____________________

OPINION

By Shemei Ndawula

In a poster that was circulating online and in Kampala malls and arcades for the past couple of days, a section of Kampala City traders, under a relatively unknown umbrella body the “Federation of Uganda Traders Association” was making a clarion call for all traders within the business district to close their shops on the 8^th of April. 

was to protest what they called the unfair tax regime of the Uganda Revenue Authority and other trade related grievances. What stood out for me at first glance on this poster was a declaration; “LET THE CHINESE GO BACK TO FACTORIES”.

I am no trade expert but I do have a number of business interests within the city and more importantly; an education in foreign relations to know how damaging such a statement can be. Kampala is the thriving metropolis it is today because of its cosmopolitan origin. Perhaps most traders may not be aware of this but Kampala was never a capital city by design, it is too down south to be central in Uganda’s geography, too hilly for proper defense (one may argue all previous coups that have happened in Kampala clearly had the defending forces at a disadvantage).

The Colonial government invested heavily in making Entebbe City, and later Jinja city the locus of Urbanization. However, none of these two could ever compare to the melting pot of cultures that was Kampala. That is who we are.

A lot of traders in Kampala seem to have been misled into believing that the Chinese businessmen in Kampala are the cause of most of their woes which, when investigated closely is far from the truth. A casual walk through downtown Kampala would acquaint the keen observer to the fact that the Chinese are not anywhere close to the top 5 demographics doing business in Kampala. To put it bluntly, there’s simply too few Chinese businesspeople in Kampala for them to pose a significant threat to the business of the average a Ugandan trader.

If anything, most of the Chinese businesses in Kampala are wholesale shops which are designed to sell goods affordably to the Ugandan traders which they in turn sell to the Ugandan consumer for a profit. This is a system that was developed out of a need to bring affordable quality manufactured products from China closer to the average Ugandan trader who didn’t have the ability to import in bulk.

I personally purchase artificial flowers for my flower shop from a Chinese wholesale shop downtown at a fraction of what it would cost me if I was to import the flowers myself. I know quite a number of traders within my same line of work doing the same and who’s businesses would collapse if the Chinese wholesalers in Kikuubo closed shop. This is why many of us suspect that this narrative of “let the Chinese go back to the factories” could simply be a ploy by different players in the import sector to monopolize the market.

Otherwise, since the Chinese operate an open market economy and we now have Ugandan importers getting goods right from Guangzou and Beijing it is hard to fathom why they are unable to have healthy competition with their Chinese counterparts and instead seek to instigate the small-scale traders who’s businesses rely on these imports against them.

Additionally, there shouldn’t be anything wrong with Chinese factories having outlets and selling points within Kampala and other major economic hubs. For any manufacturer to stay relevant on the consumer market they should have contact with at least some of their clients to keep up with the changing trends and preferences. Many Ugandan companies do this, large brands like Jesa Diaries and Lato milk have got shops in almost all economic hubs across the country. It is actually more relevant for the Chinese companies to have representatives in all trading hubs so that they can better understand the local market and produce relevant products.

Looking at the bigger picture, China is perhaps our most significant trade partner outside of East Africa.

Uganda's exports to China surpassed $50M in 2022 and it’s very easy for this figure to have doubled by the end of 2024. In contrast Uganda’s exports to the United States of America through the AGOA (Africa Growth and Opportunity Act) initiative were only worth about $8.2M in the same period. This underscores the value of China as an important trade and development partner. On top of this the People’s Republic of China has got a Zero Tariff policy on 98% of the taxable goods produced in Uganda.

From this light it is clear to see that what some people are trying to market as a “Chinese problem” in Uganda is actually a Chinese opportunity. Instead of trying to push legitimate Chinese business representatives out of the capital our leaders should instead be lobbying the Chinese embassy in Kampala to set up trade hubs where Ugandan traders can get more information on the goods required by the Chinese market, the quantities needed and how to get them there. They can also set up backwards linkages directly from Chinese suppliers for goods needed in Uganda so that they do not need to worry about “competition” from the Chinese.

It is possible that the traders have got some genuine grievances that need to be aired out. It is in the best interest of all stakeholders for them to find common ground and hopefully a consensus is reached in the upcoming meeting they have got with the Head of State. However, it is on the best interest of traders to look past hoarding the local market of 47 million people to explore the opportunity of 1.4 billion in China. Let’s not throw the baby with the bath water; with 98% of the goods to China tax exempt, the only tax Ugandan traders need to worry about maybe is EFRIS but not Chinese traders.

The writer is a senior research fellow at the Development Watch Centre