Foreign firms woo growing middle class

In the past few years Uganda has experienced massive development, with big international firms coming to take advantage of the many opportunities. David Mugabe visited the new Village Mall in Bugolobi and analyses what it means for Uganda’s economy.

Kentucky Fried Chicken (KFC) from the US is coming to town. The entry of the uptown global fast food giant to be located at the new Village  Mall in Bugolobi is testimony to the rising spending middle-class and quality demands of the market.

The presence of the pressure fried chicken pieces, seasoned with its founder’s recipe of 11 herbs and spices, is also a vote of confidence to the economy, with a bustling big and young population.

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Nakumatt Supermarket is open at the new Village Mall

“For a firm like KFC with their strings and rules to be able to come to a market such as Uganda, with some of their food supply coming from Uganda, is definitely a good thing,” said an associate of the investment.

According to reports, it has taken several years to meet the right standards to have a KFC outlet. The KFC outlet will be one of the top-class enterprises at the new Village Mall in Bugolobi behind Shell gas station. KFC entered Nairobi just a few years ago. The Village Mall will fully open its doors in December after over two years of construction.

The complex has space for a supermarket, bookshop and department store, plus a food court, gym and health centre. It is fully owned by Ugandan entrepreneurs- another testament that Ugandan businesses are holding their own against foreign onslaught from stores such as Game and Uchumi.

Other locally owned and booming supermarket chains include Quality supermarket, Kenjoy and Capital Shoppers. The tenants set to commence operation are Nakumatt Supermarket, Orange Telecom, Banana Boat, La Cara, and Spot Clean. The other new outlet at the mall is regional retailer Nakumatt, which has opened its 5th branch in Uganda with investments estimated at $4.5m.

The mall with a Roman Greek architectural design is adjacent to Shell Petrol Station Bugolobi. Its close proximity to Bugolobi flats and bungalows  easily makes it the onestop shopping centre for that large eastern Kampala population.

Uganda’s young population is the basis for massive investment interest from other global giants such as Google and Samsung, who have recently found new and expanding markets in East Africa and Uganda specifically. 

The population, according to experts, will form the cornerstone of the economy in the not so distant future. Uganda’s population is estimated at 35.4 million by mid-2013, with more than half of the people under 30 years.

Impact of economic growth

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A new Standard Chartered Development Index indicates that overall economic growth is now impacting on actual people’s lives. While GDP growth has averaged about 7% for the past decade, the report shows that indicators such as life expectancy and education, which are factors touching real lives, are actually on the rise alongside the glossy growth figures that sometimes masks the real state of the wealth of the citizenry.

“The gain in life expectancy, at 8.4 years (Uganda), is the highest of our 31 countries, followed by Ghana. But life expectancy is still below 60 years,” reads the report published in September. Uganda’s life expectancy has risen from about 45 years a decade ago to close to 56 years.

The 2013 Uganda Bureau of Statistics (UBOS) abstract data shows a 75% increase in per capita expenditure (from sh41,300 to sh72,300 in 2009/10). Per capita expenditure refl ects the mean income of the people calculated by taking the gross national income and dividing it by the total population.

“However, real increase in per capita consumption expenditure rose by 10%, while the share of household expenditure on food, beverage and tobacco increased from 44% to 50% between 2009/10 and 2010/11.”

Nearly 7.5 million Ugandans, which is equivalent to 1.2 million households, were considered poor in 2009/10. This proportion of the poor population has since reduced from 31% in 2005/06 to 25% in 2009/10. Also, the urban population has increased from three million persons in 2002 to 6.4 million in 2013.

“The increase is attributed to the creation of new urban administrative units, natural growth, demographic factors (excess of fertility over mortality), redefi nition of the boundary of urban areas and to a lesser extent, rural-urban migration,” all positive indicators.

Inequality

But there are short comings. Nationally, on average, income inequality increased from 0.408% in 2005/06 to 0.426% in 2009/10. This means more work must be done to equitably distribute wealth and create more opportunities for enterprise.