also reasoned that since Roko was implementing a significant number of government projects, the purchase would make it a suitable local partner, and it would lower the construction cost for government projects, etc.
In December 2020, the Uganda National Association of Building and Civil Engineering Contractors (UNABEC) wrote to Finance minister Matia Kasaija requesting the government to bail out Roko since it (the bailout) would save more contractors and their jobs.
“As a constituent of the engineering sector, we believe that the failure of Roko will unravel unprecedented reckoning against the advancement of the construction sector in Uganda,” the letter reads in part.
Musasizi’s presentation to parliament laid these fears bare.
“Roko owes Shs 46.8 billion to suppliers and subcontractors who would also either collapse or be left near-dead if the company was wound up. The company is a major employer with 1,945 employees (1,641 casuals and 301 permanent staff),” Musasizi said.
Speaking anonymously because of the sensitivity of the matter, a senior economist indicated that the government’s decision to purchase shares in Roko was timely and important for the construction sector.
“If the government comes in to save Roko from running bankrupt, it restores hope and confidence within other industry players. If Roko was declared bankrupt, then other players would think about moving to other economies. If Uganda cannot save a major player that controls over 60 per cent of government projects, whom then shall they save?”
He added that although most people have been pushing the government to rather encourage Roko to float their shares on the Uganda Securities Exchange (USE), no Ugandan would be ready to invest/buy shares from a loss-making company.
“The process for you to be listed is also long. Roko needs urgent financing yet the listing process takes almost a year because they have to prepare things like a prospectus which time Roko doesn’t have. The creditors want their money urgently.”
“Unlike the past when the government has invested in loss-making projects, they have this time deliberately put measures to ensure the company is profitable. They are purchasing preferential shares which means they (the government) shall always be paid first before any other shareholder. Secondly, the government … have recommended having their managing director and some appointments to the board,” he added.
Formed in 1969, Roko construction company limited had over time risen to become one of the leading construction and civil engineering companies in the country.
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