Uganda's 'investors' in a non-regulated business environment

By Simon Mone

The sight of foreign retail traders engaging in businesses meant for local traders leaves a bitter taste in the mouth of local retailer. And shows how the trading environment has changed these days.

If you own a retail business in any Ugandan town then you know how hard it is to operate. The last five years or so have been difficult for local traders to stay in competition with foreign ‘investors'. A lot has changed. Foreign traders have come in with big promise but expectations of them seem to have dissipated.

Due to their connections with manufacturers; they have forced local traders to lower costs of commodities in order to try and fit in the system. So effectively, they have ‘spoilt' business. The local business community has not particularly viewed this very well. As a result, there has been intermittent trouble between local traders and ‘foreign investors' in recent years.

The latest came about two weeks ago when traders in Kampala closed shop, demanding to see the back of foreign retailers. They say that foreign traders, who gain access into the country, pretending to be investors, come to offer nothing new.

In fact when they come in, they actually become retail traders, dealing in our common groceries. So local traders demand that foreign ‘investors' start to do meaningful investments. You can't blame them, especially when you consider the number of potential local traders, who would thrive. They are not fortunate due to needless competition with foreign investors. You now find ‘foreign' investors pedalling and hawking merchandise.

They are petty shopkeepers as well. It is not clear, how they can gain entry into the country. We require deliberate laws to protect our small business community. We think local traders should be the very last link in the chain of business. As intermediaries between the wholesaler and the ultimate consumer, you wouldn't expect competition with foreign retail traders in that aspect.

An investor does business at a higher level while the retailer remains at the other end. An investor sets up industries to do manufacturing upon which local retailers rely. In their set-up of industries, investors employ local people and engage in ‘special' activities, which the local trader is not able to do. This is why we should define clearly, the type of business that investors must do when they arrive.

Otherwise, they come to flood the local retailing industry and relegate local traders out of the business. Let us leave retailing to the small-type shopkeepers, trading in small-sized commodities. What we expect from investors is different. We need to define investors' roles.

Then ensure that they leave hawking and street vending for locals. Vet investors to ascertain if their entry to the country will benefit the citizens. Grant work permits to investors who will get local traders to learn newer ways of doing business. And offer superior business ideas to locals.

And introduce better business technology to people. And are able to connect local traders to businesses abroad, ensure that local retailers add value to enable their businesses grow. In this way, we are protecting the local trader and keeping them in business. At the moment, the business environment is not easy and is nothing to be proud of.

Just because there is no legal requirement to stop foreigners from petty trading in the country does not mean ‘investors' should continue exploiting these regulatory loopholes to do the same things that make them look as if they were local traders. Start up a deliberate process to protect local traders.

The writer is a civil engineer