East Africa

Kenyan firm sues Uganda over ownership rules


A Kenyan recruitment agency has sued the Ugandan government over failure to renew its trading licence and demanding it cedes its majority shareholding to Ugandans.

Competitive Manpower International, in a petition filed before the Constitutional Court of Uganda, says new regulations that restrict ownership of recruitment companies to Uganda citizens is illegal.

The company, through its director Moses Adala, says the requirement that 51 percent of the company be owned locally is a violation of Article 21 of the Constitution of Uganda as well as the East African Common Market Protocol.

Mr Adala says the company has failed to get renewal of its trading licence even after suing the government through the Attorney General and getting a consent order in 2020.

Mr Adala says the government later introduced the Employment (Recruitment of Uganda Migrant Workers) regulations in August this year, to undermine the consent order.

The regulations, together with a bank guarantee of $28,400, the company says are a violation of the right to trade and create a barrier to entry contrary to Article 40 of the Uganda constitution.


Trade fights

The case comes a few days after Uganda said it would restrict from its domestic market some of Kenya’s raw and processed agricultural products in a reciprocal move that follows Kenya’s continued ban on some of Uganda’s products. The two countries have now agreed to end the trade row.

Read: Kenya agrees to lift ban on Ugandan poultry

Kenya and Uganda have had trade fights for long but the latest hostilities began brewing in December 2019 when Kenya stopped importing Ugandan milk, particularly the Lato brand.

Competitive Manpower International also wants the court to declare regulation 2(2) that requires a fee of $30 per job on the job order to be declared unconstitutional on the grounds that it amounts to extortion because regulation 26(1) restricts the income charged by the recruitment agency to $5.67 per job, the equivalent to one currency point.

Mr Adala says his company has a number of Ugandan workers who were recruited while the licence was still valid and whose contracts were renewed and the company is obligated to ensure their safety abroad.

“The Ministry of Gender, Labour and Social Development policies place the duty and responsibility of ensuring the safety of migrant workers abroad on the recruiting agency and as a law-abiding company, the applicant is bound by such policies,” the company says in court documents.

Mr Adala says his firm has previously recruited 250 Ugandans as security guards in Afghanistan in a joint venture with American companies Beowulf and Aegis.

In reply to the petition, Permanent Secretary in the Ministry of Social Development AD Kibenge defended the regulation restricting ownership in recruitment agencies to Ugandan citizens saying it is not a violation of the constitution.

“I know that Regulation 5 of the regulations provides for renewal of licences and sets out all shareholders and directors as a company shall be Ugandans, which the petitioner has not complied with,” Mr Kibenge said.

The PS says the new rules are intended to regulate the recruitment and placement of migrant workers by providing a mechanism for overseeing the activities of recruiting agencies.

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